Page 19 - Russia OUTLOOK 2024

technically are still the property of the CBR. The European Central Bank (ECB) is also a hawk, warning against unilateral actions and recommending a co-ordinated international effort to mitigate risks to the euro's global role.
Sanctions whack-a-mole
Having accepted that the fighting in Ukraine is unlikely to end any time soon, and that sanctions cannot completely isolate Russia, Western countries are steadily revising their sanctions strategy and moving toward more targeted restrictions.
The US, and to a lesser extent Europe, will seek to tighten sanctions on Russia’s imports of dual-use technology, microchips and production equipment. In 2023, Russia avoided restrictions by buying via third countries; in 2024 the West will try to break those chains.
“In particular, companies operating out of third countries – from Turkey and China to UAE and Kazakhstan – will be in the spotlight,” says Prokopenko. “Western nations will try to increase the risks associated with violating the letter or spirit of sanctions so that companies and governments will themselves prefer to avoid selling to Russia.”
At the same time, legislative and voluntary embargoes on the sale of consumer goods to Russia will remain, affecting anything from cars and parts to clothing and cosmetics. Russia has workarounds, but these will get more difficult with time.
The nature of sanctions is changing. The oil price cap sanctions were supposed to be enforced by an elegant market mechanism; using the West’s dominance of maritime insurance (95%) to force buyers of Russian oil to pay no more than $60 a barrel. However, through various dodges Russia managed to evade the cap. Russia massively beefed up its own maritime insurance company and China and India’s insurance companies refused to participate in the scheme. The upshot is that the Western share of international maritime insurance has fallen to 65% in 2023.
In order to plug the leaks in the oil sanctions regime, the Western strategy is changing from the use of a market mechanism to simply playing a game of whack-a-mole, hitting individual tankers and shipping companies with secondary sanctions. The chances that this approach will effectively limit Russia’s oil exports and make the price cap stick are very low.
19 Russia OUTLOOK 2024 www.intellinews.com