According to reports, the European Union is looking to close loopholes in sanctions. This could put more pressure on the Russian economy.
EU officials are discussing new sanctions that penalize countries who re-export banned products to Russia.
The proposal would grant the EU the power to restrict certain products from countries participating in illegal trade with Russia. The mechanism would give such states a warning before export controls are implemented.
Some EU members, however, are concerned by the proposed sanctions. They cite a potential risk to geopolitical relationships, while the legality of the mechanism would need to be reviewed.
How can you avoid unintended consequences of forcing certain countries to move in a direction that is different from where you want them? “You have to be careful how you use carrots or sticks.”
The measure, if implemented, would put additional pressure on Russia’s economy which is already under strain due to sanctions imposed on its oil exports.
The EU has tried to convince countries in Central Asia, Turkey and the UAE that they need to be more aggressive against Russian efforts to evade sanction.
In the meantime, the US has urged the G7, due to the loopholes, to apply a comprehensive export ban on Russia. The G7 meeting is scheduled for the next week. Other members are not joining such calls but have indicated a willingness to address the issue of re-exporting.
According to official statistics released by the Kremlin, Russia’s economy is proving more resilient than expected in the face Western sanctions.
Other signs indicate that there is a record shortage of workers, as the conflict in Ukraine puts pressure on the workforce. There have been other recent reports that are not optimistic about Russia’s economy.
Russia’s economy is becoming more primitive, as its war with Ukraine drags on. The repercussions of this could send it down the path that the Soviet Union experienced three decades ago.
A central bank adviser in Finland said that Russia is experiencing a “reverse industrialization”. This is due to the Western sanctions against Russia and its ongoing war with Ukraine.