“All these sanctions aren’t worth a grain of sand of the Crimean land that returned to Russia.” That was Dmitry Rogozin, then a deputy prime minister, shrugging off the first Western penalties in 2014. A decade on, the grain of sand has become a pile of more than 16,500 measures, and Moscow’s economy has not behaved the way anyone in 2022 predicted.
The 2014 template
The first round, as BBC News described it, was narrow. After the annexation of Crimea, the US and EU published lists of Russian individuals and companies hit by travel bans and asset freezes. Later the target widened. Russian state banks lost the ability to raise long-term loans, exports of dual-use equipment for military use were banned, and some oil industry technology and services were cut off. Gas was left alone.
The shooting down of a Malaysia Airlines plane over eastern Ukraine on 17 July, with 298 people on board, brought tougher EU measures. Rosneft went onto the US list in July and the EU list in September, with limits on its access to capital markets.
The 2022 escalation
Everything after the full-scale invasion in February 2022 was a different order of magnitude. By February 2024 the US, UK and EU, along with Australia, Canada and Japan, had imposed more than 16,500 sanctions. The main target was money. Foreign currency reserves worth $350bn, about half the total, were frozen. The EU says about 70% of the assets of Russian banks were frozen too, and some banks were cut out of the Swift messaging network.
Oil took the next hit. The US and UK banned Russian oil and natural gas, and the EU banned seaborne crude imports. The G7 set a maximum price of $60 a barrel on Russian crude. Under the EU rules the cap on crude applied from 5 December 2022.
What the numbers show
The forecasts were grim. The Institute for International Finance expected the Russian economy to shrink by 15% in 2022, and President Biden said it was “on track to be cut in half”. The actual contraction was 2.1%, according to the country’s statistics agency, against an earlier prediction of a 12% fall. BBC News noted that the reliability of the data had been questioned, but many commentators were still surprised. The IMF estimated growth of 2.2% in 2023 and predicted 1.1% for 2024.
The technical reality is leakage. Western limits on energy came in gradually, and buyers in China and India stepped in for the oil Europe refused. The Atlantic Council says Russia sold oil above the G7 cap, using a “shadow fleet” of about 1,000 tankers. The International Energy Agency put Russian exports at 8.3 million barrels a day. Researchers at King’s College London found that sanctioned Western goods still arrived through Georgia, Belarus and Kazakhstan, and CSIS analyst Maria Snegovaya said China supplies chips and other components for military production.
Traders also moved money through barter, third countries and cryptocurrencies. McDonald’s sold its restaurants, and the new owner reopened them under the name “Vkusno i Tochka”.
The costs are real, though. The US Treasury claims sanctions cut 5% from the growth Russia would otherwise have had over two years, and says more than a million people, many young and highly educated, have left the country. BBC News reported that experts expect oil and gas output to sag without Western equipment and know-how, and that microchip shortages will hold back manufacturing. Snegovaya’s verdict: “Sanctions have not made waging this war sufficiently costly for Russia, and that means it can continue with it for some time to come”.
Sources
- Ukraine crisis: Russia and sanctions – BBC News
- Russia's economy shrinks by less than expected – BBC News
- What are the sanctions on Russia and have they affected its economy? – BBC News
- EU sanctions against Russia: questions and answers – Council of the EU
