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A surprise threat by President Vladimir Putin to restrict exports of some strategic goods in response to Western sanctions has puzzled Russian officials and business executives, who wonder whether this can be done without hurting Russia more than the West.
Putin made the proposal 23 minutes into a routine government meeting on Wednesday, asking Prime Minister Mikhail Mishustin to come up with some ideas that would not harm Russia’s interests.
Many Russian commodity exports, such as oil, gas, nickel, titanium, gold and diamonds, are already subject to varying levels of voluntary or mandatory restrictions or Western-imposed embargoes.
“Everyone is in shock. This initiative came completely out of the blue,” said a source at one of the affected companies, who asked not to be identified due to the sensitivity of the matter.
“It’s like someone shooting themselves in the foot,” said another business source.
The cuts in exports of uranium, nickel and titanium, which Putin has explicitly mentioned, could hurt foreign exchange earnings for Russia’s biggest companies, including state-owned industrial conglomerate Rostec and nuclear power Rosatom, and Nornickel, the world’s largest producer of refined nickel.
Together, these companies employ about a million people, and their revenues have already been affected by Western sanctions.
A Russian government source, who also asked not to be identified, said any ban would have to exclude so-called “friendly” countries including China, Russia’s main trading partner.
The source stressed that it will take some time for the government to prepare a plan, and that the president has not yet directed the government to do so.
Another source close to the government added that Putin “asked to develop a plan, not implement it.”
Russia’s major commodity producers declined to comment.
Moscow is on the cusp of a new level of confrontation with the West over the Ukraine war, as it considers ways to respond to what it says is almost certain Western approval for Kiev to strike deep inside Russia using Western weapons.
Putin said that if Moscow goes ahead with the measure, it will not be limited to uranium, nickel and titanium.
He pointed out that Russia has 22 percent of the world’s natural gas reserves, 23 percent of gold reserves and 55 percent of diamond reserves.
Uranium may be the only commodity where restrictions are really hurting the West, with Russian exports accounting for 27 percent of the enriched uranium supplied to U.S. commercial nuclear reactors last year.
While the United States has theoretically banned fuel imports from Russia, it has also granted waivers until 2027 as it expands its own enrichment facilities.
Europe has greatly reduced its dependence on Russian gas.
The ban imposed by the Group of Seven and the European Union on the import of diamonds from Russia forced Moscow to buy them from the Russian company Alrosa, which was affected by the sanctions.
All of Russia’s major gold producers are already under Western sanctions.
