Russia’s full-scale invasion of Ukraine has prompted economic sanctions as well as talk of terminating business in Russia, but the import of raw materials from Russia to Estonia is still in the process of winding down. According to involved parties, however, things are heading in that direction, with companies taking full advantage of contracts concluded prior to the invasion until then.
Wood, fertilizers and petroleum products account for the top three materials currently being imported from Russia to Estonia, none of which have yet to be subject to sanctions.
While Russia’s full-scale invasion of Ukraine began in late February, according to Statistics Estonia’s data, the transport of fertilizers in the first quarter of 2022 was up 3-fold YoY in terms of monetary value, as prices had gone up. According to customs data, however, volumes being transported across the border have decreased each month since the beginning of the year, by half in March and by 81% already in April.
Fertilizer transport halted altogether in April due to sanctions imposed on two fertilizer oligarchs.
“The primary reductions in volume took place during the past two months,” said Ants Kutti, head of External Border Customs at the Estonian Tax and Customs Board (MTA). “If we’re talking about fertilizers specifically, then in May, for example, not a single train formation with fertilizers came in; the reduction is 100%.”
“While last year we transported 1.6 million tons of fertilizers by rail in the first quarter, in the first three months of this year it was around 1 million tons,” said Arthur Raichmann, commercial director of Estonian Railways (EVR). “Fertilizers, which have made up the bulk of transit, then an entire slew of petroleum products, which in Russia have historically been goods in transit via Estonia – they’ve all disappeared.”
In connection with the war, forestry associations made the decision to stop importing Russian wood into Europe starting in April. In reality, however, there has been no change on that front in Estonia yet.
“Wood is being imported at essentially the same volume,” Kutti said. “Meaning that it has increased somewhat, and then in connection with sanctions has started to fall. Wood imports in May have decreased by nearly 20% as of now.”
According to Marie Allikmaa, foreign economics director at the Ministry of Economic Affairs and Communications, EU sanctions will enter into force on July 10, and currently underway is a transitional period in which time companies are trying to get a hold of their goods.
“If there are any contracts concluded prior to the imposing of sanctions, which was at the beginning of April, then these might be fulfilled through July 10, meaning these fertilizers can still be brought in through mid-July,” Allikmaa explained. “Excluded from sanctions, however, are mineral fertilizers, which affects an estimated 50% of fertilizers imported into Estonia.” (ERR/Business World Magazine)