Analysis of the News “Sanctions can’t do anything to them”

August 2022

As part of the Regional Initiative in Combating Disinformation “Western Balkans Anti-Disinformation Hub: Exposing Malign Influences through Watchdog Journalism”, we present you a new analysis of fake news and disinformation narratives.

Sanctions can’t do anything to them: Russia’s production sector remained stable in July, the level of new domestic orders is growing rapidly

The online edition of the daily newspaper Večernje Novosti published an article with a dominantly pro-Russian narrative, using unnamed and exclusively Russian sources about Russia’s economic conditions after the European Union sanctioned the country due to its aggression against Ukraine. Večernje Novosti write that Western sanctions can’t do anything to Russians, because Russian companies “managed to replace lost foreign business with domestic clients, where the level of domestic orders increased at the fastest pace in the last three years.”

“July is the third consecutive month with a positive indicator of the situation in Russia’s manufacturing sector, although that sector has been severely affected by Western sanctions against Moscow due to the special operation in Ukraine,” write Novosti. In addition, they also state that production prices have decreased at the highest rate since 2009.

Although many economic data indicate that the collapse of the Russian economy is much smaller than expected when the most comprehensive Western sanctions against Russia were adopted, which in total, for example, are greater than the existing sanctions against Iran, Syria and North Korea together, the text only mentions the production activity.

However, Western sanctions, although they cover a wide range of products and services, are focused mainly on banning the export of high-tech equipment, industrial machines and components, as well as preventing “third countries from selling Western products to Russia.” In addition, pull out of most Western companies from Russia and the disabling of the SWIFT international payment system significantly complicated business operations for Russian companies.

The International Monetary Fund’s latest report on the world economy raised its estimate of Russia’s GDP for this year by 2.5%, although the economy is expected to contract by 6%. As the IMF said, the recession in Russia during this year is quite large, but the decline as expected did not happen because the Russian policymakers and the Russian Central Bank managed to prevent a banking panic or financial collapse in the first wave of sanctions.

On the other hand, a study by Yale University from mid-July 2022 showed that the Russian economy was “catastrophically damaged”, both by Western sanctions and by the mass exodus of international companies that did business in Russia until the start of the war in Ukraine.

“Russia has lost companies that represent about 40% of the country’s GDP, reversing almost all of the valuable foreign investment of the past three decades,” Yale said. They add that despite “Putin’s delusions of self-sufficiency and import substitution,” Russian domestic production has ground to a halt without the capacity to replace lost businesses, products, and people.

The text of Večernje novosti, like other pro-Russian and pro-government media in Serbia, has been publishing news since the beginning of the Russian invasion of Ukraine in which, without concrete economic indicators, it is analyzed that Western sanctions can do nothing for the Russians. Although it is evident that the effectiveness of the sanctions is less than expected, concrete data from relevant international institutions, such as the IMF, show the decline of the Russian economy. Parallel to the publication of texts that talk about Russia’s great economic power, despite the sanctions, one can find daily texts in which Western countries are presented as if they are failing economically due to inflation.

Author: Sofija Popović