Expert: Limiting maritime and land transport would affect Russia the most
The European Commission on Tuesday proposed expanding Russia sanctions. Peeter Luikmel, head of the monetary policy and foreign economy department of the Bank of Estonia, said that restrictions to maritime and land transport would have the greatest financial effect on Russia.
Restricting maritime traffic would force Russia to use smaller-scale and more expensive ways of transporting oil. Restraining land transport would affect availability of staple goods, the central bank expert said.
"In other words, Russian carriers would find it more difficult to use Western countries' road infrastructure, with inconvenient and complicated logistics adding to the price of products," Luikmel suggested.
Limiting the import of technologies can also have a major impact.
"Russian industry, including the energy sector, largely depends on import products in which light the medium-to-long-term outlook is not good, as they have been relying on Western technologies for decades," Luikmel said.
Diplomat at the Estonian Embassy in Moscow Ingvar Bärenklau said that the average Russian has not yet realized the economic impact as price advance in Russia has been gradual. Bärenklau added that change has been drastic in macroeconomic indicators.
"For example, Russian imports have fallen by a third in the last month, while I saw today that sales of Russian-made vehicles have shrunk by two-thirds in March. Such drastic change has taken place. I believe that the effects will manifest in ordinary Russians' wallets in the coming months," Bärenklau added.
Luikmel said that limiting Russian coal imports demonstrates that energy is no longer exempt from sanctions and the West's attitude is changing. Russia's own sanctions, such as demanding states pay for energy deliveries in rubles, are only adding to willingness to drop Russian energy as soon as possible.
"All of it works to motivate a quick and total sanctions approach, as opposed to preparing ourselves and Russia for a long and slow transition," Luikmel commented.
Bärenklau said that while Russia has enough reserves to keep dissatisfaction in check, oil and gas sanctions would render that unsustainable.
"Oil and gas exports have not been included in sanctions yet and would result in a massive deficit and crisis much quicker if done."
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Editor: Marcus Turovski
