Zelenskyy outlines when sanctions will hit Russian economy hardest
President Volodymyr Zelenskyy has stated that Russia will begin to feel the full economic impact of existing sanctions in June 2026, by which time Ukraine also expects a significant deficit in the Russian state budget.
Source: Interfax-Ukraine
Quote: "June 2026 – we all hope the war will be over by then. But at the same time, we understand that the economic effect of the sanctions on the Russians will be felt. From those already imposed. We believe that starting around summer 2026, their economy will feel this strongly."
Details: Zelenskyy noted that Ukraine anticipates a budget deficit for Russia, which may not seem catastrophic due to the shadow nature of much of Russia's economy. However, he added that it is difficult to fully assess what remains hidden and how much Russia has in reserve.
Quote: "We can see that their reserves will not grow next year – they will shrink. And they will continue to shrink. The economy will completely change – they will be spending everything on the war."
More details: The president also pointed to the growing threat of Russia's military-industrial complex, which relies on components from China, Taiwan, the US and some European companies. Zelenskyy emphasised that around 30 key Russian defence industry companies have contracts with firms in these countries – a situation that could be addressed through stronger sanctions.
Background:
Earlier reports stated that Russia's coal industry has plunged into a deep crisis following the EU's embargo on fuel supplies and a drop in global prices. The sector is not expected to recover within the next five years. By 2030, seaborne coal exports, which account for over 80% of Russia's coal export volume, will decrease by 10% compared to 2024 levels, reaching 150 million tonnes.
It was also reported that the European Union is considering disconnecting more than 20 Russian banks from the international SWIFT payment system, lowering the price cap on Russian oil and banning the Nord Stream gas pipelines as part of a new sanctions package.
In the first quarter of 2025, Sovcomflot, Russia's largest shipping operator, posted a net loss of US$393 million. The company attributed the financial downturn to Western sanctions, which have made fleet management more difficult, led to vessel downtime and caused a significant drop in revenue.
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