Tag Archives: embargoes and sanctions

World

Wagner group: US introduces new sanctions targeting Russian mercenary group

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CNN
 — 

The US Treasury Department on Thursday designated the Wagner Group, a Russian private mercenary organization heavily involved in the war in Ukraine, as a significant transnational criminal organization, and imposed a slew of sanctions on a transnational network that supports it.

The US Department of State concurrently announced a number of sanctions meant to “target a range of Wagner’s key infrastructure – including an aviation firm used by Wagner, a Wagner propaganda organization, and Wagner front companies,” according to US Secretary of State Antony Blinken.

“As Russia’s military has struggled on the battlefield, Putin has resorted to relying on the Wagner Group to continue his war of choice. The Wagner Group has also meddled and destabilized countries in Africa, committing widespread human rights abuses and extorting natural resources from their people,” the Treasury Department said in a press release.

In addition to the measures targeting the Wagner Group – which were previewed by the White House last week – both agencies announced sanctions against a wide group of individuals and companies tied to Russia’s war in Ukraine. They are the latest US punitive measures against the Kremlin and its proxies as Russian President Vladimir Putin’s war approaches its second year with no signs of abating.

“This action supports our goal to degrade Moscow’s capacity to wage war against Ukraine, to promote accountability for those responsible for Russia’s war of aggression and associated abuses, and to place further pressure on Russia’s defense sector,” Blinken said in a statement.

The Treasury Department announced sanctions on a number of individuals and companies tied to Moscow’s defense industrial complex, as well as Putin allies and their family members, and two people involved with Russia’s attempts to annex parts of Ukraine.

The State Department also announced sanctions on “three individuals for their roles as heads of the Russian Federal Penitentiary Service, which has been reported to facilitate the recruitment of Russian prisoners into the Wagner Group,” a Deputy Prime Minister who also serves as the Minister of Industry and Trade,” “the Chairman of the Election Commission of the Rostov Region,” a network tied to an already-sanctioned Russian oligarch, and a financier to Putin, according to Blinken.

In addition, the State Department announced it will take steps to impose visa restrictions “on 531 members of the Russian Federation military for actions that threaten or violate the sovereignty, territorial integrity, or political independence of Ukraine.”

National Security Council Coordinator for Strategic Communications John Kirby last week previewed the significant transnational criminal organization designation and forthcoming sanctions against the Wagner group, telling reporters Friday, “These actions recognize the transcontinental threat that Wagner poses, including through its ongoing pattern of serious criminal activity.”

Among the companies sanctioned by the Treasury Department for their ties to the Wagner Group and its leader, Yevgeniy Prigozhin, are Joint Stock Company Terra Tech, a “Russia-based technology firm that supplies space imagery acquired by commercially active satellites, as well as aerial images acquired by unmanned systems,” and a China-based entity “that has provided Terra Tech synthetic aperture radar satellite imagery orders over locations in Ukraine.”

“These images were gathered in order to enable Wagner combat operations in Ukraine,” the Treasury Department said.

In addition to sanctions related to the Wagner Group’s significant involvement in the war in Ukraine, the Treasury Department imposed sanctions for its illicit activities in the Central African Republic. The group was re-designated “for being responsible for or complicit in, or having engaged in, the targeting of women, children, or any civilians through the commission of acts of violence, or abduction, forced displacement, or attacks on schools, hospitals, religious sites, or locations where civilians are seeking refuge, or through conduct that would constitute a serious abuse or violation of human rights or a violation of international humanitarian law in relation to the CAR.”

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World

CNN Exclusive: A single Iranian attack drone found to contain parts from more than a dozen US companies

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Washington
CNN
 — 

Parts made by more than a dozen US and Western companies were found inside a single Iranian drone downed in Ukraine last fall, according to a Ukrainian intelligence assessment obtained exclusively by CNN.

The assessment, which was shared with US government officials late last year, illustrates the extent of the problem facing the Biden administration, which has vowed to shut down Iran’s production of drones that Russia is launching by the hundreds into Ukraine.

