Many countries around the globe stand united against Russian President Putin’s invasion of Ukraine with numerous rounds of sanctions, military and financial aid and humanitarian support.
From 25 February 2022 Australia has applied sanctions against Russia, and the regions of Donetsk and Luhansk on import, export and commercial activity of the transport, telecommunications, energy, oil, gas and mineral reserve sectors. Though the sanctions are in alignment with other countries’ international responses, they are unique to the Australian environment, requiring the passage of the Autonomous Sanctions Amendment (Magnitsky-style and Other Thematic Sanctions) Act 2021.
But what do these sanctions mean for business?
Russia was Australia’s 46th largest trading partner in 2019, with a greater proportion of Australian exports to Russia and a modest level of two-way investment. As such, many businesses and individuals will be impacted by the sanctions. Australian exporters of aluminium ores, alumina and related products to Russia and importers of Russian oil and other energy products are most directly impacted through the prohibition of commercial activities with Russia.
If your business trades, invests or transports through Russia, Donetsk or Luhansk you should review sanctions imposed by Australia and other countries in response to the Russian invasion of Ukraine and diligently monitor and assess your risk.
Businesses which aren’t directly exposed to sanctions will still face economic risks through larger supply chain disruptions, fuel prices and inflation.
Further complicating the trade and economic atmosphere are the geopolitical pressures bubbling beneath the surface. India’s abstinence from voting at the UN Security Council on the Ukraine crisis has created question marks on India’s future trade relationships.
And Australia’s strained relationship with China risks further erosion by China’s refusal to vote at the UN Security Council on the Ukraine crisis. If China aligns with Russia against the international denunciation and sanctions regimes, the global trading system as we know it will never be the same.