Kathrine Frich
Russia’s economy is showing mounting signs of strain as the war in Ukraine drags into its fourth year.
From transport operators to construction firms, several sectors have reported mounting financial pressure amid sanctions, labour shortages and soaring military expenditure.
Although the Kremlin maintains that Russia has adapted to Western restrictions, critics argue that the country’s economic resilience is overstated, and that its war machine is still being bankrolled by a critical revenue stream.
Oil loophole
In an interview with the Kyiv Independent, investor and sanctions advocate Bill Browder questioned whether existing sanctions have truly changed the Kremlin’s calculus.
“Since 2022 Russia has been the most heavily sanctioned country in the world, but have they been effective?” he said.
“Sanctions are more advanced than I could imagine before the war started. The sanctions freezing the Russian central bank have been quite effective, but there is one loophole: oil.”
He said Russia’s crude exports continue to generate vast sums.
“Russia sells crude oil. It is a major export of theirs and they continue to be able to sell it and make hundreds of billions of dollars to fund the war. In order to change Putin’s behavior you need him to run out of money, and in order to do that you need to not go after the shadow fleet but instead go after the buyers of Russian oil. There are eight of them, two in China, four in India and two in Turkey. If you sanction them, I think that would put Putin out of business.”
Target the buyers
Asked whether sanctioning companies in those countries could push them closer to Moscow, Browder rejected the idea.
“Well, they are mainly close to Russia because they are buying Russian oil. If these countries are effectively funding Putin’s war, then we need to target them, not India itself but the four Indian oil refineries.”
He warned that current measures are insufficient.
“I don’t think the pressure they are under now is enough. I think that Putin will behave like the North Koreans. He will always have enough money for his war even if he has to starve the population. The only thing we can do is make sure he runs completely out of money.”
“If you restrict the Chinese, Indians and Turks from buying Russian oil, I don’t think there will be a ceasefire, but he won’t be able to pay soldiers to enlist or buy ammunition from North Korea, which will lead to him launching fewer attacks and sending fewer soldiers into Ukraine.”
Sanctions debate
Browder was also critical of U.S. policy.
“They are falling short. Having said that, going after Lukoil and Rosneft — that’s strong. If it’s true that India has stopped buying Russian oil, that’s strong. But I don’t believe that India has stopped buying oil.”
He added that Russia must first withdraw from Ukraine and pay war reparations before Western businesses should consider returning to the Russian market.
Souces: KyivIndependent.
