Sanctions on Russia Are Working. Here’s Why.

The Kremlin’s ability to wage war is already constrained, but the worst is yet to come.

By , the global forecasting director at the Economist Intelligence Unit.
A pedestrian walks past a vandalized mural depicting Russian President Vladimir Putin in Belgrade on June 2.
A pedestrian walks past a vandalized mural depicting Russian President Vladimir Putin in Belgrade on June 2.
A pedestrian walks past a vandalized mural depicting Russian President Vladimir Putin in Belgrade on June 2. ANDREJ ISAKOVIC/AFP via Getty Images

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There have been incessant debates over the effectiveness of sanctions on Russia. Far-right and far-left politicians who traditionally channel Moscow’s views claim they are ineffective and only hurt Europeans. French extreme-right leader Marine Le Pen has called the sanctions “completely useless, except to make Europeans suffer.” In Germany, her views are echoed not only by the right-wing Alternative for Germany but also by prominent Left Party politicians, such as Sahra Wagenknecht. “The sanctions don’t hurt Russia—only us,” she said recently. For these Kremlin-friendly voices, sanctions have done virtually no harm to the Russian economy, which in their view is thriving amid sky-high energy prices. Others who don’t necessarily share Moscow’s views nevertheless argue that sanctions have been a failure because they have not stopped Russian President Vladimir Putin from escalating his attacks on Ukraine.

This narrative serves the Kremlin’s interests. With winter fast approaching, Putin is betting that sanctions fatigue will soon set in. But a look at the data shows that the people claiming sanctions are ineffective are wrong: Only nine months after the first set of sanctions was imposed following Russia’s invasion of Ukraine on Feb. 24, they are already weighing on Moscow’s ability to wage war. And this is only the beginning. Sanctions on Russia are more of a marathon than a sprint, and the effectiveness of sanctions will increase over time.

The confusion around the effectiveness of sanctions stems from a lack of clarity about their goals. Western countries never intended to use sanctions to force Putin to back down and pull out of Ukraine; they know that Putin believes he is waging a war for Russia’s survival against a decadent West. Provoking regime change in Moscow is not the objective, either: Sanctions on Cuba, North Korea, and Syria show that this never works, and there is no reason to believe that Putin’s hypothetical successor would change course in Ukraine. Prompting a Venezuela-style collapse of the Russian economy is not the goal, either: This is impossible when the target is the world’s 11th-largest economy. Besides, Russia’s collapse would likely send the global economy into a recession by abruptly halting Russia’s exports of many commodities, including grain, fertilizer, energy, and metals.

There have been incessant debates over the effectiveness of sanctions on Russia. Far-right and far-left politicians who traditionally channel Moscow’s views claim they are ineffective and only hurt Europeans. French extreme-right leader Marine Le Pen has called the sanctions “completely useless, except to make Europeans suffer.” In Germany, her views are echoed not only by the right-wing Alternative for Germany but also by prominent Left Party politicians, such as Sahra Wagenknecht. “The sanctions don’t hurt Russia—only us,” she said recently. For these Kremlin-friendly voices, sanctions have done virtually no harm to the Russian economy, which in their view is thriving amid sky-high energy prices. Others who don’t necessarily share Moscow’s views nevertheless argue that sanctions have been a failure because they have not stopped Russian President Vladimir Putin from escalating his attacks on Ukraine.

This narrative serves the Kremlin’s interests. With winter fast approaching, Putin is betting that sanctions fatigue will soon set in. But a look at the data shows that the people claiming sanctions are ineffective are wrong: Only nine months after the first set of sanctions was imposed following Russia’s invasion of Ukraine on Feb. 24, they are already weighing on Moscow’s ability to wage war. And this is only the beginning. Sanctions on Russia are more of a marathon than a sprint, and the effectiveness of sanctions will increase over time.

The confusion around the effectiveness of sanctions stems from a lack of clarity about their goals. Western countries never intended to use sanctions to force Putin to back down and pull out of Ukraine; they know that Putin believes he is waging a war for Russia’s survival against a decadent West. Provoking regime change in Moscow is not the objective, either: Sanctions on Cuba, North Korea, and Syria show that this never works, and there is no reason to believe that Putin’s hypothetical successor would change course in Ukraine. Prompting a Venezuela-style collapse of the Russian economy is not the goal, either: This is impossible when the target is the world’s 11th-largest economy. Besides, Russia’s collapse would likely send the global economy into a recession by abruptly halting Russia’s exports of many commodities, including grain, fertilizer, energy, and metals.

What are the goals of Western sanctions on Russia, then? These have never been stated explicitly, but a closer look at sanctions packages implemented by the United States, the European Union, and their allies indicates that they have three objectives. First, Western countries are trying to send a strong signal of resolve and unity to the Kremlin. Second, sanctioning states aim to degrade Russia’s ability to wage war. Third, Western democracies are betting that sanctions will slowly asphyxiate the Russian economy and in particular the country’s energy sector. When judged on the basis of these criteria, sanctions are clearly working.


