-Analysis-
PARIS — Europe is shooting itself in the foot.
That was the narrative that spread among both the public and economists: the European Union sanctions against Russia were bound to backfire, without ever really taking a toll on Moscow — power shortages this winter in the West, while Russia “bathes in cash” thanks to soaring energy prices and a rising ruble. All the while, the received wisdom told us, Moscow will be able to skirt any EU export embargoes via the black market or thanks to its Chinese ally.
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The ever masochistic European Union was blindly following the U.S, rather than truly defending our interests by advocating a rapid diplomatic solution, a formula that ultimately means “just let Putin take Ukraine”.
The only problem is that this narrative is that it’s a myth. It is a line of rhetoric based on a lack of understanding of the real objectives and functioning of sanctions.
These sanctions are not so much aimed at weakening the Russian economy, which is impossible given the country’s agricultural resources and well-known resilience. Instead, the blockades are meant to paralyze Moscow’s war effort and weaken its key civilian industries — ultimately to make it clear victory is impossible, and encourage the Russians to withdraw from Ukraine.
Moscow left with “dumb bombs”
Now the evidence that the sanctions are working is even coming openly from Russia. Due to a lack of imported electronic components, especially semiconductors, Moscow admitted on Tuesday that it was 15 years behind the rest of the world in this area. Several military-industrial facilities have had to cut back on production or even shut down, such as the Ulyanovsk anti-aircraft missile factory, the Vympel air-to-air missiles factory and the Uralvagonzavod tank manufacturer, the country’s largest production complex.
The Kremlin reportedly recycles microprocessors from… refrigerators and washing machines.
And reports now say Moscow is probably unable to rebuild its 3,000 cruise missiles’ stock, crucial for their precision and power, 75% of which have already been used. An investigation by the Royal United Service Institute (RUSI), a British defense and security think tank, reviewed 27 types of captured Russian weapons, which shows that they all contained crucial components from 70 Western firms. Each cruise missile has dozens of components that are not made in Russia.
Russia had to buy North Korean shells and Iranian drones
It is true that Russia can obtain critical components on the black market, but it is more expensive, less reliable and more time consuming. Some very specific components, especially German ones, cannot be found anywhere on the Chinese market.
Moscow now uses mostly so-called “dumb” shells and bombs, not computer guided, dating back from its 1970s-1980s stocks. It recently revealed it had to buy North Korean shells and Iranian drones. Finally, due to a depletion of public revenues because of the Western embargo on the purchase of gold, coal and metals, some troops are only receiving their pay occasionally. This contributes to refusals to fight, or even surrenders.
Lack of spare parts, brain drain
Another impact of the sanctions is unemployment, swollen by the departure of a thousand Western companies. In addition, inflation has reached 15% and recession is estimated to reach at least 6%.
Industries are virtually shutting down one after the other. For lack of spare parts, airliners have begun to “cannibalize” themselves, that is replacing worn-out parts with those of other grounded aircraft. In May and June, Russian car production was cut by 20%, while sales of computers fell by 25% and cell phones by 27%.
Some medicines are coming up short. The Kremlin claims that local industry will be able to replace imports, but this is questionable given both corruption and brain drain: 500,000 Russians have left the country this year.
In total, Russian imports were cut in half in the second quarter over the same period in 2021. Indeed, Chinese companies are reluctant to replace Western exporters, for fear of losing — in retaliation — the vast U.S. market, which is seven times bigger for them. All this puts into perspective the importance for Russia of “drowning in cash” thanks to petro-fuels, since it no longer can spend it.
Oil prices dropping
The price of oil has risen sharply, which feeds the opponents of sanctions. Except that none of them are aimed at Russian oil and gas now, for the simple reason that the West believes it still needs them. It is in fact the Russian response, which is logical, thanks to a reduction in Gazprom’s flows, that is contributing to the increase in prices, but only partly. Any large-scale war will feed tensions in world energy markets.
This should have been a warning.
This explains why the oil prices rose to 8 a barrel in March, near its all-time high. But it has since fallen back to , below the pre-invasion level. Gazprom had doubled its prices in the ten months preceding the invasion, therefore before the Western sanctions were implemented. This should have been a warning to us.
Still, we continue to be told that Europe is threatened by a… very cold winter. Is that so? Given the current disaster for the Russian army, it is not impossible that Ukraine might have recaptured by then the territories taken by Moscow since the beginning of the invasion. So what sense would it make to impose an embargo on its gas and oil sales?
