The Great Expectations Gap
When Russia invaded Ukraine in February 2022, Western countries responded with what many officials described as the most comprehensive sanctions ever imposed on a major economy. French Finance Minister Bruno Le Maire confidently declared, “We will bring down the Russian economy,” while similar predictions came from officials throughout the West. Yet years later, the assertion that sanctions are not working as intended has gained significant traction among economic analysts and policy experts.
According to Monde Diplomatique, Russia’s GDP grew by 3.6% in 2023 and is projected to expand by another 3.2% in 2024, outpacing all advanced economies. This contrasts sharply with early International Monetary Fund (IMF) forecasts that predicted an 8.5% contraction in 2022. The reality has proven far less devastating for Moscow than Western capitals anticipated.
Russia’s Economic Adaptation Mechanisms
Several factors explain Russia’s resilience against the onslaught of international sanctions. Central to these has been preparation dating back to 2014, when the annexation of Crimea triggered the first wave of Western penalties. Russia subsequently implemented defensive economic measures, including an import substitution policy that achieved food self-sufficiency within a few years.
According to Al Jazeera, Russia developed an alternative financial infrastructure that proved critical when sanctions intensified in 2022. The country created a national card payment system (NSPK) that handles all domestic payments, along with a financial messaging system (SPFS) that replaces SWIFT. These systems immediately took over when Western-issued cards were suspended, allowing uninterrupted financial operations within Russia.
Additionally, Russia pivoted toward alternative markets, significantly increasing trade with non-Western partners. Business Insider reports that China’s trade with Russia hit a record high of $237 billion in 2023, with Chinese exports to Russia surging by 50%. India has increased Russian oil imports by 134% over the past year, accounting for almost half of Russia’s seaborne crude trade.
The Flawed Assumptions of Western Sanctions Policy
The gap between expectations and reality stems from several problematic assumptions underlying the EU sanctions approach. According to The Guardian, Western powers believed that Russia would quickly run out of money to finance its military operations, that the global community would unite in opposition to Russian aggression, and that Russia’s economy would collapse under pressure like the Soviet Union did in the 1980s.
All three assumptions proved flawed. Despite energy embargoes and frozen reserves, higher prices compensated for reduced export volumes. Many countries in Africa and Asia refused to condemn Russia at the UN and abstained instead, creating pathways for sanctions circumvention. Meanwhile, Russia’s modern economy has proven far more resilient than the Soviet system, with sufficient technical expertise and resource wealth to adapt to new conditions.
The legal framework of EU sanctions has also limited their effectiveness. According to Noerr, “EU sanctions aim to have an asymmetrical effect, i.e., to hurt the Russian economy more than the EU’s. It is doubtful whether this aim has always been achieved.” Sectors that could provide significant leverage—such as nuclear energy and real estate—have remained largely untouched due to special interests within the EU, fundamentally undermining sanctions effectiveness.
Collateral Damage to EU Economies
While Russia has weathered sanctions better than expected, the measures have imposed significant costs on EU economies. According to Politico, European countries paid Russia more money for oil and gas in the first year of the full-scale war than they provided for Ukraine’s war effort over the first two years. This reflects difficult choices made by European governments facing energy security concerns.
The sanctions have also disrupted European supply chains and contributed to inflation. According to The Guardian, sanctions-related price increases will cut UK living standards by approximately £2,500 per person. This economic pain creates political pressure to justify sanctions, potentially explaining why Western officials continue to claim the Russian economy is on the verge of collapse despite evidence to the contrary.
Unintended Global Consequences
Beyond Europe, why sanctions Russia policies have triggered significant shifts in global economic alignments. According to Al Jazeera, many nations have accelerated efforts to reduce dollar dependency after seeing Russian foreign currency reserves frozen. Countries from Brazil to Saudi Arabia have explored trading in non-dollar currencies, potentially weakening the dollar’s global dominance.
This trend extends beyond rhetoric to concrete action. Reuters reports that China and Saudi Arabia carried out their first transaction in yuan in December 2022. Meanwhile, Russia has decided to store all its oil and gas surplus revenue in yuan as it increasingly turns to the Chinese currency for its forex reserves.
Recalibrating Sanctions Strategy
The experience with Russia sanctions demands reconsideration of how economic pressure tools are designed and implemented. More effective approaches might involve fewer exemptions and carve-outs, greater coordination among implementing countries, and more targeted measures focused on specific military-industrial components rather than broad economic sectors.
Any comprehensive sanctions strategy must also acknowledge the reality that determined states with sufficient resources and partners can develop workarounds, especially in a multipolar world where alternatives to Western financial systems exist. This doesn’t mean abandoning sanctions entirely, but it suggests supplementing them with diplomatic initiatives that offer clearer pathways to resolution and more realistic assessments of their likely impact on target economies.
