The Squeeze on Russia Is Loosening
The latest numbers from the major manufacturing powers suggest that exports to Russia are rising.
Exports to Russia from the major manufacturing economies have been rising rapidly since April. If the allies do not act swiftly to tighten the enforcement of sanctions and export controls, the Russian military may be able to replenish its losses of equipment and advanced ammunition—and prolong the war.
Sanctions and the Military Balance
Since at least 2014, the rich democracies have been struggling with the challenge of how to help the Ukrainians defend themselves from Russian aggression without taking any risk.1 The statecraft of the past six months has focused on how to deliver maximum damage to the Russian military without violating this basic constraint.
Until February, the solution was to have elite U.S. and other NATO soldiers train the Ukrainian military and equip them with the best anti-tank weapons, all while trying to warn the Russians that their economy would be harmed if they got too aggressive. Deterrence failed, but so did the Russian blitzkrieg. Providing motivated defenders with (some of) the resources they needed to protect their homes has turned out to be extremely effective.
Once the invasion began, the allies intensified their contributions to the war effort by ramping up their military aid to Ukraine (both materiel and intelligence) and by depriving the Russians of access to critical expertise, parts, and components for weapons and dual-use technologies. As I noted back in April, the Russians were highly vulnerable to a coordinated campaign of denial because they lacked the sophistication and the industrial base to satisfy their domestic needs. This gave the allies the opportunity to use economic sanctions as a form of strategic bombing:
The sanctions should be understood as a weapon deployed on the economic battlefield alongside the Javelines, NLAWs, Stingers, and Neptunes that have proven so helpful to Ukraine’s defense thus far. Those weapons are neutralizing Russia’s existing inventories of tanks, aircraft, and ships, while the sanctions are crippling Russia’s ability to replace those losses by constraining what Russians are able to import…While it would be inappropriate for NATO aircraft to bomb Russian tank factories, shipyards, and missile assembly plants today, it would also be unnecessary. The democracies can replicate the effect of well-targeted bombing runs with the right set of sanctions precisely because the Russian military depends on imported equipment from the very same set of countries it has angered with its brutal attack on Ukraine.
The effectiveness of the sanctions should therefore be viewed from the context of military attrition. The Russians may have started from a position of superior firepower, but the allies’ use of sanctions, intelligence support, and weapons donations has been shifting the balance of forces increasingly in favor of the Ukrainians.
Unfortunately, the latest trade data are a warning that tighter export controls and more stringent sanctions may be necessary to ensure the continued success of this strategy. Boosting both the quantity and quality (i.e., more long-range weapons) of military aid being delivered to Ukraine should be a top priority for the allies in any case, but it will be especially important if the allies believe that they cannot tighten the sanctions regime.2
Tracking Russian Imports
The Russian government has stopped publishing monthly data on imports, but it is possible to reconstruct the data by looking at customs numbers from the main manufacturing countries. For the past several months I have been tracking a sample of 39 countries that collectively accounted for 72% of Russia’s pre-war imports of goods—and essentially all of Russia’s imports of high-tech goods.3
In April 2022, the monthly dollar value of exports to Russia from this sample of countries was 57% lower, on average, than in September 2021-February 2022. Notably, businesses operating in neutral or ostensibly pro-Russian countries—such as China, India, and Vietnam—slashed their exports to Russia at least as much as businesses in countries that formally participated in the sanctions.4
Since then, however, exports to Russia have been rising steadily. As of June, the latest month for which we have comprehensive data, the dollar value of exports to Russia across the broad sample was 47% higher than the trough in April, with the majority of that increase attributable to the EU27, Switzerland, Korea, and Japan—all of which are ostensibly participating in the sanctions.
Preliminary data from July suggest that the Russians’ situation has continued to improve.
Last week, China’s General Administration of Customs (GACC) revealed that the U.S. dollar value of the country’s exports to Russia in July had soared by 35% compared to June. For the first time since the invasion began, Chinese exports to Russia were worth more than the September 2021-February 2022 monthly average. Taiwan’s customs services reports that exports to Russia in July were 36% higher than in June, while Korean data show exports to Russia up a whopping 61%. For all three countries, the value of exports in July was about 80% higher in July than the March-April average. The exception so far is Turkey, where exports in July fell slightly compared to June, although Turkish exports to Russia remain about 40% higher than the pre-invasion average.
The Types of Exports Matter
Not all exports are equally helpful to the Russian war effort. Access to fresh vegetables and luxury handbags do not make a difference on the battlefield even if they affect Muscovites’ quality of life (and could therefore have an indirect impact on popular support for the regime). For our purposes, what matters are Russia’s imports of electronics, machinery, and other high-tech components.