CNN reported last month that the White House has created an administration-wide task force to investigate how US and Western-made technology – ranging from smaller equipment like semiconductors and GPS modules to larger parts like engines – has ended up in Iranian drones.

Of the 52 components Ukrainians removed from the Iranian Shahed-136 drone, 40 appear to have been manufactured by 13 different American companies, according to the assessment.

The remaining 12 components were manufactured by companies in Canada, Switzerland, Japan, Taiwan, and China, according to the assessment.

The options for combating the issue are limited. The US has for years imposed tough export control restrictions and sanctions to prevent Iran from obtaining high-end materials. Now US officials are looking at enhanced enforcement of those sanctions, encouraging companies to better monitor their own supply chains and, perhaps most importantly, trying to identify the third-party distributors taking these products and re-selling them to bad actors.

NSC spokesperson Adrienne Watson told CNN in a statement that “We are looking at ways to target Iranian UAV production through sanctions, export controls, and talking to private companies whose parts have been used in the production. We are assessing further steps we can take in terms of export controls to restrict Iran’s access to technologies used in drones.”

There is no evidence suggesting that any of those companies are running afoul of US sanctions laws and knowingly exporting their technology to be used in the drones. Even with many companies promising increased monitoring, controlling where these highly ubiquitous parts end up in the global market is often very difficult for manufacturers, experts told CNN. Companies may also not know what they are looking for if the US government has not caught up with and sanctioned the actors buying and selling the products for illicit purposes.

And the Ukrainian intelligence assessment is further proof that despite sanctions, Iran is still finding an abundance of commercially available technology. For example, the company that built the downed drone, Iran Aircraft Manufacturing Industries Corporation (HESA), has been under US sanctions since 2008.

One major issue is that it is far easier for Russian and Iranian officials to set up shell companies to use to purchase the equipment and evade sanctions than it is for Western governments to uncover those front companies, which can sometimes take years, experts said.

“This is a game of Whack-a-Mole. And the United States government needs to get incredibly good at Whack-a- Mole, period,” said former Pentagon official Gregory Allen, who now serves as Director of the Artificial Intelligence Governance Project at the Center for Strategic and International Studies. “This is a core competency of the US national security establishment – or it had better become one.”

Allen, who recently co-authored an investigation into the efficacy of US export controls, said ultimately, “there is no substitute for robust, in-house capabilities in the US government.”

He cautioned that it is not an easy job. The microelectronics industry relies heavily on third party distributors and resellers that are difficult to track, and the microchips and other small devices ending up in so many of the Iranian and Russian drones are not only inexpensive and widely available, they are also easily hidden.

“Why do smugglers like diamonds?” Allen said. “Because they’re small, lightweight, and worth a ton of money. And unfortunately, computer chips have similar properties.” Success won’t necessarily be measured in stopping 100% of transactions, he added, but rather in making it more difficult and expensive for bad actors to get what they need.

The rush to stop Iran from manufacturing the drones is growing more urgent as Russia continues to deploy them across Ukraine with relentless ferocity, targeting both civilian areas and key infrastructure. Russia is also preparing to establish its own factory to produce them with Iran’s help, according to US officials. On Monday, Ukrainian President Volodymyr Zelensky said that Ukrainian forces had shot down more than 80 Iranian drones in just two days.

Zelensky also said that Ukraine had intelligence that Russia “is planning a prolonged attack with Shaheds,” betting that it will lead to the “exhaustion of our people, our air defense, our energy sector.”

A separate probe of Iranian drones downed in Ukraine, conducted by the UK-based investigative firm Conflict Armament Research, found that 82% of the components had been manufactured by companies based in the US. 

Damien Spleeters, the Deputy Director of Operations at Conflict Armament Research, told CNN that sanctions will only be effective if governments continue to monitor what parts are being used and how they got there.

