Japan and the EU opposed a total ban on exports to Russia

Japan and the EU opposed the US proposal to introduce a complete ban on exports to Russia on the eve of the G7 summit. The American initiative was considered “impossible” by Tokyo and Brussels, the Financial Times (FT) reported on April 25, citing interlocutors familiar with the negotiations and documents prepared for the summit. Washington proposed to strengthen the current sectoral sanctions regime and almost completely ban the supply of goods to Russia, with the exception of agricultural and medical products. The G7 summit is scheduled to be held May 19-21 in Hiroshima, Japan.

According to the interlocutors of the newspaper, the proposal was made against the backdrop of “growing irritation” in Washington that Russia continues to import Western technology through third countries. The fight against parallel imports is at the center of attention of the US and the EU, in connection with which they have increased pressure on Turkey, the United Arab Emirates and the Central Asian republics, which, according to the interlocutors of the publication, are helping Moscow to circumvent sanctions. In particular, from April 23 to April 28, officials of the US Treasury and State Department are in the Central Asian states to discuss relevant issues with their leadership.

On April 20, the FT reported that in the EU, discussing the introduction of a new, 11th package of anti-Russian sanctions, they came to the conclusion that the possibilities of new sectoral restrictions had been exhausted, therefore only the expansion of targeted sanctions against specific individuals and legal entities is realistic. But on the same day, Bloomberg sources reported that at the same time, a complete ban on exports to Russia was being discussed within the G7. The next day, the Japanese agency Kyodo reported the same information. If the G7 approves the relevant decision, similar measures will be introduced by the EU member states. Now, by default, any export is allowed, and restrictions apply only to certain products.

The last, 10th package of sanctions, the EU countries adopted at the end of February. These included restrictions on the banking sector, a ban on the supply of dual-use technologies. The black list includes 121 individuals and legal entities, including Wagner PMC. Before that, in early February, the European Parliament adopted a resolution in which it called on the EU countries to expel Rosatom and refuse to import Russian uranium in a new package of sanctions. But at the end of March, the head of the European Commission, Ursula von der Leyen, clarified that in the new wave of sanctions, the union plans to limit itself to the fight against circumventing the previously introduced restrictions. In total, according to Castellum’s calculations, Western states have imposed over 12,600 sanctions against Russia since 2014.

According to Eurostat data published at the end of March, in 2022 the EU reduced the export of its goods to Russia by 38% in connection with the hostilities in Ukraine, to 55.2 billion euros (the lowest since 2012). And the import of goods from Russia to the EU last year in monetary terms increased by a quarter – up to 203.4 billion euros. The EU trade deficit with Russia reached a record 148.2 billion euros. The volume of exports of American goods to Russia in 2022 became a record low and amounted to $1.7 billion, having fallen by about 3.7 times – from $6.4 billion in 2021, according to the US Census Bureau.

A possible G7 decision to completely ban exports to Russia will lead to a serious political and media outcry, especially since the West is really at an impasse on new sectoral restrictions, says Ivan Timofeev, director of the Russian International Affairs Council. In practice, at least for the EU, the situation is more complicated: now there are already a number of exceptions to export control lists, but obtaining licenses even for them stretches for months when regulators are overloaded and business lacks expertise, Timofeev notes. A complete ban on exports can lead to uncalculable consequences, when the very process of technical implementation of exceptions in the EU becomes many times more complicated and overcompliance increases (excessive “preventive” compliance with sanctions by the business itself. – Vedomosti), the expert continues. This is fraught with damage to European business, Timofeev is sure. In addition, a total ban will lead to an increase in smuggling and shipments through third countries, which will require new resources to suppress. Finally, it will be difficult in principle to come up with new restrictions against Russia that will negate the intended media effect. Moreover, this is unlikely to really affect the stop of the conflict in Ukraine, the expert believes.

“Europeans could gradually expand restrictions over the years without overextending themselves, and a one-time regime change can create disruptions. Nevertheless, it is possible that in the end the G7 will still make an appropriate decision,” Timofeev believes.

The positions of European and Japanese business in the Russian economy are still strong enough to be heard, said Artem Sokolov, a researcher at the Institute of International Studies at MGIMO. But, as the practice of the last year shows, they still rarely succeed in consistently defending their interests in front of their American partners. “The maximum they can achieve is tightening export controls in the short term without a total export ban right now, but without a guarantee that it will not be introduced in the future,” Sokolov said.

Exports from Japan to Russia in 2022, according to the Japanese Ministry of Finance, decreased by 39.8% to $3.9 billion, and imports from Russia – by 6.3% to $12.85 billion. Tokyo has always taken a pragmatic position in its foreign policy, and in the current crisis seeks to maintain room for maneuver in dialogue with Moscow, said Dmitry Streltsov, head of the MGIMO Department of Oriental Studies. In addition, Tokyo fears an excessive increase in China’s economic influence in the Russian market, the expert continues: “Japan is extremely jealous of the growing influence of China in the region.”