Challenges with no ruble monthly payments: Russians in Spain hit with sanctions

Many of them see themselves “watered to the neck” because they can’t handle their money. For now, the Kremlin has other options to avoid sanctions, but the same cannot be said for its citizens.

Russia’s “corralito” and Western sanctions on the Kremlin are causing headaches for Russians living abroad and unable to handle their money in state banks. At the same time, the allies have been increasing pressure to call for a truce in Ukraine, but for the time being they have been unable to get Putin to withdraw his troops from Ukrainian territory. So, who are these sanctions really affecting?

In Spain, a part of the population suffered directly as a result of the Russian drowning. Specifically, the ONS registered nearly 80,000 Russian nationals in the country, mainly in the three main regions of Barcelona, Levante and Malaga.

This was the case with Sergey (pseudonym), who lived in Benidorm (Alicante), Spain for three years and saw his Spanish bank block his account, they wouldn’t allow him “because of his nationality” to deposit cash, which made him feel “discriminated”.

“I can withdraw and pay with my card, but I can’t get in, and I don’t understand why,” he asked. The affected party understands that the sanctions apply to his use of the Russian card, but does not understand why they are imposing restrictions on him at Spanish banks.

For his part, he represents his parents in the account because they don’t speak Spanish, and at the moment, “they can’t do anything” other than make phone calls, but despite their insistence, they’re still waiting.​ They are running out of time to pay their monthly debt. “The problem is we don’t have much in our account and we have to pay because we have to pay for electricity and so on.”

He also pledged that from now on he will pay everything he can in cash, but “he must pay now”. It also indicates that they have a rental property in Torrevieja (Alicante) and cannot charge for the service.

Others affected are those who maintain the tax system in Russia and cannot dispose of their funds in their home countries because they are excluded from the bank transfer system.

Uncertainty ensues due to lack of liquidity. For this reason, the number of legal consultations among attorneys serving this community has increased. This is the case of Ekaterina Laazareva, who saw how her Cill Lawyers office “substantially” increased her clients’ concerns and questions. “Now they are in a position where they have to choose, because the Spanish entity says that if a person, even if they have an administrative residence in Spain, continues to pay taxes in Russia, they are tax residents there and they will apply for sanctions,” explained.

The lawyer, who was born in St. Petersburg but has worked in the Alicante region for more than 20 years, clarified that her clients are upper-middle class people who want to leave the country and move to Spain. “They are not oligarchs and have nothing to do with the regime,” he explained. She was even surprised that, despite the indirect consequences of the war, her clients “few people who opposed and understood the sanctions.”

He also noted that initially his clients had the intention to sell due to liquidity issues, but now they have calmed down and are assessing the situation in case the situation changes in the short or medium term. “Most people are waiting for what will happen,” he said.

However, he assured that they were backing them so that the bank could make their situation more flexible as they had to pay some commitments, such as real estate mortgages they had prepaid, and they now risked losing money. Before them, however, are banks that are “using a magnifying glass to assess where their revenue is coming from” and are “not always flexible”.

Attorney Mariano Arias Winogradow does the same job, specializing in legal advice for foreigners on the Levant coast. In his case, he explained that most of the inquiries he received were related to how to handle monthly direct debits for electricity, internet and other services without being able to transfer his money out of Russia.

He pointed out that some of them are “in trouble”, but this, while worse now, happens all the time because Russia is on the European Community “blacklist” and they always ask for supporting documents and “give jars” constantly confirm the data and explain the source of the money. The difference is that now the lockdown “will not be resolved in a few weeks”.

As an alternative, Arias said some people brought cash and tried to talk to the companies to see if they gave them the option of being able to pay in other ways.

Has this effort paid off?
“Economic sanctions will not prevent war unless they introduce some measures against energy,” said Mira Milosevic, a senior fellow at the Royal Institute of Elcano and an associate professor of Russian foreign policy at the Enterprise Institute.

As he explained, Russia is a country with alternatives, so it won’t start suffering in a year, and today, due to the closure of services and shops, ordinary citizens are affected, but “they can live without them”. even on international travel. Russians see how their air traffic is restricted, but they are still looking for alternatives, such as going to Turkey or Egypt, which are their “favorite destinations” and are not restricted.

“Sanctions in the medium term could cause a lot of pain for Russia and Russians. But, for now, we have to distinguish between a military war in Ukraine and a Western economic war on Moscow,”he noted.

Likewise, he commented that if compared to history, Russia is not in the worst position yet. “The Russian economy has regressed its GDP to 15 years ago, which means it still has nothing to do with Russia’s bankruptcy in 1998,” he noted.

The Serbian researcher also explained that the economic war “wasn’t that fast,” adding that it would not change the course of the war or create a backdrop for the Russians to rise up to overthrow Putin. “If the West expects the Russians to turn against the Kremlin, I think that belief is rather naive,” he added.

“The system survived because sanctions did not become levers for change”

• Mira Milosevich, Research Fellow at RIEC
  Furthermore, he commented that the Kremlin is playing the game with very strong propaganda and using this refusal to convince Russians, who traditionally oppose Putin, that the West is inciting hatred.

Even these punishments, Russia and moral sanctions can backfire, as he explains, commenting that even his anti-regime friends are beginning to believe that the West has no intention of ending the war, with the aim of drowning Russia and overthrowing the government. It was successful because its popularity among the crowd increased by 80% after the invasion.

Regarding this strong propaganda by Russia, international relations expert Jose Maria Peredo added that it is causing a noticeable “disorientation” among the population. However, like Milosevic, he said there were generations of people who experienced “long lines” in the 1990s due to information censorship around the country that “can’t be seen or shown to us now”.

“The characteristics of the Russian people obviously make them very tough people when faced with adverse conditions,” he stressed.

He also stressed that the consequences would be long-term and that measures would escalate as the conflict intensifies, which could be the start of social pressure. “The first country to be affected is Ukraine, the second is Russia,” he added.

Meanwhile, Russians living inside and outside the country look forward to the evolution of the conflict and how the allies will continue to impose increasingly severe sanctions as the situation in Ukraine becomes more complicated.

Many of them see themselves “watered to the neck” because they can’t handle their money. For now, the Kremlin has other options to avoid sanctions, but the same cannot be said for its citizens.