Ukraine war: Sanctions have 'practically broken' Russia's logistics

Senior Kremlin official admits Western sanctions ARE taking their toll on Russia as he says measures have ‘practically broken’ all trade routes in and out of the country

  • Minister of Transport Vitaly Savelyev made the comments to reporters Saturday
  • He said Russia was being forced to find alternative routes to continue trade
  • Western sanctions have all but closed Russia’s traditional trade routes to Asia
  • Instead, Savelyev said Russia is considering using the North-South trade route 

A top Kremlin official has admitted that Western sanctions are taking their toll on Russia, after they were imposed over Vladimir Putin’s invasion of Ukraine.

Minister of Transport Vitaly Savelyev conceded that crushing measures had ‘practically broken’ Russia’s logistics, according to the Interfax news agency.

He said Western sanctions are forcing Moscow to look for ‘new logistics corridors’, such as the International North-South transport corridor – which runs between India, Iran, Afghanistan, Azerbaijan, Russia, Central Asia and Europe.

‘Those sanctions that were imposed today on the Russian Federation have practically broken all the logistics in our country,’ Savelyev said on Saturday, adding: ‘We are forced to look for new logistics corridors.’

Before President Vladimir Putin launched his invasion of Ukraine on February 24, Russian shipping trade bound for Asia would typically go through the Suez Canal.

This meant its trade routes took its ships through the Baltic, North and Mediterranean seas – or through the Black Sea and Bosphorus (the Istanbul Strait) – before passing through the canal into the Red Sea any beyond.

However, Western sanctions banning trade with Russia and Russian companies have essentially closed the Standard Route to Moscow’s vessels, with Savelyev saying they are looking for alternatives.

Minister of Transport Vitaly Savelyev conceded on Satruday that crushing measures had ‘practically broken’ Russia’s logistics, according to the Interfax news agency. Pictured: Saveliev attends a military parade on Victory Day, which marks the 77th anniversary of the victory over Nazi Germany in World War Two, in Red Square in central Moscow, May 9

The Kremlin official said there are three key Russian ports on the Caspian sea that could be involved in the North-South route that is being considered – the Olya port, the Astrakhan port and the Makhachkala port – according to Interfax.

However, he implied these ports do not have the capacity to cope with the level of trade Russian previously enjoyed using other routes.

‘Due to the fact that we are considering this direction, of course, these are not only ports, but also approaches to ports, bridges and roads, we should not have bottlenecks that would not allow us to reorganise,’ he told reporters.

There would be other issues Russia would have to contend with when it comes to the North-South route as well – namely crossing Iran. 

Goods would have to be unloaded in the north of Iran, transported south across the country, and then re-loaded onto another ship in the southern port of Bandar Abbas before continuing to India.

Russia has also explored sending goods on land through Kremlin-friendly Azerbaijan and into Iran, as an alternative to sending them across the Caspian Sea.

Russia’s trade with Asia is now more vital than ever for its economy. In 2021, Russia exported more than 42 percent of its goods by value to Asia – compared to 49 percent to European markets – according to Russia Briefing.

As a result of Western sanctions, the balance has shifted, and Russia is relying heavily on its relationships with the likes of India and China to support its economy. 

Savelyev’s comments mark a rare acknowledgement of the detrimental impact Western sanctions are having on Russia, which has grown increasingly isolated.

In an attempt to break Western resolve, the Kremlin has retaliated with sanctions of its own, last month cutting off its gas supplies to countries including Poland, Bulgaria and – on Saturday – Finland.

But this has not been enough to see any sanctions lifted, with Western countries standing firm in their commitment to support Ukraine, limit funding available to Moscow’s armies, and punish Putin for his brutal invasion on a sovereign nation.

Finland said it was prepared for the cutoff of Russian gas flows. It applied together with its Nordic neighbour Sweden on Wednesday to join the NATO military alliance, although that is facing resistance from NATO member Turkey. 

Bulgaria and Poland both also said they had planned for the cut off, and were reducing their dependence on Russian gas.

Pictured: Containers in the Black Sea Port of Constanta on May 11, 2022 in Constanta, Romania

In Russian, meanwhile, sanctions have meant Western companies have left the country in their droves and hundreds of Russian Oligarchs with ties to Putin and the Kremlin have had their assets frozen or seized.

While the Rouble has recovered in recent weeks after initially falling to incredible lows, it has required state intervention – which some analysts have said is unsustainable – and for Moscow to attempt to force Western nations to pay for their Russian gas in the currency.

