In Geopolitics Today - Thursday, March 3rd

Sanctions on Defence Industry Complicate Russia’s Arms Exports, Russia and Ukraine Agree Deal on Humanitarian Evacuation Corridors, US Signals Intent to Degrade Russia’s Energy Dominance

Sanctions on Defence Industry Complicate Russia’s Arms Exports

The United States Department of State will be imposing restrictive sanctions targeting a broad range of firms which make up the Russia’s defence sector. In particular, the sanctions are aimed at imposing significant costs on a broad range of Russia’s weapon development and production capabilities, with a total of 22 Russian defence-related companies falling under the sanctions designation. The sanctions will work to severely hinder Russia’s ability to produce combat aircraft, infantry fighting vehicles, electronic warfare systems, ballistic missiles, and unmanned aerial vehicles.

Russia is the world’s second-largest arms exporter after the US as the country’s production of weapons and military vehicles averages an estimated $13 billion in reported annual sales. The sanctions will work to prevent Russia from funnelling its arms, technologies and software through Belarus, and will broadly work to degrade both countries’ ability to project military power going forward. The majority of Russia’s arms exports go to five states: Algeria, China, Egypt, India, and Vietnam, with India serving as the most significant customer of Russian weapons systems. The sanctions will prove particularly concerning for India as an estimated 60% of India’s military hardware is sourced from Russia, and the bulk of India’s military manufacturing base relies on Russian technology and expertise.

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Russia and Ukraine Agree Deal on Humanitarian Evacuation Corridors

As fighting rages across multiple axes of attack in Ukraine, Ukrainian and Russian negotiators have held a second round of talks since Russia initiated a large-scale military operation across Ukraine last week. The meeting appears to have been a positive first step as both sides agreed to establish a “humanitarian corridor” and an immediate cease-fire. The evacuation corridor is expected to involve the city of Mariupol, which at this time appears to be surrounded by Russian forces, allowing civilians to evacuate before an anticipated Russian offensive in the city begins.

In a previous round of talks between the two warring sides, the Ukrainian delegation said that they were seeking an immediate ceasefire across the entire country, a temporary armistice, and the establishment of humanitarian evacuation corridors for civilians. The agreement reached today is a concrete step in achieving some of these Ukrainian objectives, but it nonetheless does not in any way guarantee a cessation of hostilities across many parts of the country as the understanding involves a temporary cease-fire only around the agreed humanitarian corridor and not elsewhere. Official statements from both powers released statements which signalled that they have agreed to meet for a third round of negotiations at a later date.

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US Signals Intent to Degrade Russia’s Energy Dominance

The United States has signalled that it intends to “degrade” the power of Russia’s oil and gas companies over time. A statement released by the White House indicated that a US priority will be to suspend any and all exports used to maintain Russia’s vast oil and gas industries going forward, and in doing so, to revoke Russia’s ability to influence energy markets as one of the world’s top producers.

The statement follows an earlier imposition of export controls” on oil and gas extraction equipment and technology exports, a move that may complicate the ability of Russian energy companies to extract and refine oil. As a part of this long-term process to degrade Russia’s ability to influence energy markets, the US and its allies are seeking alternative sources of energy in a bid to reduce Russia’s ability to funnel funds from energy exports toward its state budget. The International Energy Agency and the European Union have joined these US efforts, and are planning to release a concrete plan for how to proceed with this goal in mind. The European Union has already outlined its approach for attaining total energy independence from Russia by pushing for the introduction of a mandated minimum level of stored gas reserves of at least 80% by September this year.

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