“Iran and Russia are going to try to go around those sanctions and will try to change their acquisition channels,” Spleeters said. “And that’s precisely what we want to focus on: getting in the field and opening up those systems, tracing the components, and monitoring for changes.”

Experts also told CNN that if the US government wants to beef up enforcement of the sanctions, it will need to devote more resources and hire more employees who can be on the ground to track the vendors and resellers of these products.

“Nobody has really thought about investing more in agencies like the Bureau of Industry Security, which were really sleepy parts of the DC national security establishment for a few decades,” Allen, of CSIS, said, referring to a branch of the Commerce Department that deals primarily with export controls enforcement. “And now, suddenly, they’re at the forefront of national security technology competition, and they’re not being resourced remotely in that vein.”

According to the Ukrainian assessment, among the US-made components found in the drone were nearly two dozen parts built by Texas Instruments, including microcontrollers, voltage regulators, and digital signal controllers; a GPS module by Hemisphere GNSS; a microprocessor by NXP USA Inc.; and circuit board components by Analog Devices and Onsemi. Also discovered were components built by International Rectifier – now owned by the German company Infineon – and the Swiss company U-Blox.

CNN sent emailed requests for comment last month to all the companies identified by the Ukrainians. The six that responded emphasized that they condemn any unauthorized use of their products, while noting that combating the diversion and misuse of their semiconductors and other microelectronics is an industry-wide challenge that they are working to confront.

“TI is not selling any products into Russia, Belarus or Iran,” Texas Instruments said in a statement. ” TI complies with applicable laws and regulations in the countries where we operate, and partners with law enforcement organizations as necessary and appropriate. Additionally, we do not support or condone the use of our products in applications they weren’t designed for.”

Gregor Rodehuser, a spokesperson for the German semiconductor manufacturer Infineon, told CNN that “our position is very clear: Infineon condemns the Russian aggression against Ukraine. It is a blatant violation of international law and an attack on the values of humanity.” He added that “apart from the direct business it proves difficult to control consecutive sales throughout the entire lifetime of a product. Nevertheless, we instruct our customers including distributors to only conduct consecutive sales in line with applicable rules.”

Analog Devices, a semiconductor company headquartered in Massachusetts, said in a statement that they are intensifying efforts “to identify and counter this activity, including implementing enhanced monitoring and audit processes, and taking enforcement action where appropriate…to help to reduce unauthorized resale, diversion, and unintended misuse of our products.”

Jacey Zuniga, director of corporate communications for the Austin, Texas-based semiconductor company NXP USA, said that the company “complies with all applicable export control restrictions and sanctions imposed by the countries in which we operate. Military applications are not a focus area for NXP. As a company, we are vehemently opposed to our products being used for human rights violations.”

Phoenix, Arizona-based semiconductor manufacturing company Onsemi also said it complies with “applicable export control and economic sanctions laws and regulations and does not sell directly or indirectly to Russia, Belarus or Iran nor to any foreign military organizations. We cooperate with law enforcement and government agencies as necessary and appropriate to demonstrate how Onsemi conducts business in accordance with all legal requirements and that we hold ourselves to the highest standards of ethical conduct.”

Swiss semiconductor manufacturer U-Blox also said in a statement that its products are for commercial use only, and that the use of its products for Russian military equipment “is in clear breach of u-blox’s conditions of sale applicable to customers and distributors alike.”

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US

Arizona judge orders Kari Lake to compensate Katie Hobbs for some fees for election lawsuit, but declines to sanction her

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CNN
 — 

A Maricopa County judge on Tuesday ordered Arizona Republican Kari Lake to compensate Democratic Gov.-elect Katie Hobbs for some legal fees related to the election lawsuit Lake had brought challenging her loss, but he stopped short of sanctioning Lake for filing the lawsuit.

Judge Peter Thompson had rejected Lake’s lawsuit on Saturday, concluding that there wasn’t clear or convincing evidence of misconduct and affirming Hobbs’ victory. That Christmas Eve ruling was a major defeat for Lake, who lost to Hobbs by about 17,000 votes in November and sued in an effort to overturn the election.

