Author: Admin
How to Rebuild Ukraine with Security, EU Support, and Grants
A new review explains how to rebuild Ukraine after the destruction of war. It highlights the importance of lasting security, EU accession, and grant-based funding. The study breaks down costs, phases, and reforms to modernize the state and economy. The research is by Torbjörn Becker (SITE/SSE), Yuriy Gorodnichenko (UC Berkeley/CEPR), and Beatrice Weder di Mauro (CEPR/Geneva Graduate Institute/INSEAD).
The Scale of the Challenge
The war has left widespread human and material losses. The World Bank estimates $486 billion in recovery needs through 2023, with other figures running even higher. Therefore, plans to rebuild Ukraine must address the concentrated destruction in Donetsk and Kharkiv, where housing and infrastructure were hit hardest. In addition, more than 6 million refugees remain abroad, while millions are still displaced inside Ukraine.
Building a Path to Recovery
First, the review gathers insights from hundreds of proposals into a clear plan. Moreover, to rebuild Ukraine, the authors stress linking recovery with EU accession, anticorruption, and private investment. Finally, they urge the use of grants instead of loans and recommend creating a single, empowered coordination body aligned with EU standards.
Key Research Findings
Recovery unfolds in three phases: emergency relief, restoring essential services, and long-term modernization tied to EU accession. Policymakers should prioritize grants over loans to avoid debt traps and attract private foreign direct investment with risk-sharing and war insurance. Ukraine must rebuild energy and housing sustainably, replacing old fossil-based systems and inefficient Soviet-era structures. Finally, rule-of-law reforms, transparent procurement, and community involvement play a critical role in preventing corruption and securing investor confidence.
Looking Ahead for Ukraine’s Future
To rebuild Ukraine, policymakers must secure the country militarily while tying reforms closely to EU accession. A lean EU-linked agency should coordinate funding and enforce conditions. Investment in education, reintegration of veterans, and energy efficiency will be essential to protect long-term growth. Future research can identify which incentives are most effective in bringing back refugees and foreign investors.
Meet the Researchers
- Torbjörn Becker: Stockholm Institute of Transition Economics, Stockholm School of Economics.
- Yuriy Gorodnichenko: University of California, Berkeley; Centre for Economic Policy Research.
- Beatrice Weder di Mauro: Centre for Economic Policy Research; Geneva Graduate Institute; INSEAD.
Read The Full Report
Explore the full findings and detailed analysis in the complete report on the Annual Review of Economics website. You can also learn more about the impact of sanctions on Russia through SITE’s project, Sanctions on Russia & the Russian Economy.
Russia Budget Deficit Surges as Oil Revenues Fall
Russia’s public finances are under strain as oil and gas revenues slide. The budget deficit of Russia has ballooned in 2025, while spending keeps rising. Buffers like the National Welfare Fund are shrinking, and growth is stalling. These findings come from the KSE Institute’s August 2025 Russia Chartbook by Benjamin Hilgenstock, Yuliia Pavytska, and Matvii Talalaievskyi.
What’s Driving the Gap: Context Behind the Numbers
Russia’s oil export earnings rose to $14.3 billion in July, supported by slightly higher global oil prices that kept Russian export prices near $60 per barrel. Still, the global oil market outlook points to lower prices for Russian exports through the rest of this year and into the first half of 2026. As a result, budgetary pressures are expected to persist. While oil and gas revenues increased in July compared to June due to quarterly tax payments, they were more than 30% lower in May–July than during the same period last year. Extraction tax receipts remain very weak and are unlikely to recover soon.
Challenging Outlook for Russian Oil and Gas Exports
Sanctions are increasingly squeezing Russia’s ability to move oil abroad. The number of sanctioned shadow tankers has climbed to 535, with 124 of them directly listed by the EU, UK, and US. This means that nearly two-thirds of the shadow fleet is now under sanctions, raising pressure on Moscow’s export routes.
