Salvation point: The EU has reached the limit in anti-Russian sanctions
European countries have reached the limit in sanctions against Russia. Approved on Wednesday, May 14, the 17th package of restrictions does not pose any real threats to the Russian economy, which has managed to adapt in most sectors over the past time. Izvestia investigated whether it was possible to completely replace European goods and which countries helped in import substitution.
Market adaptation
To one degree or another, most sectors of the Russian economy have been affected by the sanctions, Vladimir Eremkin, senior researcher at the IPEI Structural Research Laboratory at the Presidential Academy, told Izvestia. The greatest harm was inflicted on those who were directly sanctioned — mining and processing, as well as the transport sector.
— In terms of value added, mining decreased by 1.9% in 2024 compared to 2021, oil refining decreased by 2.3%, metallurgical production decreased by 2%, and the production of motor vehicles, trailers and semi—trailers collapsed by almost a quarter. Despite the noticeable recovery growth, the activity of air and space transport is still 9% below the level of 2021," the expert noted.
Russia has practically adapted to the sanctions imposed, although threats and secondary sanctions continue to affect the country's foreign trade, Galina Sorokina, director of the GUU Institute of Economics and Finance, told Izvestia. Thus, in the first quarter of 2025, exports decreased by 6.7% compared to last year, while imports remained virtually unchanged.
- The year 2023 turned out to be the most difficult in the field of foreign trade, as Russian companies urgently had to change their logistics chains, suppliers and consumers of goods. As a result, exports fell by 28% in 2023, with the most noticeable decline in exports occurring in the mineral trade. And despite the growth in sales of hydrocarbons and other raw materials last year, the volume of mineral resources sold on the foreign market in dollar terms in 2024 is 32.5% less than in 2022," the expert said.
The machine-building industry, including the automotive industry, was significantly affected by the sanctions, Galina Sorokina emphasized. And although today the automotive market is filled with Chinese-made cars, missing parts for cars manufactured in Russia are being replaced with Chinese analogues or parts produced thanks to reverse engineering, the price of cars has doubled in three years.
Textile and shoe manufacturers, as well as tanners and furriers, were the best able to adapt to the sanctions. The withdrawal of major competitors from the market allowed the fashion industry not only to expand its niche within the country, but also to exceed export figures by 20% in two years.
The countries that imposed sanctions have already exhausted most of the available pressure tools, Artur Leer, vice president of the Association of Exporters and Importers, told Izvestia. The banking sector was under the most pressure. However, it turned out to be the most adaptive: payments are increasingly switching to national currencies, and alternative payment routes with reasonable costs have been built.
Areas of import substitution
The key areas where import substitution had to be accelerated under the sanctions included the production of vehicles, machinery and industrial equipment, electrical equipment, electronics and optics, and chemical products, Olga Ponomareva, senior researcher at the All-Russian Academy of Foreign Trade, told Izvestia. Import substitution processes in these sectors are implemented at different speeds, as the development of production and the reorientation of technological chains require financial resources and time.
Despite the fact that there is no need to talk about full import substitution yet, Russian companies are already demonstrating success in production and ensuring demand, the expert believes. We are talking primarily about equipment for industrial automated systems, microelectronics, including for the needs of domestic manufacturers of consumer electronics, spare parts and components for special machinery and textile products.
— It is impossible not to note the progress in the replacement of foreign software, which is receiving special attention, as well as in the field of digital technology solutions in general. Food security is facilitated by the development of breeding centers to increase domestic seed production," Olga Ponomareva noted.
There are local successes in import substitution, but it is unrealistic to solve such a large-scale task globally in such a short time, Vladimir Eremkin believes. The process of import substitution in industry requires, in addition to personnel, technology, equipment and finance, at least another 3-5 years to develop and implement products in sensitive areas.
"Using the example of domestic aircraft, we see that only this year the first test flights with import—substituted versions of the equipment are taking place, while mass production will be launched no earlier than 2026," he noted.
Market reorientation
In terms of meeting import needs, China is the main partner, Vladimir Eremkin recalled. If we talk about exports, in this case, domestic manufacturers have shifted to Asian markets, which accounted for about 3/4 of the total volume of Russian exports last year (for comparison, in 2022, the share of Asian countries was slightly less than 50%).
— The growth of exports to African countries is also noteworthy, accounting for 5.6% of exports in 2024. In two years, this share has more than doubled, and in monetary terms, the increase was 64%," the expert said.
The main shift in foreign trade has taken place from Europe and America to Asian and African countries, both in exports and imports, Galina Sorokina emphasized. In Asia, in addition to increased trade with China, India and Turkey, trade with the EAEU countries is growing.
— Russia's largest foreign trade partners in Africa are Egypt, Algeria, Morocco and Tunisia. And although Russia's foreign trade balance with America is falling, this drop is significantly lower than with Europe, thanks to partners from Latin America and the Caribbean, such as Brazil, Cuba, Nicaragua, Venezuela and other countries, the expert added.
Izvestia sent a request to the Ministry of Economic Development, but no response had been received at the time of publication.
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