How are Russian businesses doing two years into the Ukraine conflict?

On the two year anniversary of the Russia-Ukraine war, Euronews Business looks at how Russian businesses have done in the face of various international sanctions.ADVERTISEMENT24 February 2024 marks the two-year anniversary of Russia’s invasion of Ukraine. Back in February 2022, in a move that shocked the international community, Russia launched its special military operation against Ukraine.According to November 2023 data by the United Nations Human Rights Monitoring Mission in Ukraine, at least 10,000 civilians, including 560 children have been killed in Ukraine, since the invasion began. Russia, on the other hand, is estimated to have lost upwards of 300,000 troops, according to declassified US intelligence reports.Since the start of the war, Russia has faced increasing sanctions from the UK, US, EU, Canada, Australia, Japan and Switzerland, amongst others, impacting both its businesses and certain individuals.What are some recent sanctions imposed on Russian businesses?Most recently, to mark the two-year anniversary of the invasion, the UK has announced more than 50 new sanctions against Russia, mainly impacting electronics companies, munitions manufacturers and oil and diamond traders.These are intended to erode Russia’s war funding by targeting the industries that bring in most of the country’s income. Furthermore, with sanctions on munitions manufacturers, the UK is also making sure to deal a strong blow to Moscow\'s weapons arsenal. These are mainly expected to impact companies providing the Russian armoury with explosives, rocket launch systems and missiles.On 22 February, the UK’s Foreign Secretary David Cameron said, “Ukraine has shown that it can and will defend itself. And two years on, we stand united in support of Ukraine."“Our international economic pressure means Russia cannot afford this illegal invasion. Our sanctions are starving Putin of the resources he desperately needs to fund his struggling war" he added.And

he stressed, “Together, we will not let up in the face of tyranny. We will continue to support Ukraine as it fights for democracy- for as long as it takes.”Earlier on in January, as part of its 12th package of Russian individual and economic sanctions, the EU included PJSC Alrosa, the Russian state-owned diamond mining company, as well its CEO Pavel Alekseevich Marinychev on its sanctions list. Alrosa, however, has already been sanctioned by the US, UK, Canada, The Bahamas and New Zealand since 2022.Have these sanctions worked so far?According to the European External Action Service (

EEAS), the sanctions imposed by the EU on Russia managed to hit several sectors of the Russian economy quite hard in 2022.EEAS notes that the Russian manufacturing sector shrank 6% by the end of 2022, with motor vehicles production being down 48% year-on-year. Wholesale trade declined 17% year-on-year in 2022, with retail trade inching down 10%. High and medium technology manufacturing also saw an annual loss of 13%.However, last year, the tide seemed to be turning, with Russian factory activity having advanced at its fastest pace in nearly seven years in December 2023, according to the S&P Global Purchasing Managers’ Index. The Russian vehicle market also surged about 120% in September 2023.The Russian government has also managed to evade sanctions by selling gold reserves to keep funding the Ukraine war, amongst other methods. One of the most pervasive amongst these is a global network of corruption and shadow entities which act on Russia’s behalf when it cannot do so openly.Russian businesses have also been setting up a number of subsidiaries and shell companies in countries with relatively good ties to Russia, which may not scrutinise their operations too much.These include Georgia, Armenia, Kazakhstan, UAE and Turkey, amongst others. Through these subsidiaries and countries, both the Russian government and businesses are still able to access sanctioned products such as semiconductor chips and weapons.Russia’s “shadow fleet”, composed of a number of smaller oil tanker operators with ships in various states of decline, are also helping it avoid oil sanctions by making sure that very few shipments of seaborne Russian Urals oil are happening below the $60 price cap imposed by Western sanctions. These ships are typically provided by countries such as Cameroon or Liberia.Oil and energy companiesPJSC Gazprom Neft, the oil-producing subsidiary of the Russian gas mammoth Gazprom, was one of the oil companies sanctioned by the EU back in March 2022, in an attempt to restrict Russia’s oil revenues.Since then, the company’s Q2 2023 net profits fell about 43% because of discontinued sales, which the company revealed after a year of not publishing its financial results. The company also recently announced that it was putting its Bulgarian service stations up for sale.ADVERTISEMENTHowever, in late 2023, Gazprom Neft seemed to be perk