Stronger enforcement will be key, as gaps still allow some shipments to move despite restrictions. In July, the shadow fleet’s share in Russian oil exports rose slightly, likely helped by higher global prices. This suggests that Russia is leaning even more on risky channels to keep its oil flowing, leaving its energy revenues vulnerable to tighter controls in the months ahead.
Russian Budget Deficit Deepens as Revenues Fall
Russia’s public finances came under heavy strain in July. The monthly budget deficit soared to 1.5 trillion rubles, driven by weak oil and gas revenues combined with surging expenditures.
This pushed the cumulative shortfall for January–July 2025 to 4.9 trillion rubles, a sharp increase from just 1.1 trillion during the same period in 2024. Alarmingly, the deficit has already reached 129% of the full-year target set after the most recent budget revision.
The rapid deterioration highlights how falling energy revenues and rising spending are creating mounting fiscal risks for Moscow.
Key Research Findings
- Oil and gas revenues fell 19% year over year, while expenditures jumped 21%, driving the Russian budget deficit wider.
- The liquid part of the National Welfare Fund is about 4.0 trillion rubles and could be used up within 6–12 months.
- Domestic debt issuance (OFZ) reached 3.0 trillion rubles in Jan–Jul, with falling yields showing strong bank demand.
- Growth slowed to 1.1% year over year in Q2, signaling a stalling economy; inflation eased to 8.8% while the policy rate stands at 18%.
What it Means: Risks and Next Steps
If oil prices drift toward $60 Brent into 2026, budget pressure will persist. The state may lean more on domestic borrowing and the National Welfare Fund, raising financial stability risks as buffers thin. With limited labor and capital, output has little room to grow, and policy goals clash: restrain prices or fund spending. Further monitoring of the Russian budget deficit and oil price trends is essential.
Meet The Researchers
- Benjamin Hilgenstock — KSE Institute.
- Yuliia Pavytska — KSE Institute.
- Matvii Talalaievskyi — KSE Institute.
Read The Full Report
Explore the full findings and detailed analysis by reading the complete report on the KSE Institute’s website. Additionally, you can view more policy briefs from the KSE Institute on the FREE Network’s website.
Explore Other Editions of KSE Institute’s Russia Chartbook
- KSE Institute’s Russia Chartbook – August 2025
- KSE Institute’s Russia Chartbook – July 2025
- KSE Institute’s Russia Chartbook – June 2025
- KSE Institute’s Russia Chartbook – May 2025
- KSE Institute’s Russia Chartbook – April 2025
- KSE Institute’s Russia Chartbook – March 2025
- KSE Institute’s Russia Chartbook – February 2025
- KSE Institute’s Russia Chartbook – January 2025
Corporate Complicity: Global Firms Funded Russia with $20B in 2024
A new report by the KSE Institute and B4Ukraine reveals that many global corporations continued doing business in Russia throughout 2024. These companies paid $20 billion in taxes to the Russian government, indirectly helping fund the war. This corporate complicity has drawn widespread criticism for undermining sanctions and supporting aggression.
Global Business and War: A Dangerous Link
Since Russia’s full-scale invasion of Ukraine in 2022, the international response included economic sanctions and public pressure for firms to exit Russia. Yet as of mid-2025, only 12% of global firms had fully withdrawn. 1377 firms or 33% have officially declared that they are completely shutting down, or have announced they are temporarily reducing operations, but haven’t yet fully exited. A staggering 55% remain active in Russia, paying taxes, generating profit, and keeping operations running.
Many companies claim to have paused or scaled back operations. However, their tax contributions tell another story. In 2024 alone, foreign firms earned $201 billion in Russia and paid $20 billion in taxes—enough to fund more than one million soldiers based on Russia’s $18,400 recruitment bonus per soldier.
Why Companies Choose to Stay
Some firms chose profits over principles. The finance and consumer goods sectors led the way, with banks and brands like PepsiCo, Nestlé, and Mars topping revenue and tax lists. Despite early promises to leave, many companies either delayed their exit or quietly expanded. Others, like Mondelez and Coca-Cola, have been accused of masking their continued presence with rebranding or shifting operations to subsidiaries.
