Russia, seeking sanctions relief, asks businesses which penalties hurt the most: Report

Russia is consulting domestic companies on which sanctions it should seek to have lifted ahead of negotiations with Washington, two Russian business sources told Reuters, with restrictions on cross-border payment flows identified as the most burdensome.

US Secretary of State Marco Rubio said Tuesday that it was now Russia’s turn to respond, after Washington agreed to resume sharing military aid and intelligence with Kyiv. Ukraine has said it would accept a US proposal for a 30-day ceasefire.

President Donald Trump has warned of harsher sanctions on Moscow if it fails to negotiate but has also suggested relief if it agrees to a ceasefire in Ukraine.

Reuters cited two Russian industry sources as saying that the Ministry of Industry and Trade has asked businesses to identify the sanctions most urgently in need of removal. One person said the ministry had distributed a form for companies to fill out, asking which restrictions had affected them most.

Dollar access and banking sanctions

The sources said restrictions on payments were the most pressing issue, though three also cited energy-related sanctions, particularly those affecting Russia’s oil tanker fleet.

Major Russian banks were cut off from the SWIFT global payments system shortly after Moscow launched its military operation in Ukraine in February 2022. Without access to dollar and euro markets, Russian firms have been forced to use alternative currencies and intermediaries in third countries.

“Everything has become much more expensive given transaction costs and settlements through third currencies,” one source said. “The most important, most painful issue is the restriction on dollar settlements.”

When asked which sanctions Russia wanted lifted, Kremlin spokesman Dmitry Peskov said Thursday (March 13) that Moscow considers all sanctions illegal and believes they should be removed.

Lifting those restrictions and banking-related sanctions would provide a significant boost to the Russian economy, three sources said, though one acknowledged such an outcome was unlikely in the near term.

Secondary sanctions and the Europe problem

A more likely outcome, two sources said, would be reduced enforcement of secondary sanctions targeting companies in third countries that facilitate Russian transactions.

Easing the enforcement of secondary sanctions could improve international acceptance of Russia’s Mir payment system, a domestic alternative to Visa and Mastercard.

However, much of the approximately $300 billion in Russian sovereign assets frozen by Western governments is held in Europe, where leaders have maintained a tougher stance against Moscow than Washington.

“The issue of European sanctions is going to be on the table, not to mention what happens with the frozen assets,” Rubio said Wednesday. “There’s going to have to be some decision made by the Europeans about what they’re going to do with these sanctions.”

Scepticism among Russian businesses

Despite the ongoing talks, some Russian executives remain skeptical that any relief will come.

German Gref, CEO of Russia’s largest lender, Sberbank, said his bank is operating under the assumption that sanctions, if anything, will be tightened.

Eduard Gudkov, deputy chairman of liquefied natural gas producer Novatek’s board, echoed that sentiment last month.

Renaissance Capital analyst Andrei Melashchenko noted that even if the US eases sanctions, Europe may not follow suit.

“Lifting of US sanctions would not automatically remove European sanctions or fully restore the payment infrastructure, meaning the recovery of commission-based income from cross-border operations would remain limited,” he said.

With inputs from Reuters