Russia has unleashed hell on the stock markets.

How dependent is Russia on trade?

The latest available data shows how dependent Russia is on the sale of its raw materials and energy commodities. However, new sanctions affect this sector the least. The export of these materials has been worth 20 to 30% of the country’s GDP year on year. The size of exports fluctuates depending on the price of these commodities on financial markets. More than 70% of exports consist of mineral commodities, which confirms Russia’s extremely high dependence on this trade. Within this package, more than 30% is oil and oil products, with China being the country’s largest export market. Approximately 15% of Russian exports go to China. The Netherlands ranks second with a share of around 7.3%, and the United Kingdom holds third place with a share of nearly 7%. Russia’s total exports in 2021 increased from USD 337 billion to USD 490 billion. China also dominates imports with a share of up to 23%, making it the Russian Federation’s most important trading partner. This only helps explain why China did not condemn Russia’s actions; on the contrary, it signaled that it would help soften Western sanctions. Germany ranks second with a 10% share, and the United States is third, accounting for nearly 6% of total imports. It should be noted that imports into Russia are not key for these countries, as they amount to roughly USD 23 billion in Germany’s case and USD 13.2 billion in the case of the US. These are totally negligible figures given the size of their economies. However, for Russia some goods may be critical, as they include essential technologies, automobiles, or medicines. Russia’s total imports in 2021 were approximately USD 300 billion.

The West imposed sanctions on Russia

Joe Biden, the US president, announced what were at the time the strongest sanctions yet directed at Moscow on the day of the attack. They are intended mainly to prevent Russia from participating in the global economy and to cut it off completely from imports of advanced technologies. According to the president, they should significantly impact Russia while minimally affecting Western allies. Measures include an almost total freeze of Russian banks’ assets in the United States, and the sanctions list was expanded to include individuals profiting from the Kremlin’s policy. The United Kingdom also announced the toughest sanctions in its history against Russia. The UK’s bold sanctions target 100 individuals and entities. They involve cutting Russian banks off entirely from the UK financial system and freezing their assets. In addition, the UK plans new legislation to limit trade relations with Russia. The EU also unanimously agreed on massive restrictions aimed at the aggressor. These obstacles are expected to significantly limit the Kremlin’s access to the EU financial market and affect up to 70% of Russian banking. Furthermore, imports of important technologies (semiconductors, etc.) and components for the refining or aviation industries will be restricted. Of course, restrictions will also apply to the issuance of travel visas for key Russian business figures. For now, Russia will not be cut off from SWIFT. This step was likely not taken because it would make it impossible for the EU to pay for energy raw materials, which would mean halting their imports. Similar sanctions were also adopted by all Western allies such as Japan, Australia, and New Zealand. These are similar measures targeting specific individuals and restricting the export of key technologies. All the sanctions adopted suggest that they should hit Russia more significantly than the West and its allies, although they are not crippling for either side. Moscow’s functioning will therefore be made significantly more difficult, but as mentioned, China declared it would help soften the restrictions aimed at the Kremlin. It is therefore not excluded that other countries may also join in, especially those that do not align with the Western world and its allies. Let us hope that sanctions and the world will show Russia that it should return to the negotiating table and stop the war.