Key Research Findings on Corporate Complicity
- In 2024, foreign companies earned $201 billion and paid $20 billion in taxes to Russia.
- Only 12% of firms fully exited the Russian market; 55% stayed.
- U.S. and EU firms paid more than $3.8 billion in profit taxes combined.
- The finance and consumer sectors were the top contributors to the Russian war economy.
Western Values Undermined by Business-as-Usual
The report argues that continued business in Russia by Western firms directly undermines their governments’ aid to Ukraine. Companies headquartered in the U.S., Germany, and France are among the largest contributors to Russia’s tax base.
The report highlights that increasing numbers of foreign firms have stopped publishing their financial reports, a trend particularly noticeable among large corporations. Of the 100 largest foreign companies operating in Russia in 2021, 86 disclosed their financials in 2023. This number has halved in 2024 to just 43. The decision not to disclose financial statements may reflect an effort by companies to avoid further reputational damage linked to the scale of their economic support for the war effort.
Read the Full Report
Explore the full findings and detailed analysis by reading the complete report on the Kyiv School of Economics website. Additionally, you can view more policy briefs from the KSE Institute on the FREE Network’s website.
Learn More About the Russian War Economy and Sanctions
To learn more about Western sanctions and Russia’s countermeasures, visit the Sanctions Timeline. And for details on sanctions imposed on Russia and their effects, see the Evidence Base section of the sanctions portal. Explore more policy briefs on sanctioning Russia here.
Whistleblowing Policy of FREE NETWORK
The Whistleblowing Policy of the FREE Network explains how to safely report concerns, understand your rights, and access the legal support available under the EU directive.
We at the FREE NETWORK, a joint initiative by SITE (Stockholm), BEROC (Minsk), BICEPS (Riga), CenEA (Szczecin), ISET-PI (Tbilisi), and KSE Institute (Kyiv), are committed to the highest standards of transparency, honesty, and accountability. To ease and facilitate the process for our employees, as well as relevant third parties who interact with the FREE NETWORK, this Whistleblowing Policy provides clear guidance on how to safely raise serious concerns regarding aspects of work carried out under this initiative. It informs you, as a whistleblower, about the support available to help you express concerns securely, who to contact, and how to file a whistleblowing report.
The policy also explains how we ensure that the support provided is responsible and compliant with the law, including Directive (EU) 2019/1937 on the protection of persons who report breaches of Union law (the “Whistleblowing Directive”). In addition, it outlines your rights and how you can exercise them. If you have any questions about this Whistleblowing Policy or the process for filing a report, please contact us using the details provided below.
1. Who Can Be a Whistleblower?
1.1. As a whistleblower, you may be an employee of the FREE Network, a person with self-employed status, a shareholder, or a member of the administrative, management, or supervisory body of an undertaking. You may also be a volunteer, or a paid or unpaid trainee. Additionally, you may be a person working under the supervision and direction of contractors, subcontractors, or suppliers to the FREE Network.
1.2. Please note that you may still qualify as a whistleblower even if your work-related relationship with us has ended, or if it has not yet begun.
2. Who Is Responsible for the Whistleblowing Report?
2.1. The Stockholm Institute of Transition Economics (SITE), as the lead organisation in the FREE Network, is responsible for whistleblowing reports filed under this Policy. SITE is obligated to protect you, including by not disclosing your identity to anyone beyond the authorised persons handling your report (unless you explicitly consent or disclosure is required by law), and by ensuring you are not subject to retaliation.
2.2. Please note that you also have responsibilities under this Policy. We expect you to only report information and personal data relevant to a specific whistleblowing report. Personal work-related grievances, such as interpersonal conflicts or employment-related decisions, should not be reported through this system but instead raised with the SITE Admin Director or Director.
3. What Can Be Reported in a Whistleblowing Report?
3.1. If, through your work-related relationship with us, you acquire information and have reasonable grounds to believe that misconduct or breaches of applicable rules or regulations have occurred, you are encouraged to file a whistleblowing report.
