Why the 13th package of US sanctions caused a surprisingly weak reaction from Russian business

The “strong and robust” package of US sanctions published on February 23, traditionally following somewhat more lackluster British and European sanctions, caused a surprisingly weak reaction in Russia. The companies subject to sanctions announced the continuation of stable work, and the press secretary of the Russian President Dmitry Peskov assured that “nothing fundamentally new was announced and it is unlikely that anything fundamentally new can be invented.” Shares of companies that found themselves under restrictions even rose on the Moscow Exchange on Monday, although a year ago a message about being included in the SDN-list would certainly have caused a collapse in quotes.

This addiction to sanctions even looks somewhat surreal, although partly understandable. In the end, every large Russian company has been living for two years with the understanding that there are no actions that can guarantee to avoid restrictions, and has a scenario for working in such conditions. The elements of panic that were sometimes observed in 2022 have completely disappeared.

But this does not mean that companies have become indifferent to sanctions. I can judge this by the non-public efforts that many players are making to, if not guarantee, avoid sanctions, then at least reduce the chances of their introduction or delay the inevitable. The contrast between the ostentatious indifference of Russian business to sanctions in the public sphere and active work behind the scenes is growing, now it is greater than in 2022.

Another changing aspect of perception is that there is a large gap between sanctions in theory and in practice. Almost everything depends on the format of application of restrictions, as clearly shown by the problems with settlements in trade with Turkey and partly China. It took most companies more than one week to figure out exactly how the SDN status would affect their business, and in the public sphere, significant problems often appear only months after the next package.

For example, the EU bans on the supply of electronic and electromagnetic equipment, construction tools and precursors introduced on February 23, about which the Russian media, including us, wrote separated by commas – what impact will they have? I don’t have an answer right now, but I suspect there will be an impact, and may not be limited to, say, the (probably temporary) disappearance of Bosch drills from online stores. I believe that sanctions on the Russian coal sector and logistics assets are unlikely to pass without leaving a trace.

The fact that sanctions have not yet killed Russian business does not mean that it has not been damaged or, moreover, that work has suddenly become better and easier. After all, the absence of pain from frostbitten extremities is rarely a good symptom.