EU ministers assert Russia lies about its economy's strength and call for tightening sanctions

The finance ministers of eight EU countries believe Russia is lying about its economic strength and that Western sanctions are effective and should be reinforced.

As reported by The Guardian, the finance ministers of eight EU countries emphasise that the Russian economy is increasingly centred on the military industry, which is aided by large fiscal stimulus. This source of growth is limited: low unemployment puts pressure on the labour market, while a weak rouble raises import prices.

The op-ed also reveals additional symptoms of Russia's economic instability, such as a prohibition on petrol and sugar exports, a halving of the National Welfare Fund and billions of dollars being withdrawn from the nation despite capital movement restrictions.

"What could be perceived and mistaken as a ‘boost’ to Russian growth is, in fact, the beginning of a re-Sovietisation of the economy," the finance ministers state. They forecast economic overheating, private-sector stagnation, rising inflation and the depletion of foreign exchange reserves.

The ministers also emphasise that Western sanctions actually have an impact: "they reshaped the geography of Russia’s foreign trade and limited its access to high-priority battlefield items." Nevertheless, "further steps are needed, however, to constrain Russia and support Ukraine," the op-ed says.

Ministers, in particular, ask for more decisive action to use Russia's frozen assets and tighter sanctions "in strategically important sectors like energy, finance and technology," as well as increased efficiency and prevention of evasion of these limitations.

"In particular, the Russian crude oil price cap must be better enforced as we are still seeing trade above the cap at $60 a barrel. It is also essential to implement mirroring sanctions on Belarus and put more pressure on other major enablers of sanction circumvention in east Asia and the Middle East," they suggest.

The article was signed by the Ministers of Finance and Economics of Sweden (Elisabeth Svantesson), Denmark (Stephanie Lose), Estonia (Mart Võrklaev), Finland (Riikka Purra), Latvia (Arvils Ašeradens), Lithuania (Gintarė Skaistė), the Netherlands (Eelco Heinen) and Poland (Andrzej Domański).

A month before the ministers’ op-ed was published, the Council of the European Union adopted the 14th package of economic and individual sanctions against Russia. This package included measures targeting Russian gas for the first time since Russia's full-scale invasion of Ukraine.