3.2. The Whistleblowing Directive highlights the importance of reporting in the following areas:
- (i) public procurement;
- (ii) financial services, products, and markets, and prevention of money laundering and terrorist financing;
- (iii) product safety and compliance;
- (iv) transport safety;
- (v) environmental protection;
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- (viii) public health;
- (ix) consumer protection;
- (x) protection of privacy and personal data;
- (xi) harassment and unethical conduct.
We strongly encourage you to file a report on any such matter.
3.3. Reasonable grounds to believe means that, in light of the circumstances and the information available to you at the time of filing the report, you believe the matter reported to be true.
4. Where Can You File a Whistleblowing Report?
4.1. You may file a report in writing via SITE’s website or email, or orally to the SITE Admin Director or Director. Oral reporting may be done by telephone [or through other voice messaging systems] and, upon request, in person with a designated impartial contact as listed below.
4.2. Reports may also be submitted through SITE’s external whistleblowing system, Whistlelink, managed by Whistleblowing Solutions AB. This service is available 24/7 at: hhs.whistlelink.com.
4.3. We will acknowledge receipt of your report within seven days. SITE has designated impartial persons/departments to follow up on reports. They will maintain communication with you, request additional information if necessary, and provide feedback no later than three months after acknowledgement.
4.4. Reports may also be filed anonymously. This does not affect your rights under the EU Whistleblowing Directive, although anonymity may make investigation more difficult.
4.5. If internal reporting is inappropriate or not possible, you may file a report externally with competent authorities, and where relevant, with EU institutions, bodies, offices, or agencies. Contact information is available here >>.
5. Personal Data
5.1. We are committed to protecting the personal data we process. This means safeguarding your privacy and complying with applicable data protection laws, including the General Data Protection Regulation (GDPR).
5.2. When you file a report, the personal data included will be processed to fulfil our legal obligations under, among other instruments, the Whistleblowing Directive.
6. What Are Your Rights?
6.1. We are committed to implementing and maintaining adequate measures to prohibit retaliation against you for filing a whistleblowing report. This includes threats of retaliation and attempts at retaliation.
6.2. Examples of prohibited retaliation include:
- (a) suspension, lay-off, dismissal, or equivalent measures;
- (b) demotion or denial of promotion;
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- (k) harm to reputation, including through social media, or financial loss;
- (l) blacklisting that prevents future employment;
- (m) early termination or cancellation of a contract for goods or services;
- (n) cancellation of a licence or permit;
- (o) forced psychiatric or medical referrals.
6.3. In addition to this Policy, competent authorities provide independent, accessible, and free information on available procedures, remedies, protection against retaliation, and your rights. Contact information is available here.
How to Contact Us?
If you have any questions about this Whistleblowing policy and/or how to file a Whistleblowing report, please contact us via the following contact information:
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SITE Admin Director
E-mail: Minh.Phan@hhs.se
Phone: +46 8 736 96 89
Russian War Economy Faces Slowdown Despite Resilience
Since 2022, the Russian economy has surprised many with its resilience under Western sanctions. Growth was fueled by wartime spending and high energy revenues. Now, signs suggest this “war bump” is fading. In a recent Financial Times interview, Elina Ribakova explains why the Russian war economy faces serious challenges ahead. Elina Ribakova is vice-president for foreign policy at the Kyiv School of Economics. She spoke with Sam Fleming, economics editor at the Financial Times.
Sanctions and Short-Term Resilience
When Western nations imposed sanctions on Russia, many expected a collapse. Instead, wartime spending and high oil revenues propped up growth. Ribakova notes that Russia’s ability to redirect resources into military production created a temporary boom. But this resilience came at the cost of long-term growth in the Russian war economy.
Why the Russian War Economy Is Slowing
Russia is now hitting hard limits. Labor shortages, soaring inflation, and overstretched industrial capacity are beginning to bite. Ribakova points out that unemployment has fallen to unsustainably low levels, while non-military sectors are stagnating. Even the defense industry, once booming, is showing signs of strain across the Russian war economy.
