The Estonian Foreign Intelligence Service (EFIS) has published its tenth public report on external security threats. The report describes the consequences of sanctions against Russia, including the impact of oil price restrictions and other sanctions on the country’s economy.
The report claims that third countries, including China, have begun to restrict transactions with Russia due to fears of secondary sanctions from the US, which will complicate Russia’s foreign trade and increase transaction costs. The Moscow Stock Exchange can no longer trade in Western currencies due to sanctions, making it impossible to determine their actual market value. This allows Russian banks to manipulate exchange rates at the expense of customers, significantly increasing the costs for Russian companies for exports and imports in Western currencies. Russia’s “wartime economic boom” is likely to end in 2025, increasing the risk of negative surprises such as budget revenue cuts. However, the economy still has significant inertia, so a sudden economic downturn is unlikely without external shocks. Overall, the trend is clearly downwards according to the report.
In addition, the report discusses a number of industries in Russia. Sanctions have had a limited impact on Russian drone production, according to the document, and the military-industrial complex continues to obtain critical components through intermediaries. Estimates indicate that up to 80% of Western components are reaching Russia via China, implying that representatives of manufacturers, wholesalers, and intermediaries in China may be weak links in the supply chain. Despite China’s attempts to restrict state-owned entities from providing sanctioned goods, it has tightened restrictions on exports of drones and their components since September 1st, 2023, but covert supplies continue from private companies, making Beijing Russia’s main hub for high-tech imports.
