Alexander Knobel, Director, Institute of World Economics and Finance, Russian Foreign Trade Academy, Head of the International Trade Department at the Gaidar Institute, commented to «Rossijskaya gazeta” on the decision of South Korean authorities to expand restrictions on the exports to Russia. According to the expert, China will become the main resource for imports substitution.

South Korea extended export restrictions on Russia and Belarus. Thus, export controls on the part of the Republic of Korea will be extended from 57 to 798 commodity items, which are prohibited to deliver to Russia and Belarus without special permission. Among the added positions are semiconductors, goods of the chemical, steel, automotive, machine-building industries, as well as quantum computers. The sanctions will take effect on Friday, April 28.

According to Alexander Knobel, it is not a total export ban, but only an extension of export restrictions, meaning that special permission is required to export these items. In this way, the South Korean Ministry of Commerce is placing general restrictions on exports of dual-use items that can be used in weapons development. Most likely, Korean exporters will need to confirm that the exports are not for the Russian defense industry.

“In practice, this will be expressed in the increasing complexity of supply mechanisms and growth in the cost of these commodity items, since supplies will be arranged through intermediate companies or involving agents. However, in the end, most of the listed goods can be supplied to Russia,” the expert explained.

Alexander Knobel believes that Russia is no more dependent on Korean imports than on imports from other unfriendly countries. “Korea in this sense makes a small contribution to the broad picture of the need to reorient the Russian economy. The logistics of imports will become a little more complicated and supplies will be more expensive,” he explained, adding that Korean sanctions seem to be the least severe compared to suppliers of similar goods from the U.S. or Japan.

Nevertheless, we should be prepared that some items will still be affected by the ban. In this case, the more high-tech production is, the more difficult it will be to replace it. However, the main resource for substitution will be China, the expert believes. For example, in terms of vehicles, the replacement with the Chinese automobile industry seems to be the most obvious solution, Alexander Knobel concluded.