As Russia massed troops near its border with Ukraine early in 2022, the US, the European Union and their allies held out hope that threats of massive sanctions might deter an invasion. Once hostilities began, there was a sense that sanctions could force an immediate economic crisis in Russia and a quick end to the war. With fighting now in its second year, the latest thinking is that prolonged sanctions, including restrictions on essential Russian imports, will have a cumulative effect, eventually forcing President Vladimir Putin into deciding between continuing the war and saving his economy. Tightening the pressure further carries risks for those doing the sanctioning, however.
1. How broad are the sanctions?
As of May, the US had sanctions in place against more than 3,600 individuals, entities, vessels and aircraft, according to Castellum.AI, a compliance screening company that maintains count. Targets of US sanctions included the top 10 Russian-owned banks, military manufacturers and government leaders all the way up to Putin. (Some of these sanctions traced back to 2014, when Russia seized Ukraine’s Crimea peninsula.) The number of EU sanctions exceeded 1,700 as of May. Other nations with sanctions in place against Russia included Switzerland, Canada, the UK and Australia.
2. What do they include?
The widest-ranging and most consequential sanctions include the coordinated blocking by Western governments of some $300 billion of Russian central bank assets held abroad and a ban on transporting Russian crude anywhere in the world using Western services, such as insurance or shipping, unless it’s sold at or below $60 per barrel. There are also export restrictions on technology used for military purposes. Additional, more typical sanctions include asset freezes, banking and trade restrictions, and other financial penalties against Russian individuals and entities.
3. What effect have they had?
They’ve put Russia’s gross domestic product on a path to be 8% smaller in 2026 relative to its trajectory before the war started. That’s a difference of $190 billion, roughly the equivalent of the entire annual GDP of countries like Hungary or Kuwait. However, the overall drop in 2022 — 2.5%, according to the central bank — was far below the 10% collapse that some had predicted. In the first months of 2023, there were indications that the sanctions were biting harder. Russia’s oil revenue in April was just a third of what it had been a year earlier, and its current-account surplus — roughly the difference between exports and imports — shrank by more than $51 billion in the first three months of 2023 compared with a year earlier. Beyond the economic impact, Russia has struggled to resupply its military, in part because of weapons and ammunition shortages.
4. How has Russia gotten by?
Using lessons learned from the 2014 sanctions, technocrats close to Putin had steeled the economy against disruption by stowing away windfall energy revenue and making Russia less dependent on some imports. Russia started the invasion with low public debt, a current account in surplus and the National Wealth Fund flush with cash. Also, Russia’s control over vital natural resources — most important, oil and natural gas — meant that sanctions enforcers had to tread carefully to avoid blowback to their own economies. European countries crafted a system of regulations that is supposed to allow Russian energy to flow to developing nations, reducing but not stopping the revenue the Kremlin earns. Some of the world’s most populous countries have continued to trade with Russia, which has also circumvented many export restrictions via third countries.
5. Who still trades with Russia?
When crude sales to Europe slumped, India — which has close defense ties with Moscow — stepped in as a buyer. Turkey, China, Kazakhstan and the United Arab Emirates are supplying Russia with more semiconductors, integrated circuits and other technologies, which the US and its allies tried to block through sanctions. China became Russia’s largest trading partner in 2022, providing more than a third of the country’s imports.
6. What’s the outlook?
The US and its allies want to crack down on the circumvention and evasion of sanctions and trade restrictions, especially through third countries. One possible step would be to ramp up so-called secondary sanctions on third parties — a company based in Turkey or China, for instance — for doing business with sanctioned Russian people or entities. That’s what the US did in the case of North Korea and Iran. In Russia’s case, there’s the danger that secondary sanctions might create conflict between otherwise friendly nations, such as the US and India, and complicate already fraught relations with China.
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