Attorneys for Hobbs – the current secretary of state – had charged that Lake and her lawyers knew their challenges to the election could not be substantiated, which would violate legal ethic rules. They wanted sanctions against Lake and her team. Thompson did not agree. “The Court finds that Plaintiff’s claims presented in this litigation were not groundless and brought in bad faith,” he wrote on Tuesday.

But he ordered Lake to pay Hobbs $33,040.50 in compensation for expert witness fees and again reaffirmed the election of Hobbs, who will be sworn in on January 5.

The recent rulings are the latest rebuke to election deniers nationwide and harken back to the long stream of legal losses former President Donald Trump suffered in 2020 as he sought to challenge his election loss. Maricopa County, which spans the Phoenix area and houses a majority of Arizona’s population, was a hotbed of unfounded allegations of fraud in the midterms and 2020 election.

In a tweet after the Saturday ruling, Lake, who sat in the courtroom during the trial but did not testify, said she would appeal the decision “for the sake of restoring faith and honesty in our elections.”

A former Arizona television journalist, Lake built her campaign around her support for Trump’s lies about widespread election fraud in the 2020 presidential election. She had since doubled down, falsely claiming she won the 2022 election.

Thompson had previously dismissed eight counts alleged in Lake’s lawsuit prior to trial, ruling that they did not constitute proper grounds for an election contest under Arizona law, even if true. But he had permitted Lake an attempt to prove at a two-day trial last week two other counts involving printers and the ballot chain of custody in Maricopa County.

According to Thompson’s Saturday ruling, Lake’s team had to show that someone intentionally caused the county’s ballot-on-demand printers to malfunction – and as a result of that, enough “identifiable” votes were lost to change the outcome of the election.

“Every single witness before the Court disclaimed any personal knowledge of such misconduct. The Court cannot accept speculation or conjecture in place of clear and convincing evidence,” Thompson wrote.

This story has been updated with additional information.

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World

Exclusive: Biden task force investigating how US tech ends up in Iranian attack drones used against Ukraine

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Washington
CNN
 — 

The Biden administration has launched an expansive task force to investigate how US and western components, including American-made microelectronics, are ending up in Iranian-made drones Russia is launching by the hundreds into Ukraine, multiple officials familiar with the effort tell CNN. 

The US has imposed tough export control restrictions and sanctions to prevent Iran from obtaining high-end materials, but evidence has emerged that suggests Iran is finding an abundance of commercially-available technology. 

Last month, the UK-based investigative organization  Conflict Armament Research examined  several drones that had been downed in Ukraine and found that 82% of their components were manufactured by companies based in the US. 

Among the components found in some of the drones are processors built by the Dallas-based technology company Texas Instruments, according to an investigation by the Ukrainian Armed Forces and a source familiar with the US inquiry, as well as an engine made by an Austrian firm owned by Canada’s Bombardier Recreational Products. Both companies have condemned any use of their technology for illicit purposes. 

Their apparently unintentional ensnarement in Iran’s drone manufacturing industry underscores how inexpensive products intended for civilian use can be easily retrofitted for military purposes, and often fall just outside the bounds of sanctions and export control regimes.  

Texas Instruments said in a statement to CNN that “TI is not selling any products into Russia, Belarus or Iran. TI complies with applicable laws and regulations in the countries where we operate, and partners with law enforcement organizations as necessary and appropriate. Additionally, we do not support or condone the use of our products in applications they weren’t designed for. ”

Bombardier Recreational Products  said in a statement that it was launching an investigation into how the engines ended up in the drones.

The investigation has intensified in recent weeks amid intelligence obtained by the US that the Kremlin is preparing to open its own factory for drone production inside Russia as part of a deal with Iran, the officials said. 

Iran has already begun transferring blueprints and components for the drones to Russia to help with production there, CNN has reported, in a dramatic expansion of the countries’ military partnership. 

