Sanctions against Russia have changed what Europe imports, but it’s still worth billions to Putin
Did you know there’s a critical product – one without which we’d all be dead – which Europe is actually importing more of from Russia now than before the invasion of Ukraine?
It might feel a bit pointless, given how much chat there is right now about the end of the Ukraine war, to spend a moment talking about economic sanctions and how much of a difference they actually made to the course of the war.
After all, financial markets are already beginning to price in the possibility of a peace deal between Russia and Ukraine. Wholesale gas prices – the ones which change every day in financial markets as opposed to the ones you pay at home – have fallen quite sharply in the past couple of weeks. European month-ahead gas prices are down 22% in the past fortnight alone. And – a rare piece of good news – if that persists it should eventually feed into utility bills, which are due to rise in April, mostly because they reflect where prices used to be, as opposed to where they are now.
But it’s nonetheless worth pondering sanctions, if for no other reason than they have almost certainly influenced the course of the war. When it broke out, we were told that economic sanctions would undermine Russia‘s economy, making it far harder for Vladimir Putin to wage war. We were told that Russia would suffer on at least four fronts – it would no longer be able to buy European goods, it would no longer be able to sell its products in Europe, it would face the seizure of its foreign assets and its leading figures would face penalties too.
The problem, however, is that there has been an enormous gap between the promise and the delivery on sanctions. European goods still flow in large quantities to Russia, only via the backdoor, through Caucasus and Central Asian states instead of directly. Russian oil still flows out around the world, though sanctions have arguably reduced prices somewhat.
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Luxury cars still getting to Russia
The upshot is Russia has still been able to depend on billions of euros of revenue from Europe, with which it has been able to spend billions of euros on components sourced, indirectly, from Europe. Its ability to wage war does not seem to have been curtailed half as much as was promised back in 2022. That in turn has undoubtedly had an impact on Russia’s success on the battlefield. The eventual peace deal is, at least to some extent, a consequence of these leaky sanctions, and of Europe’s reluctance to wage economic war, as opposed to just talking about it.
A stark example is to be found when you dig deeper into what’s actually happened here. On the face of it, one area of success for sanctions is to be seen in Europe’s gas imports. Back before the conflict, around half of all the EU’s imported gas came from Russia. Today that’s down to around 20%.
But now consider what that gas was typically used for. Much of it was used to heat peoples’ homes – and with less of it around, prices have gone sharply higher – as we are all experiencing. But the second biggest chunk of usage was in the industrial sector, where it was used to fire up factories and as a feedstock for the chemicals industry. And that brings us back to the mystery product Europe is now importing more of than before the invasion.
One of the main chemicals produced from gas is ammonia, a nitrogen-based chemical mostly used in fertilisers. Ammonia is incredibly important – without it, we wouldn’t be able to feed around half of the population. And since gas prices rose sharply, Europe has struggled to produce ammonia domestically, turning off its plants and relying instead on imports.
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Which raises a question: where have most of those imports come from? Well, in the UK, which has imposed a clear ban on Russian chemical imports, they have come mostly from the US. But in Europe, they are mostly coming from Russia. Indeed, according to our analysis of European trade data, flows of nitrogen fertilisers from Russia have actually increased since the invasion of Ukraine. More specifically, in the two-year pre-pandemic period from 2018 to 2019, Europe imported 4.6 million tonnes, while the amount imported from Russia in 2023-24 was 4.9 million tonnes.
It raises a deeper concern: instead of weaning itself off Russian imports, did Europe end up shifting its dependence from one category of import (gas) to another (fertiliser)? The short answer, having looked at the trade data, is a pretty clear yes.
Something to bear in mind, next time you hear a European leader lecturing others around the world about their relations with Russia.
Donald Trump has said that his 28-point peace plan for Ukraine is “by far” not the “final offer”, ahead of crisis talks in Geneva.
Meeting on the sidelines of a G20 summit in South Africa, European and other Western leaders scrambled to respond to the US president’s demand for Ukraine to accept the plan drawn up by the Trump administration and the Kremlin.
In a joint statement on Saturday, they said the plan announced on Friday could serve as a basis for talks to end Russia’s war in Ukraine but required “additional work”.
