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"Russia Is Good at Cheating"
- Feb 22, 2023 4:14 pm GMT
In an interview, Vladyslav Vlasyuk, sanctions adviser to the Ukrainian government, accuses Russia of fudging economic statistics and calls on the West to drastically lower the oil price cap.
DER SPIEGEL: INTERVIEW CONDUCTED BY MARKUS BECKER
DER SPIEGEL: Mr. Vlasiuk, are the West’s sanctions against Russia having a significant impact at all?
Vlasiuk: Of course they do.
DER SPIEGEL: The International Monetary Fund (IMF) seems to differ: According to a recent report, Russia’s economy will grow by 0.3 percent this year and by 2.1 percent in 2024. And on Monday, Russia’s statistics authority said that in 2022, the country’s economy has contracted by only 2.1 percent, far less than experts had expected.
Vladyslav Vlasiuk, born in February 1989, is an expert on international sanctions. In April 2022, he became an adviser to Andriy Yermak, head of the Office of the President of Ukraine. A lawyer by training, Vlasiuk is also a secretary of the Yermak-McFaul Group of international experts working on sanctions against Russia and Belarus.
Vlasiuk: Never believe a word of what Russian authorities are saying. They stopped publishing many statistics that were published before – for good reasons. Russia is struggling to get hold of fresh money and is running a record-high deficit. Lots of Russia’s assets are frozen, less and less technology is available. The European Union's ban on Russian oil products alone has cost the Russian economy a market of 30 to 40 billion euros. At the end of 2022, Russia was forced to impose an additional 600 billion rubles in new taxes on the biggest companies, including Gazprom. Russia now spends 20 percent less on drugs for hospitals. Expenditures for road construction were cut in half. They are losing whole industries – their car industry, for example. So, it would be absurd to assume that the sanctions don't have a significant impact. They do, only Russia is trying to hide it, by lying with their statistics.
DER SPIEGEL: Do you have an example of that?
Vlasiuk: Only this week, Russia introduced a bill which basically prescribes that they count taxes collected on oil exports based not on the real price, but on some theoretical price. It consists of the price for a barrel of Brent (crude), which is much more expensive than Urals, the Russian reference oil brand, minus some discount. This shows one thing: Russia is good at cheating.
DER SPIEGEL: Still, Russia is firing thousands of artillery shells per day and seems to be able to keep up production, whereas the West is struggling to resupply Ukraine with ammunition.
Vlasiuk: The sanctions’ direct impact on Russia’s military production is hard to gauge. We have some reports that there is such an impact. In the coming weeks, we will have a report ready with more definitive numbers.
DER SPIEGEL: The IMF also suggests that the price cap the G-7 and the EU have placed on Russian oil – $60 a barrel – is not enough to significantly curtail Russian revenues. How low would the cap have to be for that?
Vlasiuk: According to the International Working Group on Russia Sanctions, the price ceiling should be $30 to $35. From our point of view, this makes sense. At present, the potential of this instrument is not yet fully exploited.
"Now is the moment to discuss a lowering of the oil price cap."
DER SPIEGEL: The EU and the G-7 only managed to agree on a threshold of $60 after much wrangling, for fear of turbulence on the global markets. How realistic is it that they would lower the threshold to $30?
Vlasiuk: Of course, we understand why the West is wary of any risky moves. But now is the moment to discuss a lowering of the oil price cap. Perhaps not immediately to $30, but over time, that level should be reached. After all, the production cost for Russian oil is only $20 or even less.
DER SPIEGEL: A major part of the 10th sanctions package being discussed by the EU is to close loopholes in ways that make it more difficult to circumvent sanctions. Has the EU been too lax in this respect?
Vlasiuk: You cannot block any kind of exports to a country like Russia, especially exports by non-EU countries. But there are tools the EU has to stop goods from reaching Russia if it can be proven that sanctions are being violated. The EU could make more consistent use of these tools.
DER SPIEGEL: Secondary sanctions against countries who help Russia circumvent sanctions could be among those tools. Should they be used?
Vlasiuk: Ukraine is interested in effective sanctions. To ensure that, secondary sanctions are certainly an option.
DER SPIEGEL: Which countries would be likely targets?
Vlasiuk: Georgia is helping Russia to circumvent some sanctions; the same is true of Kazakhstan, Turkey and, of course, of China. Hitting them with sanctions would be very difficult for legal reasons and reasons of trade policy. But it is true that these countries could do more themselves in curtailing their help to Russia
"Diamonds and nuclear fuels would be very easy to sanction."
DER SPIEGEL: There is also disagreement among EU countries about whether to sanction certain products – like diamonds imported by Belgium or nuclear fuels, which are especially important for France's nuclear power plants. Is the EU still too soft on Russia?
Vlasiuk: From a Ukrainian viewpoint, diamonds and nuclear fuels would be very easy to sanction. Of course, some issues are difficult for some countries. But we hope that in the next packages, the European Council will agree on sanctions against companies like Russia’s nuclear agency Rosatom and diamond producer Alrosa.
DER SPIEGEL: So far, France has been strictly against curtailing civil nuclear imports. It is hard to imagine why Paris would just give in.
Vlasiuk: Perhaps. But one year ago, nobody could imagine that the EU would ban Russian energy imports almost completely, either. Now, it is doing exactly that.
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