In another frank admission from a Russian official last month, head of the Central Bank of Russia (CBR) Elvira Nabiullina said she had to do everything in her power to stop a huge run on the banking system.

‘The sanctions imposed against Russia affected the situation in the financial sector, spurred the demand for foreign currencies, and caused fire sales of financial assets, a cash outflow from banks, and surging demand for goods,’ she said in April.

Russia is not the only country to have suffered logistical issues since the invasion began, however.

Dozens of container ships are blocked in Ukrainian ports that are surrounded by Russian forces, choking off exports of wheat, sunflower oil and other foodstuffs, as well as fertiliser for crops.

Fears over global food shortages as the war grinds on is spurring calls for a safe corridor for ships to exit the Black Sea, but the logistics are daunting and would need Russian cooperation. 

That has already sent prices rising and the United Nations warns that millions of people are at risk of malnutrition or even famine.

The fears are spurring calls for a safe corridor for ships to exit the Black Sea, but the logistics are daunting and would need Russian cooperation. 

Before President Vladimir Putin launched his invasion of Ukraine on February 24, Russian shipping trade bound for Asia would typically go through the Suez Canal. Now, Russia is having to find alternative routes due to Western sanctions. Pictured: Panama-flagged MV ‘Ever Given’ container ship sailing near a felucca along Egypt’s Suez Canal in 2021 (file photo)

‘Stop blocking the ports in the Black Sea. Allow for the free flow of ships and trains and trucks carrying food out of Ukraine,’ US Secretary of State Antony Blinken told a UN Security Council meeting on Thursday.

‘About 400 million people throughout the world depend on grain supplies from Ukraine,’ Serhii Dvornyk, a member of Ukraine’s mission to the UN, told the meeting.

‘We demand that Russia stop illicit grain stealing, unblock Ukrainian seaports, restore freedom of navigation and allow trade ships to pass,’ he said.

Russia denies the claims, yet such assurances are not about to be tested by shipping firms hoping to get vessels to and from Ukraine.

A Western diplomatic source told AFP news agency around 20 million tonnes of grain are currently blocked in Ukraine and trying to send out such quantities by truck or rail is not feasible.

‘In concertation with the UN, we are working to create a safe conduct for Ukrainian boats transporting grain,’ Turkish Foreign Minister Mevlut Cavusoglu said in New York on Wednesday.

Turkey is trying to act as a mediator with Russian President Vladimir Putin but Francois Heisbourg of the Paris-based Foundation for Strategic Research said broader support was needed for a UN resolution that would force Moscow to accept a naval corridor.

‘The ones who should be pressing on the food blockade issue are the big importers in Asia (eg Indonesia), MENA (eg Egypt) and West Africa,’ he wrote on Thursday on Twitter, referring to the Middle East and North Africa.

James Stavridis, the US Navy admiral who was NATO’s Supreme Allied Commander in Europe from 2009 to 2013, said the solution could be escorted convoys as during Operation Earnest Will, which protected Gulf oil tankers during the Iran-Iraq war in the 1980s.

But in a strategic review published by Bloomberg this month, he acknowledged that Putin might insist on trying ‘to sever the Ukrainian economy from global markets.’

‘We’d need to have an agreement,’ the Western diplomat said.

Even with an accord, protecting ships in the corridor from the mines placed by both Russian and Ukrainian forces could prove difficult and time-consuming.

‘Currently there is very little maritime traffic in the Black Sea, in part because mines have been found,’ said Captain Eric Lavault, spokesman for the French Navy.

‘We don’t know the mine maps… It’s not clear what’s been done in Odessa so we’d have to send in an anti-mine force,’ he said.

‘That could take days or even weeks. It’s like building a road, so that boats can get past each other, and zones for parking, and you have to clear all of them.’

That would also require air and naval support since they would be operating in a war zone, regardless of whether or not they had a UN mandate.

And it remains uncertain if Ukraine would accept removing its mines from Odessa and other ports, even if Russian forces agreed to remove theirs.

‘If any passage is arranged, it can then be used by the aggressive side,’ said Deniz Kutluk, a retired admiral of the Turkish Navy, which controls access to the Black Sea via the Bosporus under the 1936 Montreux Convention.

Ukrainian President Volodymyr Zelensky might first insist on receiving more advanced weapons for coastal defence from Western allies, raising the risk of further reprisals by Moscow.

And even if all the mines were cleared, ‘you can put mines back in very quickly’, Lavault said.

‘We don’t know how much capacity they have left, but to drop in mines you just need a fishing boat and two metal poles and in one night the way is blocked.’

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