Research & Insights #55

Western banks in Russia paid EUR 800 million in taxes last year

The largest Western banks in Russia paid over EUR 800 million in taxes to the Russian state last year, four times more than before the war, according to the Financial Times. The profits made by foreign lenders are the result of rising interest rates – the Russian Central Bank’s key lending rate is 16% – and international sanctions imposed on Russian banks. Unlike their Russian competitors, Western banks still have access to international payment systems (SWIFT), making them attractive to domestic customers. More than half of the EUR 800 million in taxes paid by Western banks can be attributed to the Austrian Raiffeisen Bank International. It should be noted that Western banks do not have access to cash earned in Russia. Restrictions imposed by the Russian government in 2022 prohibit the payment of dividends by Russian subsidiaries to companies in “unfriendly” Western countries.

Russian oil price cap doesn’t work, say Western insurers

According to Western insurers, the Russian oil price cap has become unenforceable, prompting more ships to join the Russian shadow fleet. With the aim of reducing Russian state revenues while maintaining the flow of Russian oil to the markets, the G7 countries, under the impetus of Washington, approved a cap on Russian oil prices. This cap allows Western shippers and insurers to trade in Russian oil as long as it is sold for less than US$ 60 a barrel. The International Group of P&I Clubs said that the price cap had had little of the desired effect, since Russia had opted to have its own fleet of vessels beyond the control of Western countries. “We estimate that around 800 tankers have already left the International Group’s clubs as a direct result of the introduction of the oil price cap,” says the statement from the group, which comprises 12 marine liability insurers covering around 90% of the world’s seaborne tonnage.

EU’s largest fertiliser producer warns against over-reliance on Russian fertilisers

The CEO of Yara International has warned the European Union against over-reliance on Russian fertilisers. The warning comes after Yara drastically reduced production last year. “It’s paradoxical that the aim is to reduce Europe’s dependence on Russia, and we are in the process of ceding crucial power over food and fertilisers to Russia,” CEO Svein Tore Holsether told the Financial Times. Despite the reduction in total fertiliser deliveries to EU countries, Russia remains the leading exporter of nitrogen fertilisers. Since gas prices soared in 2022, EU nitrogen fertiliser production has collapsed and never recovered. In 2023, Germany almost doubled its nitrogen fertiliser purchases compared to 2022, while they increased more than sevenfold compared to 2021. In 2023, France increased its imports by around a quarter compared with 2022, and bought twice as much as in 2021.

Russians who left their homeland in 2022 are coming back

While some estimates suggest that over a million Russians fled abroad in the months following the outbreak of war in Ukraine, and the mobilisation of 300,000 reservists in September 2022, thousands are now returning home. Abroad, they regularly encounter administrative difficulties in renewing their residence permits, transferring their work and money, and are welcomed in a limited number of destinations. Finion, a Moscow-based relocation company, estimates that 40-45% of those who left the country in 2022 returned to Russia. These migrants tend to earn high salaries and be employed in high value-added sectors. Bloomberg notes that the current number of short-term residence permits for Russians in Turkey is around 60,000, half the number issued in 2022. According to data from Georgia’s national statistics office, the number of Russians leaving the country increased sixfold to 35,344 in 2023.

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