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How Ukraine peace plan came about
Follow the latest on the Ukraine peace plan
As a result, a meeting has been hastily convened in Geneva, Switzerland, on Sunday, where national security advisers from the E3 – France, Britain and Germany – will meet EU, US and Ukrainian officials for further discussions.
Ahead of the talks, Volodymyr Zelenskyy said in a video address to his nation that Ukrainian representatives at the talks “know how to protect Ukrainian national interests and exactly what is needed to prevent Russia from carrying out” another invasion.
“Real peace is always based on security and justice,” the Ukrainian leader added.
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PM: ‘More to do’ on US Ukraine peace plan
The 28-point peace plan closely resembles the list of demands repeatedly stated by the Kremlin since it launched its full-scale invasion of Ukraine nearly four years ago and if adopted, would see Ukraine cede territory to Russia – and cut the size of its military.
Mr Trump has said he wants a response from Ukraine by Thursday, while suggesting an extension could be possible.
On Saturday, Mr Trump told reporters outside the White House that the plan was not the “final offer” when asked.
He said: “We’d like to get the peace, it should’ve happened a long time ago. The Ukraine war with Russia should’ve never happened. If I was president, it would have never happened. We’re trying to get it ended. One way or another, we have to get it ended.”
His secretary of state Marco Rubio insisted that the peace proposal was authored by the US, despite what a handful of senators have alleged.
“It is based on input from the Russian side. But it is also based on previous and ongoing input from Ukraine,” he said.
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The 28-point peace plan explained
Leaders have sought to balance praise for President Trump’s attempt to end the war with recognition that some terms in his proposal are unpalatable for Kyiv.
“There are many things that cannot simply be an American proposal, which requires broader consultation,” French
President Emmanuel Macron said on the sidelines of the G20, adding that an agreement had to allow for peace for Ukrainians and “security for all Europeans”.
German Chancellor Friedrich Merz underlined the importance to Europe of supporting Ukraine.
“If Ukraine loses this war and possibly collapses, it will have an impact on European politics as a whole, on the entire European continent. And that is why we are so committed to this issue,” he said.
“There is currently an opportunity to end this war, but we are still quite a long way from a good outcome for everyone.”
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Keir Starmer calls for growth plan at G20
Prime Minister Sir Keir Starmer told reporters in Johannesburg: “We are concerned about [caps on military], because it’s fundamental that Ukraine has to be able to defend itself if there’s a ceasefire.”
He said the proposal “requires additional work”, adding: “And that’s why there’s been the agreement that in Geneva tomorrow [Sunday], you’ll have senior US personnel, you’ll have European NSAs [national security advisers], including the UK NSA, and obviously Ukrainians there to work further on the draft.”
Sir Keir also spoke to Mr Trump, relaying discussions held at G20 to the US leader, according to a Downing Street spokesperson, who added that the two leaders would speak again on Sunday.
Meanwhile, Sir Keir, who has defended his decision to fly to the G20 days before a difficult budget, said the role of the G20 is “critical at this moment”.
“The G20 has worked together before to fix fundamental problems in the global economy. We need to find ways to play a constructive role again today in the face of the world challenges,” he said.
“I’d like to see us come together around a five-point plan for growth that leaves no one behind.”
Sir Keir Starmer, Emmanuel Macron and Friedrich Merz at the G20 summit. Pic: PA
The US, however, is boycotting the talks.
The Trump administration made its opposition to South Africa’s G20 agenda clear earlier this year when the country started holding meetings ahead of the summit. South Africa gets to set the agenda as the country holding the rotating G20 presidency.
G20 leaders broke with tradition and adopted a declaration at the start of their summit – despite opposition from the US.
Vincent Magwenya, spokesman for South African president Cyril Ramaphosa, said a leaders’ declaration was adopted unanimously in Johannesburg.
The White House later accused South Africa of refusing to facilitate a smooth transition of the G20 presidency.
Pic: AP
Read more:
Analysis: Europe scrambles at G20 over Ukraine peace plane
G20 lands in South Africa: But who feels forgotten?
The G20 bloc was formed in 1999 as a bridge between rich and poor nations to confront global financial crises.
While it often operates in the shadow of the powerful Group of Seven nations, G20 members represent around 85% of the world’s economy, 75% of international trade and more than half the global population.
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