Agencies across Washington are involved in the task force, including the departments of Defense, State, Justice, Commerce and Treasury, with one official describing the inquiry as an “all hands on deck” initiative. The effort is being overseen by the White House National Security Council as part of an even bigger, “holistic approach” to dealing with Iran, a senior administration official said, from its crackdown on protesters and its nuclear program to its deepening role in the war in Ukraine.

But the drone issue is particularly urgent given the sheer volume of US-made components, many of them manufactured in the last couple years, that have been found in the Iranian drones Russia has been deploying across Ukraine against civilians and critical infrastructure. 

Conflict Armament Research found that the Iranian drones they examined in Ukraine in November had “higher-end technological capabilities,” including tactical-grade sensors and semiconductors sourced outside of Iran, demonstrating that Tehran “has been able to circumvent current sanction regimes and has added more capabilities and resiliency to its weapons.”

National Security Council official John Kirby told reporters earlier this month that the US would be sanctioning three Russian companies involved in acquiring and using the Iranian drones, and is “assessing further steps we can take in terms of export controls to restrict Iran’s access to sensitive technologies.” 

Much of that work has fallen to the task force, officials said, and among its first tasks has been to notify all of the American companies whose components have been found in the drones. Congressional staffers briefed on the effort told CNN that they hope the task force provides lawmakers with a list of US companies whose equipment is being found in the drones in an effort to force greater accountability by urging the companies to monitor their supply chains more closely.

The task force is also having to coordinate with foreign allies, since the components being used in the drones are not limited to those produced by American companies.  Conflict Armament Research also found that “more than 70 manufacturers based in 13 different countries and territories” produced the components in the Iranian drones they examined.

In October, CNN obtained access to a drone that was downed in the Black Sea near Odesa and captured by Ukrainian forces. It was found to contain Japanese batteries, an Austrian engine and American processors. 

Iran may also be acquiring near-exact replicas of western components from China, according to a study published last month by the Washington-based Institute for Science and International Security. “China plays a larger role than previously assessed in enabling Iran to manufacture and supply drones to Russian forces,” the report found. “It appears that Chinese companies are supplying Iran with copies of Western commodities to produce UAV combat drones.”

The White House believes it is successfully driving home the scale of the issue with allies. The senior administration official told CNN that there was “growing broad and deep international consensus on Iran, from the EU to Canada to Australia and New Zealand, which is being led by US diplomacy.”

There is no evidence that any of the western companies are knowingly exporting their technology to be used in the drones, and that is partly why the task force’s job has been so difficult, officials said. 

The task force has its work cut out for it in tracing supply chains for the microelectronics industry, which relies heavily on third party distributors and resellers. The microchips and other small devices ending up in so many of the Iranian and Russian drones are not only inexpensive and widely available, they are also easily hidden. 

Iran also uses front companies to buy equipment from the US and EU that may have a dual use, like the Austrian engines, that Tehran can then use to build drones, according to the Treasury Department, which sanctioned several of those companies in September. 

 That makes supply chain monitoring a challenge, though experts say US and European companies could be doing a lot more to track where their products are going. 

“American companies should be doing a lot more to track their supply chains,” said Dmitri Alperovitch, the former chief technology officer at the cybersecurity firm CrowdStrike. 

Keeping better track of resellers is a first step, he said, but the task is admittedly difficult because so many of these companies’ products are so commoditized and available off-the-shelf and online for civil purposes. Ultimately, neutering some Iranian front companies with sanctions and cutting off their supply from some western companies will be akin to “a game of whack a mole,” Alperovitch said, noting that they “can easily find another supplier.”

He added that the real “weak underbelly” of US policy when it comes to export controls is enforcement—and prosecuting the specific individuals involved in the illicit transactions. 

“We have to beef up the resources for enforcement of our sanctions to achieve the desired effect,” Alperovitch said.

“You can put companies on the [sanctioned] entities list,” he added, “but if you don’t actually go after the people involved, it doesn’t mean a whole lot.” 

