Russia is currently engaging with domestic businesses to determine which sanctions it should prioritize for removal in advance of discussions with Washington, as reported by two Russian business sources to Reuters. The restrictions on cross-border payment transactions have been highlighted as particularly onerous.
On Tuesday, U.S. Secretary of State Marco Rubio stated that it is now Russia’s responsibility to respond, following Washington’s decision to resume military aid and intelligence sharing with Kyiv. Ukraine has expressed its willingness to accept a U.S. proposal for a 30-day ceasefire.
President Donald Trump has indicated that more severe sanctions could be imposed on Moscow if it does not engage in negotiations, while also suggesting that sanctions relief could be possible if Russia agrees to a ceasefire in Ukraine.
According to Reuters, two sources from the Russian industry revealed that the Ministry of Industry and Trade has solicited input from businesses regarding which sanctions are most urgently in need of removal. One source mentioned that the ministry had circulated a questionnaire for companies to indicate which restrictions have had the most significant impact on their operations.
The sources indicated that payment restrictions are the most critical concern, although three also pointed to energy-related sanctions, particularly those impacting Russia’s oil tanker fleet.
Following the initiation of its military operation in Ukraine in February 2022, major Russian banks were excluded from the SWIFT global payments network. This exclusion has compelled Russian companies to rely on alternative currencies and intermediaries in third-party nations due to their lack of access to dollar and euro markets.
“Transaction costs and settlements through third currencies have made everything significantly more expensive,” one source remarked. “The most pressing and painful issue is the limitation on dollar transactions.”
When asked about which sanctions Russia seeks to have lifted, Kremlin spokesman Dmitry Peskov stated on Thursday (March 13) that Moscow views all sanctions as illegal and believes they should be abolished.
Removing these restrictions, along with banking-related sanctions, would greatly benefit the Russian economy, according to three sources, although one acknowledged that such relief would be contingent on various factors.
Secondary Sanctions and the European Dilemma
According to two sources, a more probable scenario involves a decrease in the enforcement of secondary sanctions aimed at companies in third countries that facilitate transactions with Russia.
Relaxing the enforcement of these secondary sanctions could enhance the global acceptance of Russia’s Mir payment system, which serves as a domestic alternative to Visa and Mastercard.
However, a significant portion of the approximately $300 billion in Russian sovereign assets that have been frozen by Western governments is located in Europe, where leaders have adopted a more stringent approach towards Moscow compared to Washington.
“The topic of European sanctions will be under discussion, particularly regarding the frozen assets,” Rubio stated on Wednesday. “Europeans will need to make a decision regarding their stance on these sanctions.”
Skepticism Among Russian Business Leaders
In spite of ongoing negotiations, some Russian business leaders express doubt about the likelihood of any sanctions relief.
German Gref, the CEO of Sberbank, Russia’s largest bank, indicated that his institution operates under the belief that sanctions are likely to become more stringent. Eduard Gudkov, the deputy chairman of the board at liquefied natural gas producer Novatek, shared a similar perspective last month.
Andrei Melashchenko, an analyst at Renaissance Capital, pointed out that even if the United States were to ease its sanctions, Europe might not necessarily follow suit.
“The removal of US sanctions would not automatically lead to the lifting of European sanctions or the complete restoration of the payment infrastructure, which means that the recovery of commission-based income from cross-border operations would still be constrained,” he explained.
