Moscow prepares for talks as Kremlin asks businesses about toughest sanctions – Reuters

Ahead of talks with Washington, Russian officials have approached businesses to identify which sanctions they should seek to lift. Two Russian entrepreneurs told Reuters that restrictions complicating international financial transactions remain the most damaging.

According to two industry sources, Russia's Ministry of Industry and Trade has asked companies to provide a list of priority sanctions for removal.

One source said businesses received a questionnaire asking them to specify which restrictions had caused the most harm and which sanctions were the most sensitive.

Reuters interviewed 12 people in its investigation, including employees of major exporters, consultants, lawyers, economists, and advisers. Most respondents requested anonymity to speak freely.

The most significant issue, according to those interviewed, is payment restrictions. Three sources also pointed to sanctions on the energy sector, particularly those affecting Russia's oil tanker fleet.

"Everything has become much more expensive given transaction costs and settlements through third currencies. So the most important, most dangerous, most painful is the restriction on settlements in dollars," one source said.

Since Russia invaded Ukraine in 2022, major Russian banks have been cut off from the global SWIFT payment system. As a result, companies must rely on complex payment schemes through third countries and alternative currencies.

Three sources said lifting these restrictions would give Russian businesses a significant boost. However, one cautioned against expecting such a favorable outcome anytime soon.

Andrei Melashchenko, an analyst at Renaissance Capital, noted that even if the US eases sanctions, it would not automatically lead to the removal of European restrictions or the full restoration of financial infrastructure.

Two other sources suggested that a more likely scenario would be the easing of secondary sanctions, which currently penalize third-country companies for doing business with Russia.

Fearing secondary sanctions, most Chinese banks are reluctant to take risks, causing payment issues and forcing businesses to use complex intermediary schemes.

Another source noted that Russian businesses "really howled" when China tightened payment controls in August last year, leaving billions of dollars frozen while awaiting payment for already delivered goods.

One source emphasized that another major problem for Russia is the shortage of ice-class tankers, which complicates oil deliveries under sanctions.

Another source pointed out that sanctions imposed by Joe Biden's administration targeting Russia's shadow fleet, major oil companies, and trading networks selling Russian oil have severely impacted the industry.

However, not everyone expects sanctions relief.

German Gref, CEO of Russia's largest lender Sberbank, said that his bank operates under the assumption that sanctions will only intensify. Eduard Gudkov, deputy chairman of the board at liquefied natural gas (LNG) producer Novatek, said last month: "One should not think that as geopolitical tensions ease, it will somehow ease our situation."