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World

The West just scrambled the oil market. What happens next is up to Russia

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London
CNN Business
 — 

Most Russian crude oil exports to Europe are now banned, marking the boldest effort yet by the West to pile financial pressure on President Vladimir Putin as his brutal war in Ukraine enters its tenth month.

The oil embargo, which was agreed upon in late May, took effect in the European Union on Monday. It was accompanied by a new price cap on Russian crude set by G7 countries. That’s designed to limit the Kremlin’s revenues while allowing countries such as China and India to continue to buy Russian oil, provided they don’t pay more than $60 a barrel.

What happens next will likely hinge on the response from Moscow, which has vowed not to cooperate with the price cap and could slash its production, rattling global energy markets. Global crude prices were up 2.6% on Monday as investors watched nervously for the next move.

Here’s what you need to know about the oil embargo, the price cap and the potential impact.

The European Union now prohibits Russian crude oil imports by sea, setting up the bloc to have phased out 90% of oil imports from Russia. It’s a huge move given that Europe received roughly a third of its oil imports from Russia in 2021. More than half of Russia’s exports went to Europe 12 months ago.

There are a few exceptions. Bulgaria received a temporary carve-out. The embargo also doesn’t target imports via pipeline. That means the Druzhba pipeline can continue to supply Hungary, Slovakia and the Czech Republic. (Germany and Poland are working to end pipeline imports from Russia as soon as possible.)

But the embargo is significant. In 2021, the EU imported €48 billion ($50.7 billion) worth of crude oil and €23 billion ($24.3 billion) of refined oil products from Russia. Two-thirds of those imports arrived by sea.

A ban on Russian refined oil products, such as diesel fuel, imported by sea will launch in early February.

The European Union, plus the other members of the G7 — the United States, Canada, Japan and the United Kingdom — and Australia also agreed on Friday to cap the price of Russian crude oil at $60 a barrel, a policy aimed at Moscow’s other customers. This measure took effect Monday, too.

The price cap, which can be adjusted over time, is designed to be enforced by companies that provide shipping, insurance and other services for Russian oil. If a buyer pays more than the cap, they would withhold their services, in theory preventing the oil from being shipped. Most of these firms are based in Europe or the United Kingdom.

Despite unprecedented sanctions from the West, Russia’s economy and the government’s coffers have been padded by its lucrative position as the world’s second largest exporter of crude oil behind Saudi Arabia.

In October, Russia exported 7.7 million barrels of oil per day, just 400,000 barrels below pre-war levels, according to the International Energy Agency. Revenues from crude oil and refined products currently stand at $560 million per day.

By quickly phasing out imports, Europe hopes to limit inflows to Putin’s war chest, making it harder for him to continue his war in Ukraine.

But countries like China and India have stepped in buy surplus barrels. That’s where the price cap comes in.

G7 countries don’t want Russian oil taken off the market entirely, since that would push up global prices at a time when high inflation is hurting their economies. By enacting a price cap, they hope that can keep barrels flowing, but make the business less profitable for Moscow.

That’s far from certain. Countries like Poland and Estonia wanted a lower price cap, emphasizing that $60 is too close to the current market price for Russian oil. At the end of September, Russian Urals crude was trading just under $64 a barrel.

“Today’s oil price cap agreement is a step in right direction, but this is not enough,” Estonian foreign minister Urmas Reinsalu tweeted Friday. “Why are we still willing to finance Russia’s war machine?”

Enforcement could also prove difficult. Russia and its customers could start using more ships and insurance providers outside Europe and the United Kingdom to circumvent the rules, increasingly relying on what’s termed a “shadow fleet.”

“Capacity in that fleet has been growing, and it could probably handle Russian volumes for a while,” said Richard Bronze, head of geopolitics at Energy Aspects, a research firm.

Kremlin spokesperson Dmitry Peskov said Monday that Moscow will “not recognize any price caps.” Russian Deputy Prime Minister Alexander Novak said Sunday that Russia would not export oil to countries adhering to the cap, even if that will mean cutting production.