China’s Critical Role
One reason Russia has endured sanctions is its growing reliance on China. Ribakova highlights how Chinese exports—from consumer goods to vital military components—have allowed Moscow to sustain its war economy. Yet this partnership is highly lopsided: for China, Russia is a marginal partner; for Russia, China is a lifeline.
The Postwar Challenge
Looking ahead, Ribakova warns that ending the war will not mean an easy recovery. Russia faces deep demographic challenges, heavy reliance on military production, and decades of failed economic diversification. Rebuilding a sustainable postwar economy may prove “devastatingly hard” for the Russian war economy.
Listen to the Original Interview
The slowdown of the Russian war economy is more than an economic story; it shapes global energy markets, security, and geopolitics. To hear the full conversation and Ribakova’s detailed analysis, listen to the original Financial Times interview here.
Learn More About the Russian War Economy and Sanctions
To learn more about Western sanctions and Russia’s countermeasures, visit the Sanctions Timeline. And for details on sanctions imposed on Russia and their effects, see the Evidence Base section of the sanctions portal. Explore more policy briefs on sanctioning Russia here.
Are the Sanctions on Russia Finally Working?
Russia’s brutal war in Ukraine is now in its fourth year. In recent weeks, President Donald Trump has held several high-level meetings to explore ways to end the conflict. How serious are these efforts, and what would it take to ensure Ukraine’s long-term security?
When Russian forces invaded in February 2022, many expected Western sanctions to cripple Moscow’s economy and limit its ability to fight. Yet, Russia’s economy has remained surprisingly strong. What explains this resilience? And what could the international community have done differently?
Today, signs of economic slowdown are becoming clear in Russia. Could this downturn finally start to weaken the Kremlin’s war machine? What effect might a recession have on the battlefield? And how can Ukraine’s allies keep supporting the country while preparing for reconstruction and future EU membership?
These questions were discussed by:
- Cecilia Malmström, Nonresident Senior Fellow at the Peterson Institute for International Economics (PIIE)
- Torbjörn Becker, Director of the Stockholm Institute of Transition Economics at the Stockholm School of Economics,
- Jacob Funk Kirkegaard, Nonresident Senior Fellow at PIIE.
For more information about the event, visit the Peterson Institute for International Economics.
To learn more about sanctions on Russia and Russian economic retaliation, explore the SITE Sanctions Project — a hub that collects, organizes, and shares insights, data, and analysis on the evolving landscape of sanctions against Russia.
EU Adopts 18th Sanctions Package Against Russia to Cut War Funding
The European Union has adopted its 18th sanctions package against Russia, marking one of the toughest measures since the start of the war in Ukraine. The new package targets Russia’s oil revenues, banking system, and trade routes that have been used to bypass earlier restrictions. Slovakia had initially blocked the move but lifted its veto after negotiations. The authors of the package described it as crucial to closing loopholes and weakening Russia’s wartime economy.
Why the EU Tightened Sanctions?
Russia has repeatedly adapted to previous sanctions by finding new trade partners and exploiting loopholes. As a result, the EU introduced the 18th sanctions package against Russia to strengthen enforcement rather than create entirely new bans. Sanctions are part of a constant economic battle, with the EU closing gaps as Russia discovers new ways to evade them.
What are the Main Goals of the New Package?
The 18th sanctions package focuses on reducing Russia’s energy income and financial resources. It aims to block the shadow fleet of tankers, target Russian banks, and restrict access to military technology.
What are the New Measures of the 18th Sanctions Package?
- The oil price cap has been lowered to about $47.6 per barrel, with dynamic adjustments.
- Imports of refined oil made from Russian crude in third countries are now banned.
- Twenty-two more Russian banks face transaction bans, including those linked to Nord Stream projects.
- Over 105 new vessels were blacklisted, bringing the “shadow fleet” count to more than 400.
- Export restrictions on military-use technology have been tightened.
- Sanctions now extend to third-country actors helping Russia evade restrictions.
- New limits on liquefied natural gas (LNG) aim to reduce Russia’s long-term energy revenues.
