The Bank of Russia has warned that the expansion of sanctions on Russia and increased pressure on countries Moscow considers “friendly” are hurting Russian firms’ export revenues and creating issues with oil payments.
According to the central bank’s report on financial stability, the widening of sanctions and pressure on “friendly” countries, which Russia distinguishes from “unfriendly” nations that imposed sanctions over the Ukraine conflict, has led to companies’ reduced export revenue.
The report states that “unfriendly countries are hindering not only the sale of hydrocarbons, but also the realization of major investment projects.” Additionally, the threat of secondary sanctions has slowed Russian banks’ efforts to increase the number of correspondent accounts in friendly jurisdictions, with the number of such accounts in US dollars and euros dropping by 55% since the start of 2022.
The central bank said that as a result of secondary sanctions, supply chains and payment mechanisms have become more complicated, leading to higher import prices and supply disruptions.
US Treasury Secretary Janet Yellen has acknowledged that the new authority to impose secondary sanctions on banks aiding Russian military-related transactions has helped frustrate Russia’s efforts to procure goods needed for the conflict in Ukraine. However, Yellen said the most concerning Russian sanctions evasion activity is coming through China, the United Arab Emirates, and Turkey, and that the Treasury is working to disrupt such evasion.