The Russian economy is in a very bad state right now and will take years to recover from the damage caused by Vladimir Putin’s war, EU special representative for sanctions David O’Sullivan said on 13 January.
“All the key indicators of the Russian economy are flashing red today: the inflation rate, the interest rate, the situation in the labour market, the very bad situation with investment in the civilian economy. In fact, they have devoured the civilian economy in favour of the military economy,” the official said.
According to the diplomat, the Russian budget is in deficit and revenues are falling along with oil prices, which are now around $60 per barrel of high-end Brent. At the same time, it is difficult, the EU special envoy for sanctions said, to predict how this will affect Putin’s Ukraine policy. O’Sullivan did not answer how much longer Russia will be able to wage war.
“The Russian economy is actually in a very difficult state… Whether that will make him rethink his ambitions and his commitment to this aggression is another question entirely, but we have to keep the pressure on,” O’Sullivan summarised.
On 23 October, the European Union gave final approval to the 19th package of sanctions against Russia. The measures target Russia’s main sources of revenue through energy, financial and trade restrictions and should weaken its ability to wage war against Ukraine. Specifically, the sanctions package includes a gradual ban on liquefied natural gas (LNG) imports – after six months for short-term contracts and from 1 January 2027 for long-term contracts.
Following the start of Russia’s full-scale invasion of Ukraine, the US and other Western countries imposed a series of sanctions against Russia aimed at reducing Moscow’s ability to wage war by cutting off access to Western technology.
However, Russia continues to find ways to circumvent the sanctions and has been able to obtain foreign components.