Why These Measures Matter?
The 18th sanctions package against Russia is not just about new bans; it is about ensuring old rules work. Energy is still Russia’s biggest source of money, and cutting this income weakens its ability to fund the war. However, Russia has proven resilient by redirecting oil exports to Asia, relying on smuggling networks, and depleting its National Wealth Fund to cover deficits.
To learn more about the 18th sanctions package, how Russia is adapting, what tools the EU has left, how well the EU is responding to Russian countermeasures, and how long Russia can hold out, visit the Sanctions Hub—a website that collects data and insights on sanctions against Russia and its economic retaliation (read more).
To learn more about Western sanctions and Russia’s countermeasures, visit the Sanctions Timeline. And for details on sanctions imposed on Russia and their effects, see the Evidence Base section of the sanctions portal.
Russia Budget Deficit Nears Full-Year Target in Just Six Months
Russia’s budget deficit has surged to alarming levels, hitting 97% of its full-year target by mid-2025. Falling oil and gas revenues, combined with a sharp rise in government spending, are putting unprecedented strain on the country’s finances. The Russia budget deficit is now the largest for the first half of any year since the war began. The findings come from a new report by Benjamin Hilgenstock, Yuliia Pavytska, and Matvii Talalaievskyi of the KSE Institute.
Economic Strains Push Russia’s Finances to the Brink
In early 2025, low global oil prices dealt a major blow to Russia’s revenue streams. Although prices briefly spiked in June due to Middle East tensions, they soon fell back to $50–55 per barrel. This sustained drop cut oil and gas income by 17% year-on-year, leaving the government struggling to meet budget plans and worsening the Russia budget deficit.
Mounting Pressure on State Finances
By June, the budget deficit had climbed to 3.7 trillion rubles—over five times higher than in the same period of 2024. Government spending rose 20%, while non-oil revenues increased by just 13%. The Russia budget deficit has already nearly equaled the planned total for the year, making it almost certain the target will be missed.
Key Research Findings
- The Russian budget deficit reached 97% of the annual target in just six months.
- Oil and gas revenues dropped 17% year-on-year, while government spending rose 20%.
- Domestic debt issuance in H1 2025 was 90% higher than in the same period last year.
- The National Welfare Fund’s liquid assets exceed the mid-year deficit by only 12%.
Outlook: Risks and Financing Challenges
If oil prices remain low, the Russia budget deficit will likely surpass forecasts by a significant margin. This could force the government to draw heavily on the National Welfare Fund and increase domestic debt issuance. While demand for bonds from Russian banks remains strong, the long-term sustainability of financing is questionable without a rebound in export revenues.
Meet the Researchers
- Benjamin Hilgenstock: Head of Macroeconomic Research and Strategy, KSE Institute
- Yuliia Pavytska: Manager of the Sanctions Programme, KSE Institute
- Matvii Talalaievskyi: Analyst, KSE Institute
Read the Full Report
Explore the full findings and detailed analysis by reading the complete report on the KSE Institute website. You can also explore more policy briefs covering sanctions against Russia and Russian counter-sanctions in the FREE Network’s policy briefs section.
Explore Other Editions of KSE Institute’s Russia Chartbook
- KSE Institute’s Russia Chartbook – August 2025
- KSE Institute’s Russia Chartbook – July 2025
- KSE Institute’s Russia Chartbook – June 2025
- KSE Institute’s Russia Chartbook – May 2025
- KSE Institute’s Russia Chartbook – April 2025
- KSE Institute’s Russia Chartbook – March 2025
- KSE Institute’s Russia Chartbook – February 2025
- KSE Institute’s Russia Chartbook – January 2025
Georgia’s Business Confidence Dips as Financial Sector Weakens
Business confidence in Georgia slipped slightly in Q3 2025, falling by 0.2 index points to -1.5. The decline was driven by pessimistic expectations and weaker past performance, with the financial sector showing the steepest drop. Despite this, sales price expectations rose, hinting at potential price hikes in the coming months. The survey was conducted by the ISET Policy Institute in partnership with the BIA and the International Chamber of Commerce in Georgia.
