Sanctions were supposed to deny Russia's ability to finance the war. But sanctions were delayed and it didn't happen. Now sanctions are finally starting to bite. At the end of 2022 liquid reserves were slightly above 1 month of import. More facts: 1/
Before the invasion, Russia's reserves were $634B. Sanctions immobilize about $313B. This leaves Russia with $146B in gold and about $107B in FX assets (largely yuan). 2/
Russia’s economy faces an extended period of stagnation. There was essentially 0 productivity growth post-2014; now it will turn negative due to sanctions and war. Russian economy will further suffer due to emigration and brain drain. 3/
Russia reports a record deficit of 2.4T rubles in 2023Q1 - 82% of the full-year budget target. December had a record single-month deficit of more than 4T rubles. Key drivers are revenue underperformance, notably oil and gas, and elevated expenditures due to the war. 4/
Oil and gas revenues for January-March are 45% below their level the last year. Russia is increasing its tax on oil. However, this is estimated to bring about 600B - not even close to cover Ts in lost revenues. 5/
EU embargoes on crude oil (Dec. 5, 2022) and oil products (Feb. 5, 2023) were delayed. But now together with Europe’s exit from Russian gas, over 50% pre-invasion exports are sanctioned. The sanction gaps are East Asian democracies as well as China, India, and Turkey. 6/
Russia was able to redirect crude oil to China, India, and Turkey. The exclusion of shipping services from the EU embargo allowed to keep Russian oil on the market. But Russia has had to accept heavy discounts. 7/
Sanctions succeeded in maintaining oil market stability while reducing Russian export earnings. Global oil prices have returned to pre-full-scale invasion levels. Russia’s inability to find alternative buyers for its gas decreased gas production. 8/
High prices and redirection to alternative buyers supported Russian exports. But total exports have weakened since 2022Q4 as energy prices moderated and additional sanctions took effect. In imports, Russia has not been able to replace EU and US trade. 9/
KSE Institute expects significant declines in oil and gas export volumes (-12.9%, -27.9%) as well as prices (-32.6%, -49.4%) in 2023. 10/
KSE Institute projects that lower export volumes and prices will cut oil and gas earnings in half this year (41% for oil, 64% for gas). The current account surplus will narrow to $63 billion. This is a problem because Russian budget assumes $123 billion surplus. 11/
Sanctions are working. Slowly but surely. Let's add more. You can read the entire KSE Institute sanction chartbook and suggestions for further sanctions here kse.ua/wp-content/upl…
Russia knows it can’t create a second Ukrainian SSR. Its goal is the destruction of Ukraine — “Novorossiya,” LNR/DNR, “Malorossiya.”
Signs of genocide are clear, including deporting children, Ukrainian Institute of National Memory head Oleksandr Alfyorov for Ukrainska Pravda.1/
Alfyorov: “In Ukraine, Russia needs only two resources: history and children.”
Russia uses history as a weapon — through “Novorossiya,” “LNR,” “DNR,” “Malorossiya,” and the myth of a “fight against Nazism” to justify occupation and erase Ukrainian statehood.
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Alfyorov: “Russians violate territories with their markers and people.”
They glorify Soviet generals, invent imperial continuity, and turn memory into a tool that normalizes war, borders, and violence.
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Chris Wright, US Energy sec.: Russia is funding its war by selling oil, gas and coal. Europe is the biggest buyers of Russian oil and natural gas to this day.
Trump is saying you’re helping fund this war machine, so we’re going to stop large buyers. 1/
Chris Wright: What’s India doing right now? It’s looking to buy more oil from the United States, probably more from Venezuela and other sources.
One way to help end the war in Ukraine is to starve the Russian war machine. 2X
Russian Ambassador to the UK Kelin: We could fight in Ukraine like the US did in Iraq, crushing cities, but we don’t. This war is slow and ‘surgical,’ to preserve civilians.
[Russia killed more than 15,000 civilians since 2022, this is how they preserve civilians.]
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Kelin: Three rounds of peace talks with Ukraine in Istanbul brought little result except prisoner exchanges.
Russia sticks to the Anchorage understandings with the US. Ukraine, despite a losing position, is trying to dictate its own terms.
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Kelin: Of course the talks matter. With or without the U.S., we need to work through many details.
Russia has proposed three tracks — military, political, humanitarian. Dialogue at different levels and formats is better than continued fighting.
Yuliia Dvornychenko from Ukraine’s Donetsk region spent two years in Russian captivity. Her two sons waited the entire time.
Yuliia: I was tortured: electric shocks, stripped, beaten. They threatened to send my kids to an orphanage. I signed anything to stop it. — DW.
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Yuliia: People traveled from occupied areas to Ukraine-controlled territory to buy basics, collect pensions, get medicine. Everyone needed to get out; for some, just to breathe.
We’d go with the kids to see the difference between life under occupation and outside it.
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Yuliia: The unit that captured me got 500,000 rubles($6,500) for taking Ukrainian “spies.” My younger son slept, the older saw everything.
Then the kids were alone for a month, the occupation security service banned neighbors from helping.
The EU may give Ukraine EU-level protections before full membership
The EU is weighing a peace-deal formula that grants Kyiv early access to EU membership rights and safeguards, locking in a time-bound path to full accession, possibly by 2027 — Bloomberg.
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One option would grant Ukraine up-front accession protections, legal, economic, and regulatory safeguards, plus immediate access to selected EU rights, before formal membership.
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At the same time, the EU would lock in a time-bound accession roadmap, fixed steps and deadlines, replacing today’s open-ended process that can stall for years.
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