Experts assessed the consequences of the 10th package of sanctions: the primitivization of the Russian economy will begin

The EU has dealt a blow to Russian trade. The damage from the next, already the tenth package of sanctions against Russia, was estimated at €12.7 billion. Imports of domestic goods to European countries were cut by almost 60%, and EU exports to our country – by almost half. Russia will fight the new bans with its usual methods: import substitution and the development of parallel imports. If these methods do not help, you will have to resort to the complete rejection of a number of goods, the simplification of production and the primitivization of the economy. All these anti-sanction measures were worked out in 2022 and will certainly help the domestic economy this year as well.

The European Union adopted the tenth package of anti-Russian sanctions exactly on February 24 – on the first anniversary of the start of the special operation. In addition to sanctions against numerous individuals and legal entities, it included restrictions related to exports and imports. For example, the EU banned the supply of dual-use goods to Russia, as well as their transit through Russian territory in order to avoid circumvention of sanctions.

The new package restricted exports of “critical” technology, industrial goods such as electronics, vehicles, machine parts, spare parts for trucks and jet engines, construction products such as antennas or cranes.

In addition, a ban was introduced on the supply of heavy trucks, spare parts for them, semi-trailers, special equipment, in particular, snowmobiles. The restrictions included power generators, binoculars, radars, compasses, bridge structures, loaders and cranes, and pumps. In addition to this, Russian paraffin, petroleum coke, natural bitumen and asphalt, bituminous mixtures, and carbon fell under the European rink of bans.

In general, the list looks impressive, but how serious are these bans really? This blow is not fatal for our economy, but still heavy, since the EU is Russia’s main foreign trade partner, says Igor Nikolaev, chief researcher at the Institute of Economics of the Russian Academy of Sciences.

“The losses from the reduction of exports and imports will be very significant and painful. At the same time, of course, the Russian economy will not die, but the period of the day will be very difficult for it, the expert continues. – Based on the experience of 2022, we can conclude that problems with a number of goods will be solved with the help of import substitution. The increase in investments in fixed capital (about 5.5%) is largely due to the fact that our companies were forced to invest in this program. Here, as they say, the question of survival. This year, import substitution will continue to develop. But one must be realistic and understand that it will not be possible to replace the “sanctions” in all areas. It is for this reason that the use of certain goods will simply have to be abandoned, and this is already a simplification or even primitivization of the economy. We saw this especially vividly last spring in the automotive industry: in Russia, cars were allowed to be produced without airbags, ABS, etc.”

According to Nikolaev, parallel imports, which continue to grow rapidly, will also come to the aid of the Russian economy. True, its volumes are not yet impressive. According to open sources, in 2022, parallel imports covered about 10% of the imports that were in the year before. It turns out that such a scheme helps to solve the trading problem, but only partially.

“Now it is difficult to assess the damage from new trade sanctions,” says Nikita Maslennikov, a leading expert at the Center for Political Technologies. – It is important to understand that the initiators of the bans are forced to constantly invent something new, so that no one could even think that the potential of their imagination is close to exhaustion. The tenth package fully confirms this theory.”

At the same time, the expert emphasizes that rejection from the advanced European markets is not very pleasant for Russia, and the greater the depth of this fault, the more difficult it will be to establish ties in the future.

“The tenth package of sanctions is an additional incentive for Russia not to reduce its efforts to redirect export flows, in particular, to Africa, Latin America, and the Asia-Pacific region. And something has already been done. So, for example, 80% of our crude oil goes to Asia,” reminds Maslennikov.