浪花直播

The beginning of Russia鈥檚 invasion of Ukraine produced several pledges of cooperation on one side or the other of the conflict. No country was more effusive in its support for Russia than China, which said there would be 鈥渘o limits鈥� to its support. The limits to that support appear to be at hand, however. It took a while, but the pressure from the sanctions is mounting and having an impact on the Russian economy.

The Situation with China

In February alone, some of China鈥檚 biggest banks stopped doing business with Russia. On February 7, Chouzhou Commercial Bank, the main Chinese bank facilitating Russia鈥檚 imports,  doing business with Russia. By February 21, three of China鈥檚 four largest banks鈥攖he Industrial and Commercial Bank of China (ICBC), the China Construction Bank, and the Bank of China鈥攈ad  doing business with sanctioned Russian institutions. More financial institutions will likely follow suit as new EU sanctions on Chinese companies helping Russia evade sanctions, prompted by the death of Alexei Navalny, were announced on February 24, 2024. These Chinese institutions have  that  expose them to the effects of sanctions.

China鈥檚 鈥渘o-limits鈥� strategic partnership with Russia helped Putin weather the most strenuous months of the invasion, but on the second anniversary of the war, Xi Jinping鈥檚 rhetorical commitments appear to have run up against China鈥檚 broader national interests. 

China鈥檚 economic growth is ,  is up, investment and exports are , and internal consumption is still low. China鈥檚 massive real estate and construction markets, which make up a quarter of the entire economy, are . Meanwhile, China鈥檚 debt burden is growing and is  than that of the United States. These issues may be  and require liberalizing reforms that are not likely to be condoned by the Chinese Communist Party under Xi Jinping.

As a result, Russia鈥檚 big bet on China to replace the West as an economic partner and save it from sanctions looks increasingly unlikely to pay off. 

Effects of Secondary Sanctions

The effects of secondary sanctions are also beginning to work their way through the Russian economy.  Since the beginning of 2024, banks in  have severed  financial ties with Russia. The  (which recently joined the BRICS) has similarly begun exiting the Russian market. Cyprus, once a safe haven for the Russian ultra-rich,  it would begin partnering with financial crimes specialists from the U.S. FBI to root out sanctions evasion. 

Even India, which had been a major importer of cheap Russian crude oil since the start of the war, has now begun to reduce its imports owing to increasing cost, with January 2024 imports  from 2023鈥檚 peak.

Closing the Loopholes

Beginning in December 2023, the United States and the EU began taking aggressive action against non-Russian companies helping to facilitate sanctions evasion and providing Russia access to technology and materials that could be used for both civilian and military purposes. The most significant effort to clamp down on these loopholes came with the EU鈥檚  of sanctions on December 18, 2023, and with the Biden administration鈥檚 Executive Order on Taking Additional Steps With Respect to the Russian Federation鈥檚 Harmful Activities,  December 22, 2023. 

The most recent EU sanctions, enacted in the aftermath of Navalny鈥檚 death, have also been global in scope,  companies in such countries as Serbia, Thailand, Kazakhstan, and Sri Lanka. Several post-Soviet republics, including , , and , have agreed to enforce sanctions on Russia, although it remains unclear how vigorously they have done so. 

China has also become entangled in the most recent round of sanctions, imposed by the U.S., for their continued dealings with Russia, to the  of the Chinese government.

Russia鈥檚 Financial Maneuvers

 There are other  potential signs that the Kremlin is bracing for trouble with the  of the license of QIWI Bank, an entity that provides payment and financial services in Russia and CIS countries. The move, according to the Russian government鈥檚 , appears to be an effort to keep money from fleeing the country. Such actions are even more alarming when viewed in the context of  what appears to be increasingly elaborate  performed to maintain the appearance of normalcy in major cities such as Moscow. Nevertheless, the  of QIWI bank is estimated to have cost Russians upwards of 4 billion rubles. 

These moves signal a discontinuity between the Kremlin鈥檚 , derived from a combination of recent if  and the  in the United States, and an underlying sense of insecurity. Renewed concerns about the health of the Russian economy in the run-up to the symbolic anniversary of the war and the Russian presidential election in mid-March could explain the  in domestic repression and spending. 

Russia has increased  on national projects and on promoting tourism鈥攁 fantasy under current conditions. Meanwhile, the state-owned space corporation Roscosmos has  that its Western customer base has dried up. Finally, China (and Europe) have  their purchases of gas from Qatar, another blow to Russia鈥檚 revenue stream and ability to circumvent sanctions. 

Despite naysayers, the sanctions against Russia are working. Time and a firm application of pressure should see an even bigger impact on the Russian economy.

The opinions expressed in this article are those solely of the author and do not reflect the views of the Kennan Institute