The European Union (EU) has imposed broad and unprecedented sanctions on Russia in response to its military campaign in Ukraine, which began on February 24, 2022, and the Kremlin's annexation of breakaway regions, including Donetsk, Luhansk, Zaporizhzhia and Kherson.
The bloc has also added to existing measures against Russia since 2014 following its annexation of Crimea.
The sanctions include targeted restrictive measures (individual sanctions), economic sanctions and visa restrictions, with nearly 1,500 individuals and 250 entities on the EU blacklist.
Accordingly, EU sanctions against Moscow will build up over time and will have an increasingly long-term impact on the Russian economy, Bloomberg reported on July 7, citing an EU report.
An impact assessment by the European Commission (EC), seen by Bloomberg, outlined the impact of the bloc's sanctions on Moscow's economy, including a cut of about 91 billion euros ($99.1 billion) in imports from Russia and 48 billion euros in EU exports.
The sanctions have “significantly undermined Russia’s industrial and technological capabilities,” the EC assessment said. “These impacts will increase over time, as the sanctions have a structural, long-term impact on the Russian budget, financial markets, foreign investment and industrial and technological base.”
A car with the letter Z drives on a road in Moscow, Russia, July 19, 2022. Russian troops entered Ukrainian territory on February 24, 2022 in a "special military operation", leading to prolonged fierce fighting and more Western sanctions against Russia. The letter Z painted on Russian military vehicles in Ukraine quickly became a symbol of support for the Russian Army. Photo: Euractiv
With measures designed to mitigate the impact on member states, the impact on the EU has been contained, but it is “tangible” in some areas mainly due to Russian countermeasures and the war itself, and the resulting price hikes, according to the assessment.
The review also notes that European industry has reported some serious disruptions in supply chains related to imports of rare gases such as neon and xenon used to make chips.
Rail freight traffic between the EU and China via Russia has decreased and the ban on imports of wood products and countermeasures by Russia have contributed to price increases and some supply problems, especially for plywood and oak.
EU exports to Russia and imports from Russia fell by more than 50% compared to 2021, resulting in “unprecedented decoupling”, the assessment said. This has led to a particularly rapid contraction in technology-dependent manufacturing industries, with high- and medium-high-tech manufacturing recording an annual loss of 13%.
However, Moscow may still stockpile some raw materials and source some banned goods and alternative technologies from third countries, including China, Kazakhstan, Türkiye and the United Arab Emirates (UAE), the EC assessment said.
The assessment estimates that nearly a third of Russia’s federal budget will be spent on defense and internal security this year. Russian steel production fell 7% last year compared to 2021 and is expected to fall another 10% this year.
“Beyond their immediate impact, EU import restrictions have profound effects on the fabric of the Russian economy,” the assessment concluded .
Minh Duc (According to Bloomberg, European Council)
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