Economic Uncertainty Weighs on Business Confidence
The Business Confidence Index (BCI) measures how optimistic or pessimistic companies feel about the economy. In Q3 2025, confidence fell for the first time since early 2025, reflecting a mix of sector-specific challenges. The largest decline came from financial services, which dropped by 19.5 points, followed by trade and agriculture. Conversely, manufacturing saw a strong rebound, gaining 15.4 points compared to the previous quarter.
Why This Research Was Conducted
The BCI is a quarterly measure designed to track business sentiment across Georgia’s key economic sectors. It helps policymakers, investors, and entrepreneurs understand market trends and prepare for future changes.
Key Research Findings
- The BCI fell to -1.5 in Q3 2025, with expectations dropping to 2.0 points.
- Past performance weakened, particularly in agriculture (-22.5) and trade (-20.7).
- Sales price expectations rose sharply to 22.0, led by manufacturing (+44.4).
- Large firms’ confidence increased by 16.6 points, while SMEs’ fell by 8.2.
What This Means for Georgia’s Economy
The mixed results suggest a split recovery. Large companies remain optimistic, while smaller firms face challenges like weak demand and limited access to finance. Rising price expectations may indicate inflationary pressure in late 2025. Future research will likely focus on whether optimism in manufacturing can offset weakness in finance and trade.
Read the Full Report
Explore the full analysis on the ISET Policy Institute website. You can also find more policy briefs on economic growth and development on the FREE Network website.
Russian Oil Revenues Dip to $12.6 Billion as Sanctions Bite
In May 2025, Russian oil export revenues fell by $0.4 billion to $12.6 billion due to lower prices and export volumes. Seaborne oil shipments declined, with oil products dropping sharply. The shadow fleet’s role in exports grew, raising environmental and enforcement concerns. The findings come from the latest Russian Oil Tracker by the KSE Institute, authored by Borys Dodonov, Benjamin Hilgenstock, Anatolii Kravtsev, Yuliia Pavytska, and Nataliia Shapoval.
Falling Oil Exports Amid Sanctions Pressure
Global oil prices remained weak in May, keeping all Russian crude grades within the G7/EU price cap. Export volumes slipped, with overall seaborne shipments down 3.1% month-on-month. Reliance on Western-insured tankers dropped to 42%, while older, uninsured “shadow fleet” tankers carried most crude exports. India remained Russia’s largest crude buyer, taking 51% of shipments, while Turkey led in oil product imports.
Tracking Sanctions Evasion and Enforcement
KSE Institute data shows that 165 Russian-affiliated tankers operated in May without international insurance, 89% of them over 15 years old. Many had previously been sanctioned, yet enforcement gaps persist. Between March and May, 135 sanctioned vessels were still loaded at Russian ports. The US and EU maintain stricter compliance, while UK and Canadian enforcement remains weaker.
Key Research Findings
- Russian oil revenues fell to $12.6 billion in May 2025, the second-lowest since the invasion.
- Oil product exports dropped 7% month-on-month, with Pacific ports seeing a 21.9% collapse.
- Shadow fleet tankers carried 82% of crude exports, most over 15 years old.
- In a strict sanctions scenario, annual revenues could drop to $111 billion in 2025.
Economic and Policy Implications
If sanctions enforcement remains weak, Russia could still earn $163 billion from oil in 2025. Stronger enforcement and tighter price caps could sharply cut revenues, limiting war financing. The growing shadow fleet also raises environmental risks due to poor maintenance and flag evasion. Future monitoring will focus on how sanctions coalitions adapt to these tactics.
Meet the Researchers
- Borys Dodonov: KSE Institute
- Benjamin Hilgenstock: KSE Institute
- Anatolii Kravtsev: KSE Institute
- Yuliia Pavytska: KSE Institute
- Nataliia Shapoval: KSE Institute
Read the Full Report
Explore the complete findings and detailed charts in the Russian Oil Tracker on the KSE Institute’s website.