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Sanctions are ‘starting to bite’ in Russia, according to western officials, who say the tanking value of the rouble, food shortages similar to those seen during the Soviet-era and Vladimir Putin approaching the Chinese for assistance is proof that trade bans are having an ‘enormous’ impact on the Kremlin.
This week, Russian officials threatened to repay foreign currency debts in roubles rather than dollars if current sanctions imposed by western nations prevented banks from honouring debts in the currency they were issued.
The country’s finance ministry said it approved a temporary procedure on Monday, just days before a payment on its external debt was due. However, Eurobond repayments in roubles could be seen as the equivalent of a default – where a credit agreement has been broken – which Russia has accused the west of deliberately trying to organise.
Today, a western official said: ‘We are now beginning to see the evidence of sanctions really biting in Russia.
‘You would expect that – this is an enormously significant package of sanctions well in advance of any package that we have ever put on a major economy ever before.
‘It will be having an effect and it is having an effect, you can see that in the value of the ruble, you can see that in the announcements that they are aiming to pay their interest payments on government bonds in rubles. And you can see that in the mooted and reported approaches of the Russians to the Chinese for assistance.
‘I think we can expect to see the pressure mounting in Moscow continually as a result of that.’
However, Germany and Italy today revealed they are among nations trying to block more Russian sanctions in a bid to protect their own economies, despite pressure from Poland and the Baltic states that are right on Putin’s doorstep.
The Russian President yesterday claimed Western ‘attempts to have global dominance’ are coming to an end as he slammed sanctions imposed because the EU ‘doesn’t want a strong and sovereign Russia’.
But the bloc is now beginning to split into ‘three sides’ as Germany – with support from Italy, Hungary, Bulgaria and Greece – is accused of ‘openly putting the brakes on’ sanctions amid concern about the impact on its own economy.
Yesterday, shoppers were filmed battling in Russian supermarkets as sanctions began to hit vital supplies triggering a wave of panic-buying. One sugar rush was seen after a consignment was wheeled into the Perekryostok store in the north of Moscow.
There were also similar scenes in Ukraine at the start of the month, where queues outside supermarkets and at shop checkouts stretched for hours as Kyiv residents panic-bought essential groceries including bread during a temporary end of a curfew, as a 40-mile convoy of Russian tanks and other vehicles threatened the city.
At the same time, millions of Russians were seen standing in huge queues reminiscent of the bread and meat lines of the Soviet Union while the rouble plunged to its lowest-ever levels.
The Russian ruble has now lost nearly 50% of is value since the start of 2022, with the currency falling off a financial cliff after Putin declared the war in Ukraine.
Western officials said Vladimir Putin’s (left) reported approaches to China’s President Xi Jinping (right) show that sanctions are working
People were seen queuing at a ticket machine at a Moscow metro station after sanctions prevented passengers from using Apple Pay, Google Pay and Samsung Pay
Russians have been urged not to panic-buy and hoard but there is a lack of trust in official assurances that supplies will hold up in light of the Western sanctions over Vladimir Putin’s war in Ukraine.
There have also been recent reports of Russians filling fridges with McDonald’s while others have been selling burgers for £250 after the restaurant said it would close its 850 locations across Russia in response to the invasion.
And after Coca-Cola and Starbucks announced they were suspending operations in Russia amid a growing consumer backlash and threats of boycotts for failing to pull out of Ukraine, the Kremlin pushed a green, tarragon-flavoured fizzy drink called Tarkhun as an alternative to the rapidly disappearing Western favourites.
The move led to parallels being drawn to the Soviet-era, which ended around 30 years ago, when Russia was completely isolated from Western products.
Elsewhere, pro-sanction countries, led by Poland and the Baltic states, are pushing for further and stronger restrictions against Russia and key oligarchs.
An internal battle within the EU is now raging between the ‘Sanctionistas’, countries that are pro-sanctions, and the Contras – countries prioritising their own economies.
