Sanctions against Russia are reducing the Kremlinʼs ability to finance the war, but China and Turkey are helping it circumvent Western restrictions, according to an internal European Commission report.
The publication EUobserver writes about this with reference to the document.
According to the analysis of the European Commission, EU sanctions hit Russiaʼs energy and banking sectors the most. It managed to divert only two-thirds of Europeʼs oil exports, which sell “at a significant discount of around $25 per barrel”.
Due to the sharp rise in energy prices, Russiaʼs budget surplus amounted to €8 billion in the first half of 2022, Russian oil production in August decreased by 10%, and gas production by 22% year-on-year. Additionally, the EU oil embargo, which will come into effect in December, will intensify the situation.
The banking sector has also suffered: Russian lenders have closed 670 branches, and the state has to recapitalize banks, which could cost two trillion rubles. In addition, international investors are almost not interested in buying Russian bonds.
“As a result of the combined impact of the war itself and sanctions, Russia has entered a protracted recession that may last for a considerable period. The plans of the Russian Ministry of Finance to cover the budget deficit during the next three years at the expense of domestic borrowing do not look plausible,” the report states.
- On October 6, the European Union approved the eighth package of sanctions against Russia. It includes a ban on the import of Russian products worth €7 billion and a cap on oil prices. The EU also expanded sanctions against individuals and Russian companies involved in illegal "referendums" on the territory of Ukraine.