Despite the invasion, Gazprom has increased gas transit to the EU, which may indicate a desire to maintain existing business relations with member states. During the first five days following the invasion, the transit of Russian gas through Ukraine more than doubled (from around 55 million m3/d to 117 million m3/d). The use of the Yamal gas pipeline has increased, too. On average, it transported 4.2 million m3/d more of Russian gas to Poland than in February (an increase of 52%, to 13% of the pipeline's transmission capacity). Of this, approximately 2.4 million m3/d was sent to Germany (3% of the Mallnow interconnection point’s capacity). In total, the transit of Russian gas to the EU increased by more than 20% during this period (from 529 million m3/d to 640 million m3/d).
The Western sanctions will lead to a drop of around 15-20% in Russia’s GDP in 2022, the Polish Economic Institute’s economists forecast. As a result, Russia will not only be poorer than all the EU countries, but also poorer than certain countries in South America, such as Uruguay. Even before it invaded Ukraine, Russia had not been a rich country in relative terms: its GDP was just 51% of Germany’s, between Chile and Greece. Moscow stood out from the rest of the country – and will continue to do so. Earlier, its wealth was comparable to that of the Czech Republic; after the sanctions, it will be at the level of Latvia.
Everything suggests that EU leaders will decide to expel Russia from the SWIFT system. However, this will not bring long-term results; it will merely disrupt the banking system’s operation for a few days. Only freezing Russian oligarchs’ assets and banning transactions in euros for Russian banks will have an impact on the Russian economy. These steps should cover Belarus, too.
Sanctions imposed since the Russian invasion will not disrupt the Russian economy. For example, the sanctions imposed on the financial sector will exclude payments for energy materials. The Polish Economic Institute estimates that the impact of those sanctions could be limited to just 0.7% or so of Russian GDP. No firm decision has been made on expelling Russia from the SWIFT system, although it could happen in the coming days. In 2018, Iran’s exclusion from the SWIFT system blocked one-third of Iranian exports. Sanctions on energy sector would be the most painful, as 36% of Russia’s budget revenue comes from oil and gas exports.
Earlier today the European Commission has presented a plan of legislative proposals on new reduction targets along with a proposal to revise and extend the current EU ETS system to the building and transport sector.