One EU diplomat told The Times: ‘It’s becoming clearer by the day that three sides are forming: Poland and the Baltic states, known as the Sanctionistas that want more and stronger sanctions; Germany, Italy, Hungary, Bulgaria — the Contras — that prioritise their own economic interests; and the rest.’
The EU issued a fourth round of sanctions on Tuesday, but Germany is understood to have subsequently used meetings with at least three other governments to discuss calling a halt to further measures.
Instead, the Contras has suggested the bloc focus on ‘closing loopholes’ as opposed to imposing any further sanctions.
At least four yachts and a private jet owned by sanctioned Russians or their families have escaped the grasp of European officials in recent weeks, a Daily Mail investigation can reveal
A man collects debris outside a damaged housing block after it was hit by debris from a downed rocket in Kyiv on Thursday
A residential building destroyed by shelling in the village of Krasylivka, in the Kyiv region of Ukraine
Poland, though, is furious that sanctions agreed earlier this week did not include metals oligarch Oleg Deripaska due to the potential impact it would have on aluminum production in Germany and other countries.
It comes days after a Russian attack on a military base just 12 miles from the Polish border in which at least nine people were killed and dozens more injured.
But the Contras moved to weaken a ban on new investment in joint energy ventures with Russian companies such as Gazprom and Rosneft.
Instead, a ‘winding down’ delay of six months was agreed.
Berlin has also secured exemptions on transactions that are said to be ‘strictly necessary’ to purchase, import and transport various metals including titanium, aluminium and copper.
The agreements, though, have been met with dismay among the Sanctionista countries on the border with Russia and Ukraine amid concerns over their proximity to the conflict.
It comes as the bombardment of Ukrainian cities contiues despite US officials estimating that at least 7,000 Russian soldiers have been killed in the fighting and a further 14,000 to 21,000 wounded in action.
Kyiv was struck by missiles in the early hours of Thursday, with wreckage of one shot down rocket striking a 16-storey apartment block and killing one person.
Mariupol, the heavily besieged city in the south of Ukraine, also continued to come under heavy fire as city officials estimated that at least 2,400 people have now been killed there – though mayoral adviser Petro Andriushchenko said the true toll could be as high as 20,000 once cut-off areas have been searched for victims.
Andriushchenko spoke even before a theatre in the city housing up to 1,200 civilians was struck and destroyed by Russian forces Wednesday evening – despite having signs that said ‘kids’ in Russian positioned outside it.
Ukrainian President Volodymyr Zelensky Receives applause before he addresses the German Bundestag via live video from the embattled city of Kyiv on Tuesday
A member of the Ukrainian military walks among debris in front of a residential building that was hit by an intercepted missile on Thursday
The Donetsk Regional Theatre of Drama in Mariupol is destroyed by an airstrike from Russian forces on Wednesday
Rescuers work at the site of a residential building damaged by an airstrike on Thursday
Aerial footage released by the Azov Battalion of the National Guard of Ukraine on Wednesday shows Russian army tanks are destroyed as they enter the besieged city of Mariupol
President Volodymyr Zelensky called the attack ‘heartbreaking’, while Joe Biden branded Putin a ‘war criminal.’
Casualties from the attack are unclear, but City officials said this morning that evacuations are now underway, and that a bomb shelter at the theatre survived the strike. It is unclear how many people were inside at the time.
Despite the mounting death toll, peace talks between the two sides are continuing with concrete proposals for a ceasefire being discussed.
Russian negotiators yesterday briefed journalists on their 15-point plan for peace, which would see Ukraine declare neutrality and place limits on its armed forces in return for Russian withdrawal.
Ukraine’s chief negotiator Mikhailo Podolyak would not be drawn on the plan, saying only that the two sides had discussed it and it did not take Kyiv’s negotiating position into account.
The proposal makes no mention of Crimea and Donbass – Ukrainian territory occupied by Russia and its proxies before the invasion – with President Zelensky later reiterating that his country’s territorial integrity is not up for negotiation.
Source: Daily Mail