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HomeNewsHow the West’s sanctions against Russia have backfired

How the West’s sanctions against Russia have backfired

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SANCTIONS against Russia have proved to be a farce, with damaging blowback against European economies, continued (but never mentioned) Western energy imports from Russia, a big recovery in Russian GDP growth since early 2022 and a major Russian programme of import substitution aiming at long-term self-sufficiency in goods and services previously bought from the West.

In the first seven months of this year, Russia has been the second biggest supplier of liquefied natural gas (LNG) to EU countries:

While Russian oil is banned, fuels derived from Russian oil are flooding Europe. This is because Russian oil sales have boomed to China, India and Turkey, where it is turned into oil products which are exported to the West.

India’s oil imports from Russia peaked at 69million barrels in May, almost ten times more than in the same period in 2021. In turn India shipped 5.1million barrels of diesel fuel and 3.2million barrels of jet fuel to the EU in June, compared with 1.68m barrels and 0.51m barrels in June 2021. 

Ukraine has called on the West to ban the supply of all refined oil products to G7 countries if they were produced using Russian oil but such a measure would risk serious economic costs on the industrial economies at a time of high inflation and a feared recession.

In addition to high sales to Europe, the NGO Global Witness found that China was a major buyer of Russian LNG. Overall imports by Europe have increased by 40 per cent compared with the same period in 2021, and the value of LNG imported between January and July was €5.29billion.

In a classic case of energy sanctions backfiring, Germany stopped Russian gas only to import massive amounts of fertilisers produced from that gas. Cheaper imports of Russian fertilisers have increased by 334 per cent.

And contrary to the mythology of the West that Russia is ‘only a gas station’, the country’s manufacturing has staged a substantial recovery: 

This contrasts with the USA’s Purchasing Managers Index: 

While preaching hatred of Russia, certain Western countries still manage to export vast amounts to the country.

For instance there has been a massive increase in German exports to Kyrgistan. Why?Because from there they can be exported to Russia. Similarly, German car exports to Kazakhstan grew by 507 per cent between 2021 and 2022, and to Armenia by 761 per cent. Exports of chemical products to Armenia increased by 110 per cent, and to Kazakhstan by 129 per cent. Sales of electric and computer equipment to Armenia grew by 343 per cent – nearly all for on sale to Russia.

The US, as Bloomberg points out, still imports massive amounts of uranium from Russia because Rosatom is still the world’s largest supplier of uranium and still supplies almost a quarter of the 92 US nuclear reactors. Twenty per cent of US electricity production is from nuclear and the US is the world’s largest producer of nuclear power, accounting for about 30 per cent of worldwide nuclear-generated electricity.

The US is totally reliant on Russian uranium supplies for its energy security since the last uranium enrichment facility in the United States closed in 2013, and the nuclear fuel reserve will last for 18 months. On August 24, it was reported that the United States had sharply increased its purchases of uranium-235 from Russia. The volume of deliveries of nuclear fuel increased by 2.2 times. The US paid $696.5million for the supplies, a record since 2002.

Another example of continued and hypocritical trade with Russia involves the Estonian Prime Minister Kaja Kallas, one of the most outspoken Russophobes, demanding that all trade with and business in Russia should cease.

Stark Logistics, a transportation company partially owned by Kallas’s husband Arvo Hallik is still operating in Russia, and the prime minister provided a ‘loan’ of 350,000 euros to her husband’s other company, Novaria Consult, which holds a 24.8 per cent stake in Stark Logistics. Kallas is under pressure to resign. 

Russia’s import substitution programme

After the exit of Visa and MasterCard from Russia as sanctions were applied, the Russians were able to greatly expand their own Mir national payment system which Russia’s Central Bank and the Finance Ministry introduced in 2015, not least because sanctions meant that Russian banks were banned from the international SWIFT payment system.

Together with fundamental changes in gas and oil trade away from Europe and towards the East, such structural changes in trade and finance are long-term and not easily reversible losses to the Western interests which previously provided those goods and services.

No wonder the German newspaper Bild published details of a conversation between German chancellor Olaf Scholz and France’s President Macron, who bewailed the fact that Putin had not even mentioned the sanctions in his conversation with them.

The list of immediate and long-term Russian self-sufficiency at the cost of Europe and the West in general is extensive:

Civilian Aircraft

The prototype of the Russian SJ-100 short-haul aircraft manufactured by the Yakovlev Production Center has made its maiden flight. The test was successful and the French Russian engines used will soon be replaced by Russian ones.

3D printers

The Moscow Digital Plant (MDP) was officially opened. It includes:

– manufacturing and designing industrial 3D printers;

– FHZL RUS is a Russian-Chinese enterprise localising the assembly of 3D printers’

– ‘SPIN’ – full-cycle additive manufacturing with 3D printing services.

No need to import pasta!

The first pasta production enterprise was launched in Kalmykia – a full-cycle project from field to counter. There will be about ten types of pasta products, including those made of durum wheat.

Steel production

The Shakhta Pipe Plant was opened in the Rostov Region. Its products are rolled steel sheets. Capacity at the first stage is 8,000 tons per month, and at maximum load up to 15,000 tons per month. The new plant is part of Techmash, which produces steel pipes. West Siberian Iron and Steel Works expanded production of rolling rolls and bands. Previously, the company purchased these components for the rail and beam mill, ball mill and small section mill abroad.

Combine harvesters

When reporting a record harvest in the Rostov area it was emphasised that the combine harvesters were domestically manufactured, not imported.

Military transport aircraft

Another IL-76MD-90A heavy military transport aircraft has been manufactured and delivered to the customer at Aviastar. It represents a significantly modernised version of the IL-76MD aircraft, constructed using domestically sourced components. It is specifically engineered for the transportation and parachute deployment of military equipment, personnel and cargo.

Marine engines

Petrozavodskmash Foundry (Karelia) has completed production of Russia’s first cylinder block for the new D500 family of marine engines. Previously not manufactured in Russia, they are not inferior to those of foreign equivalents.

No wonder Russia is on track for between 2.5 per cent and 3 per cent growth in 2023 which is higher than the US, UK and every EU country except the Czech Republic. The eurozone is expected to grow by less than 1 per cent. Meanwhile German industry collapses.

Yes, those sanctions were a great idea!

This article appeared in Freenations on September 4, 2023, and is republished by kind permission

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Rodney Atkinson
Rodney Atkinson
Rodney Atkinson is an entrepreneur and political economist who is the author of some 500 articles and policy papers. His Freenations website is 23 years old. Rodney Atkinson's books are available on Amazon .

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