Oil prices have fallen sharply since the spring as fears about a global recession that may hit demand have come to the fore. Now, all eyes are on Russia’s response. Peskov said the price cap was a step towards “destabilizing the world energy markets.”

Moscow needs to find replacement customers for 1.1 million barrels per day of crude that had still been flowing to Europe, according to the IEA. That may not be easy, especially as coronavirus restrictions and a growth slowdown in China affect demand from the world’s second biggest economy.

The price cap adds to the uncertainty. Would-be customers may decide buying Russian cargoes has become too risky and complex, taking another batch of buyers off the market.

As the Kremlin has threatened, Russia may reduce its oil output as a result. The IEA has estimated Russia will slash output by an additional 1.4 million barrels per day by early 2023.

Other factors will dictate prices, too. Rare protests in China have raised questions about the country’s commitment to its “zero-Covid” policy, and demand could increase if its economy picks up pace.

The Organization of the Petroleum Exporting Countries, or OPEC, could also alter its output. The cartel on Sunday decided to stick with previously announced production cuts, giving it more time to assess the effects of the embargo and the price cap.

Europe’s embargo on refined oil products in February could also be a flash point for energy prices, since the region remains dependent on Russian diesel. Finding alternative sources in just two months may be tricky.

— Anna Chernova contributed reporting.



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World

Russians grow more critical as Putin’s military operation drags on and sanctions take a toll

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Moscow
CNN
 — 

November and December are known as the most depressing months in Moscow. The days are short and dark, and the weather is too cold and wet to be outdoors much but still too warm and rainy to enjoy the real Russian winter.

This year, the feeling of melancholy is increased by the sight of shuttered shops on many of the capital’s streets, as businesses face the economic fall-out from massive Western sanctions in response to the war in Ukraine, which Russian officials still call the “special military operation.”

“The mood in Moscow and the country is now extremely gloomy, quiet, intimidated, and hopeless,” said 34-year-old Lisa, who declined to give her last name and said she was a film producer. “The planning horizon is as low as ever. People have no idea what might happen tomorrow or in a year.”

While the shelves in most stores remain well stocked, Western products are becoming increasingly scarce and very expensive, further driving prices that are already hammering many Russian households.

“Familiar goods disappear, starting from toilet paper and Coca-Cola, ending with clothes,” said Lisa.

“Of course, you can get used to all this, this is not the worst thing at all,” she said. But she also took a jab at Western governments and companies that have left the Russian market in response to the invasion of Ukraine. “I do not really know how this helps in resolving the conflict, because it affects ordinary people, not those who make decisions,” Lisa said.

Some economists believe Russia will face growing economic hardship and a population that will grow increasingly critical of the “special military operation” amid mounting defeats such as seen in Ukraine’s southern city of Kherson, where a determined Ukrainian offensive forced a Russian withdrawal.

Sergey Javoronkov, a senior researcher at the Gaidar Institute for Economic Policy, says the mood is already more critical than it was, thanks to “both the economic price and the dissatisfaction with the task not being solved,” contrary to the expectations created by the Kremlin.

“We were supposed to win. Officials promised to capture Kyiv in three days but, as we see, it turned out to be foolish,” he told CNN.

“In his February 24 speech, (Russian President) Vladimir Putin stated that the military operations would be conducted only by professional troops. But in September a partial mobilization was declared – also an unpopular measure: those who do not want to fight are being recruited.

“It is a known effect: a short victorious war may provoke enthusiasm, but if the war lasts endlessly and does not lead to the desired outcome, then comes disappointment.”

A 30-year-old PR manager who gave her name only as Irina disagrees, saying she believes the situation is stabilizing after an initial exodus of Russians fleeing not only Western sanctions but also possible conscription following Putin’s September 21 announcement of a nationwide partial mobilization.

The Kremlin says more than 300,000 Russians were drafted into the military between late September and early November while hundreds of thousands of mostly young Russian men fled the country, often to places like Kazakhstan or Georgia.

