By Gleb Stolyarov and Anastasia Lyrchikova
MOSCOW (Reuters) – Russia is asking companies to propose which sanctions Moscow should seek to have lifted ahead of talks with Washington, two Russian business people told Reuters, adding curbs that hamper cross-border payment flows are the most painful.
U.S. Secretary of State Marco Rubio on Tuesday said it was Russia’s turn to respond, after Washington agreed to resume sharing military aid and intelligence with Kyiv, which said it would accept a U.S. proposal for a 30-day ceasefire.
U.S. President Donald Trump has threatened harsher sanctions on Moscow should it fail to negotiate, but sanctions relief if agrees to a ceasefire in Ukraine.
Two Russian industry sources said the industry and trade ministry was asking companies to suggest which sanctions most urgently needed to be lifted.
One person said the ministry was distributing a form for businesses to fill out, asking companies which sanctions had affected their business most and to identify the most sensitive restrictions. Reuters could not access a copy of the form.
The industry ministry did not respond to a request for comment.
In all, Reuters spoke to a dozen people – employees at major exporters, consultants, lawyers, economists and advisers. Most of them asked not to be named so they could speak freely.
The people Reuters questioned said payment issues were the most onerous, although three of the sources also highlighted energy sanctions, particularly restrictions on Russia’s oil tanker fleet.
“Everything has become much more expensive given transaction costs and settlements through third currencies,” one of them said. “So the most important, most dangerous, most painful is the restriction on settlements in dollars.”
Asked for details on which sanctions Russia wants eased, the Kremlin on Thursday said it believes all sanctions are illegal and should be lifted.
“As for the details, these are already the subject of negotiations, and here I would like to again remind you of my words: ‘let’s not get ahead of ourselves’,” Kremlin spokesman Dmitry Peskov told reporters.
“And there is no point in announcing any specific segments before the negotiations.”
DOLLAR ACCESS
Major Russian banks were blocked from using the SWIFT global payments network shortly after Moscow sent its army into Ukraine in February 2022. Without access to dollar and euro markets, Russian companies have been forced to find workarounds in other currencies and through third countries.
Removing those restrictions and sanctions on banks would be a huge boost for Russia, three of the sources said, although one noted it was unrealistic to hope for such a favourable outcome soon.
Renaissance Capital analyst Andrei Melashchenko cited the likelihood Europe may not follow any U.S. move.
“Lifting of U.S. sanctions would not automatically remove European sanctions or fully restore payment infrastructure, meaning the recovery of commission-based income from cross-border operations would remain limited,” he said.
Reduced enforcement of secondary sanctions that target companies in third countries, allowing Russia to circumvent restrictions, is the more likely near-term outcome, two of the sources said.
The lack of clarity over whether secondary sanctions will be enforced has meant few banks in China are willing to risk possible retribution, causing payment bottlenecks and increasingly complex steps to avoid delays.
“Workarounds are expensive and slow,” said one source. “We can get equipment and technologies through China or the Emirates, but how can we pay for them?”
Another of the people said its business “really howled” when China tightened settlements in August last year. For Russian business as a whole, billions of dollars in revenue cannot be settled for goods already delivered, the person said.
FROZEN ASSETS
Easing the enforcement of secondary sanctions, which largely depends on the United States, could improve acceptance of Russia’s Mir payment cards, Moscow’s alternative to Visa and Mastercard.
But most of the around $300 billion of Russia’s sovereign assets frozen by the West are held in Europe, where leaders have maintained a tougher stance against Moscow than the United States.
“The issue of European sanctions is going to be on the table, not to mention what happens with the frozen assets,” Rubio said on Wednesday. “There’s going to have to be some decision made by the Europeans about what they’re going to do with these sanctions.”
An industrial sector source said finding ice-class tankers was another major issue hampered by the payment problems.
Another source said sanctions at the end of the Joe Biden administration that targeted vessels in Russia’s shadow fleet, major oil exploration companies and the networks trading Russian oil had been very painful.
Not everyone expected any relief.
German Gref, CEO of Russia’s largest lender Sberbank, said his bank worked under the assumption that sanctions, if anything, would be tightened.
Eduard Gudkov, deputy chairman of liquefied natural gas (LNG) producer Novatek’s board said last month: “One should not think that as geopolitical tensions ease, it will somehow ease our situation.”
($1 = 86.2000 roubles)
(Reporting by Gleb Stolyarov, Darya Korsunskaya, Anastasia Lyrchikova, Oksana Kobzeva, Elena Fabrichnaya and Alexander Marrow; additional reporting by Daphne Psaledakis in Shannon, Ireland; editing by Barbara Lewis)
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