Russian President Vladimir Putin signed into law a largely toothless counter-sanctions law drawn up by lawmakers in retaliation to sanctions imposed on Russia in April that is unlikely to have anything more than a symbolic effect. 

The law gives the president the executive power to sever ties with unfriendly countries and impose bans and embargoes on the import or export of goods to those countries.

“Perhaps the most intriguing passage in the law is the right for the president to introduce unspecified “other measures”. In our opinion this implies much broader powers for the president to retaliate against “unfriendly states”, which could spread to any sphere of policy or cooperation,” Gintaras Shlizhyus, an analyst with Raiffeisen International, said in a note.

However, the measures are relatively toothless as the US exports only a limited range of goods to Russia and those goods are largely impossible to replace.

Currently Russia’s largest trade partner is China that accounts for 21.1% of the total, having imported $51.7bn worth of goods between March 2017 and March 2018. Germany is second with 10.9% of imports, with the US in third place with 5.5%. In terms of exports China is also the main export destination accounting for 11.2% of all exports, worth $45.5bn in the same period to March, followed by the Netherlands (10.2%), Germany (7%), Turkey (5.2%) and Belarus (5%). The US is in tenth place for Russian exports and accounts for only 3% of the total. 

Russia would inflict more damage on its own industries than it would cause pain to American business if any of the important goods were targeted by the new law.

The situation was different with the Russian ban on the import of European agricultural products that was imposed as a counter-sanction following the EU sanctions imposed in 2014 after Russia’s annexation of the Crimea. Those counter-sanctions cost the EU an estimated €100bn in lost trade and did real damage to the European agricultural sector. However, Russia largely benefited as the sanctions are de facto protectionist measures that have allowed domestic agricultural producers to flourish and consolidate or increase their market shares.

Chief amongst Russia’s imports from the US are pharmaceuticals and high tech equipment, neither of which Russia produces to the required standard itself, nor can these products be easily sourced from other countries.

Among other US products and businesses that Russia could target are titanium and cars. Boeing is highly dependent on Russian titanium for plane-building, but to ban titanium exports would not only cost Russia a lot in missed export revenues, it would put thousands of Russians out of work. The situation is even more extreme in the car making industry where several US firms have built factories in Russia: closing these down would have almost no impact on the US economy, but would wreck the local economy in many of Russia’s regions and cause widespread local unemployment.

Lawmakers initially proposed large-scale restrictions on US goods and services, ranging from food and alcohol to medicine and consulting services, however, the final law is largely symbolic.

The law was one of two items of legislation. In the second, lawmakers debated making it a crime punishable by jail for a Russian citizen to comply with the US sanctions.

Russian and foreign business lobbies had said any such law would effectively force firms to choose between doing business with Russia and having dealings with the rest of the world and the legislation is unlikely to be passed.

Last month Putin said any retaliation against Western sanctions must not hurt the Russian economy or partners that do business in Russia.