“The first wave of panic has already passed, everyone has calmed down a little. Many have left, but many remain. I am pleased with the people who stay and support Russia,” Irina told CNN.

At the same time, she emphasized that she is opposed to the war in Ukraine, as it is beginning to sink in for her, as for many Russians, that the fighting may go on for a very long time. This is especially the case since Ukraine’s forces managed to take back the major city of Kherson from the Russian military – an area Russia had annexed in September and which Putin had said would remain part of Russia “forever.”

“I have a negative attitude. I believe that any aggression or war are evil. And to say that if we wouldn’t attack them, they would attack us is of course absurd,” Irina said, referring to Putin’s repeated claim that Russia is acting in self-defense in its invasion of Ukraine.

Well-known Russian blogger Dmitry Puchkov, who goes by the name “Goblin” and supports his country’s military operation in Ukraine, acknowledges that the recent battlefield defeats have shaken many people’s trust.

“From the point of view of civil society, it is not good for our troops to leave the territories that have become part of the Russian Federation. But we think it’s a tactical move and it won’t last long,” he wrote, answering written questions from CNN online. Puchkov says he believes Russia will fight back fiercely and force Ukraine into a ceasefire.

“The morale of the Russian military is very high,” Puchkov wrote, as he laid out how he thinks victory will be achieved. “The necessary strategic decisions are well known: first and foremost is the destruction of the Ukrainian infrastructure. The electricity, hot water and heat systems must be destroyed,” he said.

The Kremlin appears to be following that playbook. Russian forces have repeatedly targeted power infrastructure in Ukraine in recent weeks, leaving more than 7 million people without power after one wave of strikes a week ago, according to Ukrainian officials.

Ukrainians remain resolute in the face of Russian missile attacks, however, and hopes for any kind of negotiated end to the war remain distant, even as America’s top general pushes for diplomacy. NATO Secretary General Jens Stoltenberg on Sunday called for greater support for Ukraine, telling NATO allies: “We must be prepared to support Ukraine for the long haul.”

Asked what the mood is like in the Russian business community given the prospects of a prolonged conflict, Javoronkov used a single word: “Pessimistic!”

“The economic experts realize that nothing is expected for the economy if the military actions continue,” Javoronkov said. Russia’s economy is now officially in a recession, which he believes will only get worse.

The country’s industrial firms are facing major problems replacing Western technology, leading the automobile company AvtoVAZ – manufacturer of the Lada vehicle brand – to first halt production earlier this year and then move to producing some vehicles without basic electronic features like air bags and anti-lock braking systems.

The problems span everything from the airline industry to consumer electronics, leading former Russian President Dmitry Medvedev to call for a nationalization of foreign assets.

Yevgeny Popov, a well-known journalist and member of the Russian parliament, ripped into Medvedev’s idea in a rare moment of open criticism.

“What will we drive, we have nothing to drive. Are we going to drive railcars?” Popov yelled at a former Russian general who supported the idea of nationalization on the state TV talk show “60 Minutes.”

“Let’s nationalize everything, but what will we drive, how will we make phone calls, what will we do? Yes, all our technology is Western,” Popov said.

The Kremlin has been promoting the idea of replacing Western goods with products and technologies from allied countries such as China or Iran, but also of increasing Russia’s own production.

On Monday, Putin opened – via videolink – a turkey breeding farm in the Tyumen region. The move was hailed as a sign of growing Russian economic independence by Kremlin spokesman Dmitry Peskov, who labeled it “a significant event in the president’s schedule related to the development of domestic breeding and selection of the meat and poultry sector of the agriculture industry. A crucial sector that is directly connected with Russia’s food security.”

But Russia’s increasing isolation from the world is not necessarily welcomed by all its citizens. Film producer Lisa said she would rather have her country end the war and renew ties with foreign countries than go it alone.

“I wait and hope that it will all end because there is nothing more valuable than human lives,” she said.

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