BOFIT Viikkokatsaus / BOFIT Weekly Review 2022/15

On April 8, the EU approved a fifth sanctions package against Russia that includes a variety of new restrictive measures. In addition to banning imports of Russian coal and other solid fuels as of August 2022, the latest round of sanctions also bans imports of certain other goods such as wood products, paper products, fertilisers and car tyres. The total value of the proscribed articles in Russian imports to EU countries amounts to about 13.5 billion euros a year. The EU previously banned certain imports of iron and steel goods from Russia. The total value of imports items banned under EU sanctions represent about 4 % of Russia’s total exports.

The EU also decided to strengthen its bans on exports to Russia. Among others, the latest sanctions forbid the export of certain electronic products, software, machinery and transport vehicles to Russia. In addition, the EU has banned Russian ships from docking at EU ports as well as the operation of Russian and Belarussian road transport carriers within EU territory. The bans make exceptions for items such as energy, medicines, farm produce and processed foods.

The EU also expanded its sanctions on Russia’s financial sector. Full transaction bans were imposed on four large banks (VTB, Novikombank, Sovkombank and Otkrytie). The target banks were earlier kicked out of the SWIFT payments system, but now their assets in EU countries are also frozen.

The EU also implemented various additional measures to eliminate earlier loopholes used to circumvent sanctions. Sanctions on specific individuals and their family members were also extended. The EU’s Russia sanctions list currently targets 1,091 individuals and 80 organisations.

The latest US sanctions package, announced on April 6, impose full blocking restrictions on Russia’s largest state-owned bank, Sberbank, and Russia’s largest privately-held bank, Alfa Bank. The new sanctions also proscribe any new investments in Russia (earlier investment was only banned for the energy sector). In addition, the US extended sanctions targeting individuals, including e.g. members of Russia’s security council. Many other countries, including the UK, Australia and Japan, have increased their own economic sanctions on Russia in recent weeks.

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