Ukraine has turned its drone campaign on Wildberries, Russia's biggest online retailer, striking logistics hubs to raise the cost of war for Russian businesses. Moscow has acknowledged it may need to prop the company up, and one analyst expects zero growth in the Russian economy this year at best.
Ukrainian drones have ratcheted up the pressure on Moscow's wartime economy by striking Wildberries, Russia's biggest online retailer, as Kyiv seeks to force President Vladimir Putin back to the negotiating table after nearly four-and-a-half years of war. Kyiv is targeting major logistics centers to severely disrupt Russia's supply chains and increase the financial burden facing Russian banks and businesses. That marks a significant change in approach after months of long-range strikes on Russian energy infrastructure.
Drones shift from energy sites to warehouses
Wildberries evacuated a warehouse in the central Russian city of Ryazan on Wednesday morning, the company said, after Ukrainian drones struck several industrial facilities. Founded in 2004, the retailer employs about 48,000 people. President Volodymyr Zelenskyy has said the targeted warehouses were involved in providing Russian forces with drone components and navigation equipment.
Moscow weighs support for its Amazon
The Russian government has acknowledged it may need to prop up Wildberries, Reuters reported Tuesday, citing two unnamed sources, with state-controlled bank VTB expected to play a key role. Russia's Foreign Ministry was not immediately available to comment when contacted by CNBC.
Russian businesses have faced numerous disruptions since the full-scale invasion of Ukraine in early 2022 and have largely absorbed them, according to Natalya Kovaleva, a researcher at Chatham House: Western sanctions fractured supply chains and recent fuel shortages drove up costs while adding to inflationary pressures. Kovaleva said Kyiv hopes that raising the cost of war will make internal opposition mount and may force Putin to negotiate, or at least halt his bombardment of Ukraine's cities. Yet she added it remains to be seen whether the strategy has the desired effect, as Russia's elites appear more dependent on — and wary of — the Kremlin than ever.
Sanctions bill advances as growth stalls
According to CNBC, Elina Ribakova of the Peterson Institute for International Economics expects zero growth this year at best, after the economy and industrial output both contracted in the first quarter: "The Russian economy has stalled." That industrial contraction means the defense sector has decelerated meaningfully too, Ribakova said, and she added that Russian energy sanctions legislation had the potential to be extremely impactful for Putin's wartime economy, particularly as the Russia and Iran conflicts appear to be converging.
Legislation championed by the late Sen. Lindsey Graham has passed its first Senate hurdle amid a renewed congressional push to tighten sanctions on Moscow. Zelenskyy, meanwhile, said Tuesday he had discussed reinvigorating the diplomatic process with U.S. President Donald Trump at the Oval Office.
Separately, Kyiv attacked an Iranian commercial vessel in the Caspian Sea on Saturday, and Tehran said one sailor died and several others were injured. Iran's ability to close the Strait of Hormuz is boosting oil prices and giving Russia another way to continue fighting in Ukraine, Ribakova said.
Source: CNBC
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