Western countries are using sanctions to send a message to the Kremlin: Europe and the United States are standing with Ukraine. From that perspective, mission accomplished. Trans-Atlantic collaboration on sanctions has proved strong over the past nine months, with only a few disagreements between Washington and European capitals. This confounded Putin’s likely expectation that the West would remain weak and divided, and there is also every chance that he was surprised by the speed and scale of these measures. It took the United States and the EU only weeks to impose sanctions on thousands of Russian individuals and companies, disconnect several Russian banks from the SWIFT system for international money transfers, and freeze half of the Russian central bank’s reserves.

Sending a diplomatic message is a good start, but the main objective of the sanctions is to degrade Russia’s ability to wage war. Here, too, the measures are working. Despite the Kremlin’s claims to the contrary, sanctions have sent the Russian economy into a deep recession. This impact is notable because sanctions have not yet targeted the country’s energy exports; in fact, Russia’s oil revenues have increased this year due to higher oil prices as a result of the war. Things would be much worse for the Kremlin if energy prices were at their historical average.

To make matters worse for Putin, Western countries have not exhausted all the options in their sanctions arsenal.

Presumably to deny the West transparency over the success of sanctions, the Kremlin has cut back on the release of economic statistics. Nonetheless, the data we have paints a bleak picture. In October, Russia’s GDP was 4.4 percent lower than during the same month in 2021. Industrial production, including oil and gas extraction, was almost 3 percent lower than in 2021. Retail trade has collapsed by nearly 10 percent year on year, highlighting the toll of high inflation. Data for the automotive sector—a bellwether for the health of the economy in Russia as in many other countries—is downright alarming: Russian car companies have slashed production by 64 percent compared with 2021 due to lack of demand and a shortage of imported components. October was not an outlier: The data has been awful in every month since April. Things are not getting better. They probably took a turn for the worse after mobilization began in late September.

Faced with such a difficult economic situation, the Kremlin knows that social stability is at stake. Putin sees public discontent as a threat to his survival—and he may be right. Yet the poor state of the economy means that Russia’s budget is firmly in the red. This is unusual for an energy exporter when commodities prices are at record-high levels. This also signals that trouble is brewing: In the coming months, Moscow will need to solve an impossible equation to finance the war in Ukraine while keeping social subsidies high enough to avoid unrest. (This will be no small feat if a second mobilization happens.) The Kremlin still has reserves, notably from its sovereign wealth fund. Without replenishment, however, these will run dry at some point. Already, the Russian government is living off reserves.

The reach of Western sanctions extends beyond the economic sphere to the technological sector. Here, the United States has an ace up its sleeve: Almost all advanced semiconductors used for electronic and military gear are made using U.S. companies’ know-how. Since the invasion, Washington has been imposing export controls that curb Russian access to microchips. For Moscow, this is an urgent problem, not least because Russian missiles are full of semiconductors the country cannot make itself. Faced with a 90 percent drop in microchip imports, the Kremlin is frantically trying to establish semiconductor smuggling networks. Sanctions are almost never watertight—but any leakage will probably not be enough for Russia to replenish its missile stocks, especially if the war continues unabated in the coming months.

The third and final objective of sanctions is the slow, long-term asphyxiation of the Russian economy. Washington and Brussels seek to achieve this goal by depriving Russian oil and gas firms of Western financing and technology. For Moscow, this is another existential threat: Russian oil and gas fields are being depleted, and new reserves to be tapped are located on or in the Arctic Sea. Developing these fields will require sophisticated Western technology (which will not be supplied) and huge amounts of money (which is in short supply). Sanctions on Russian energy production date back to 2014, when Russia illegally annexed Crimea, and they may well take decades to work. Once they do, they will be the most painful of all the sanctions for Russia because both the economy and fiscal revenues rely on oil and gas extraction.


It is safe to assume that things will only get worse for Moscow. Energy prices have been dropping, with oil prices now below where they were at the start of the war. Further decreases are likely in 2023 as the global economy slows. Starting next year, the EU will stop importing Russian oil. In addition, Russia shot itself in the foot by turning off most of the gas tap to Europe, cutting off the Kremlin’s financial lifeline. Reorienting gas exports to China will take many years and tremendous investments in new infrastructure, since most of Russia’s gas pipelines are routed to serve Europe. Building new pipelines to China would solve this issue, but Beijing is in no rush. Time is on China’s side; the country knows that it will be able to extract more financial concessions from an increasingly desperate Kremlin.

To make matters worse for Putin, Western countries have not exhausted all the options in their sanctions arsenal. Still at their disposal are three measures from the Iran sanctions playbook. Washington and Brussels could cut all Russian banks off from SWIFT, which would send the country into financial isolation. The United States could also ban Russia from using the U.S. dollar, greatly complicating energy exports. And the most powerful option, U.S. secondary sanctions, would force all companies, whether foreign or domestic, to choose between the Russian and U.S. markets. Buying Russian oil or gas would be outlawed worldwide, seriously harming the Kremlin’s finances. Not only are sanctions on Russia working, but the worst for the Kremlin is probably yet to come.

Agathe Demarais is the global forecasting director at the Economist Intelligence Unit and the author of Backfire: How Sanctions Reshape the World Against U.S. Interests. Twitter: @AgatheDemarais

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