The Russian economy is said to be facing recession as the Kremlin tries to “disguise and dismiss” the impact of sanctions. Russia’s Minister of Economic Development, Maxim Reshetnikov, stated at the St. Petersburg International Economic Forum (SPIEF) that Russia is on the “brink of recession”, and the Moscow Times reported that Energy Minister Sergei Tsivilev recently told the Russian Federation Council that oil companies are struggling to procure parts to repair refineries because of Western sanctions.
In addition, Central Bank Chairperson Elvira Nabiullina stated at SPIEF that Russia has exhausted many of its “free resources“ since the start of its full-scale invasion of Ukraine, and needs to think of a new growth model, according to the Institute for the Study of War (ISW). Experts added that the Kremlin has “continued to falsely claim that sanctions do not have an impact on the Russian economy” in response to the EU’s new sanctions package.
This includes a price cap on Russian crude at 15% below its average market price.
This comes after a $60 cap active since December 2022, Reuters reports.
The UK also said it would implement the cap, suggesting it would hit Russia’s oil revenues that are used to finance the ongoing conflict with Ukraine.
Officials also fully banned EU-based specialised financial messaging services from conducting transactions with 22 Russian banks and 23 previously barred banks.
Moreover, the measures target actors “directly supporting Russian military capabilities”, including three entities based in China, and eight companies operating in Belarus that sell goods to Putin’s military.
Kremlin spokesperson and former Prime Minister Dmitry Medvedev threatened to target Kyiv and other Ukrainian cities with more force in response to the sanctions package, and claimed that Russia must learn to “hate” the EU and its “Russophobia” as much as the country’s ancestors did.
“How this ends for Europe is known,” he added.
The ISW emphasised that Russia’s sanctions evasion schemes, including via China, which the new sanctions target, are “a key aspect of the Kremlin’s strategy to offset Western sanctions and relieve pressure on the Russian economy”.
Specialists added: “Russia has created a network of actors to circumvent Western sanctions and is reconfiguring its economic policy and business models to withstand sanctions in the long term, although more extensive Western sanctions will complicate this effort.”