A Russian shipyard closes due to sanctions

View of ships and cranes in the Kaliningrad river port, Russia.
View of ships and cranes in the Kaliningrad river port, Russia.

After the start of the Russian-Ukrainian conflict, Russia was subject to severe international sanctions, and the Ukrainian Defense Intelligence Service claimed to have obtained an internal document of the Russian Ministry of Defense, which showed that the JSC Vostochnaya Verf shipyard in Vladivostok, in the Far East, Experiencing financial difficulties. Due to factors such as lack of raw materials, production will be completely suspended from April this year, and employees will be fired.

It is understood that the Oriental Wilf Shipyard was founded in 1952. In order to meet the needs of the former Soviet Pacific Fleet and the Far East Frontier Forces, it built small tonnage ships such as minesweepers, which played an important role in the provision of Russian shipping and military equipment. It was changed to a joint-stock company in 1994. From the 1950s to the 2000s, the shipyard built more than 400 vessels for the navy, border guards and fisheries, and exported more than 30 sets to 8 countries in the world (China, Vietnam, Cuba, Indonesia, Ethiopia, Guinea, Iraq, Yemen) military equipment.

Currently, the Vostochnaya Verf shipyard is part of Russia's United Shipbuilding Corporation (USC). Since January 2020, the shipyard has been the sole contractor for the Russian Ministry of Defense's projects in the Far East and is home to the Free Port of Vladivostok (CPV). The shipyard can build ships with a length of 120 meters, a width of 16 meters, a depth of 25 meters and a displacement of 3,500 tons.

The Ukrainian Defense Intelligence Service said that due to financial difficulties and a lack of imported components and raw materials, Russian shipyards have recently encountered difficulties in the construction and maintenance of warships. The bureau specifically pointed to the JSC Vostochnaya Verf shipyard, which it said had to execute orders worth a total of 35 billion rubles, including the construction of 2 oil tankers, 2 small missile boats, 2 mobile terminals, and various types of maintenance vessels.

Another internal document said the Russian shipbuilding system, including equipment such as navigation systems and communication systems, had to be halted due to a lack of foreign raw materials. The deadliest point is that in addition to being unable to buy goods from Europe due to sanctions, Russia is also unable to import substitutes from domestic and Asian countries. In addition, the gunpowder required for naval artillery was discontinued.

Earlier, the U.S. Treasury Department announced that the move would bar Russia's United Shipbuilding Group from entering the U.S. financial system or dealing with U.S. companies, aimed at crippling Russia's ability to build and service warships.

German Chancellor Olaf Schultz said at a joint press conference with British Prime Minister Boris Johnson on April 8 that sanctions on Russia are effective and will profoundly affect all sectors of the Russian economy, leaving it with little competition force. "