BRUSSELS, July 28 — The corridors of European power are once again tightening the economic noose around Moscow. Against this backdrop, the Russian ruble — already battered by two years of sanctions — now faces a fresh wave of restrictions aimed at the financial sector, the military-industrial supply chain, and the transshipment hubs that have kept Russia’s war economy afloat. Since the full invasion of Ukraine in 2022, EU sanctions have radically redrawn the map of Russian trade.
Bilateral trade between the European Union and Russia, which stood at €258 billion in 2021, had fallen by 2023 to roughly €138 billion — a 47% decline. Russian oil exports to the EU, once running at 3.1 million barrels per day in early 2022, have dropped to near zero after the bloc’s embargo.
Moscow rerouted those supplies to India, China, and Turkey, but at a price. The G7 oil price cap of $60 per barrel has forced Russia to sell its oil at discounts of $15 to $20 compared to global Brent prices.
New targets: the transshipment networks
The new package of sanctions expands the list of restricted entities to 1,600 firms, including companies in China, Turkey, and the United Arab Emirates suspected of serving as transshipment hubs. These intermediaries have allowed Russia to import restricted goods such as microchips, machine tools, chemical precursors, and dual-use technologies. The scale of the circumvention is vividly illustrated by trade data: EU exports of microchips to Central Asian countries like Kazakhstan and Kyrgyzstan surged by over 150% in 2023, strongly suggesting re-export to Russia.
If the new measures are enforced effectively, these trade routes may face disruption, raising costs for Russia’s military-industrial complex.
Ruble under pressure, inflation climbing
The ruble has already depreciated significantly under the weight of previous sanctions. From about 75 rubles to the dollar in early 2022, it slid to between 90 and 100 in mid-2024. Inflation in Russia climbed to 7.4% in June 2024.
The new sanctions target the Russian financial sector directly, potentially expanding the list of banks cut off from the SWIFT messaging system and further restricting access to EU capital markets. The wider picture is one of mounting costs for maintaining military equipment: key components for missiles and drones have been identified as being sourced from entities now on the proposed list.
Compliance burden on foreign firms
For EU companies still operating in or with Russia, the compliance burden continues to grow. A 2023 survey by the European Business Association found that 57% of foreign firms in Russia have had to restructure their supply chains to avoid sanctions violations. The calculations in
