Russia Sanctions Update: CIS-picious Trading Patterns
Exports to Russia have been rising in recent months, although mostly for goods without potential military applications. But there are suspicious increases in exports to some of Russia's neighbors.
The pressure on Russia from sanctions is fading. Exports of manufactured goods to Russia have been rising rapidly in recent months, while exports of goods delivered to Russia’s friendly neighbors are soaring far beyond pre-invasion norms. If export restrictions and sanctions enforcement cannot be tightened further, the Russians may be able to restock some of their lost military equipment—and prolong the war. Ensuring a favorable military balance for the Ukrainians may therefore require a substantial increase in the volume and lethality of weapons deliveries from the allies.
Total Exports Are Recovering Rapidly
The Russian government stopped publishing monthly trade data when the war started, although the central bank continues to publish quarterly data as part of the balance of payments. I have been tracking exports to Russia from a broad and comprehensive sample of major manufacturing powers since the spring. At first, the combination of financial restrictions and export controls were devastating. The monthly average U.S. dollar value of Russian imports in March-May 2022 was less than half what it was in September 2021-February 2022.
Exports began recovering over the summer, however, and as of November—the latest month for which we have comprehensive data—the value of exports to Russia from my sample was just 15% below the pre-invasion monthly average. China and Turkey account for much of this recovery, but exports from the EU27, Korea, and Taiwan have also been on the rise.
The data we have so far for December suggest that Russian imports have gone up even more, and may even have fully recovered. Exports from China were more than a third above the pre-pandemic average, while exports from Turkey were 150% higher. While there could be a seasonal element to some of the Chinese data, the U.S. dollar value of Chinese exports to Russia in December 2022 was nevertheless 8% higher than in December 2021.
