Tag: Western Sanctions
Russian War Economy Faces Slowdown Despite Resilience
Since 2022, the Russian economy has surprised many with its resilience under Western sanctions. Growth was fueled by wartime spending and high energy revenues. Now, signs suggest this “war bump” is fading. In a recent Financial Times interview, Elina Ribakova explains why the Russian war economy faces serious challenges ahead. Elina Ribakova is vice-president for foreign policy at the Kyiv School of Economics. She spoke with Sam Fleming, economics editor at the Financial Times.
Sanctions and Short-Term Resilience
When Western nations imposed sanctions on Russia, many expected a collapse. Instead, wartime spending and high oil revenues propped up growth. Ribakova notes that Russia’s ability to redirect resources into military production created a temporary boom. But this resilience came at the cost of long-term growth in the Russian war economy.
Why the Russian War Economy Is Slowing
Russia is now hitting hard limits. Labor shortages, soaring inflation, and overstretched industrial capacity are beginning to bite. Ribakova points out that unemployment has fallen to unsustainably low levels, while non-military sectors are stagnating. Even the defense industry, once booming, is showing signs of strain across the Russian war economy.
China’s Critical Role
One reason Russia has endured sanctions is its growing reliance on China. Ribakova highlights how Chinese exports—from consumer goods to vital military components—have allowed Moscow to sustain its war economy. Yet this partnership is highly lopsided: for China, Russia is a marginal partner; for Russia, China is a lifeline.
The Postwar Challenge
Looking ahead, Ribakova warns that ending the war will not mean an easy recovery. Russia faces deep demographic challenges, heavy reliance on military production, and decades of failed economic diversification. Rebuilding a sustainable postwar economy may prove “devastatingly hard” for the Russian war economy.
Listen to the Original Interview
The slowdown of the Russian war economy is more than an economic story; it shapes global energy markets, security, and geopolitics. To hear the full conversation and Ribakova’s detailed analysis, listen to the original Financial Times interview here.
Learn More About the Russian War Economy and Sanctions
To learn more about Western sanctions and Russia’s countermeasures, visit the Sanctions Timeline. And for details on sanctions imposed on Russia and their effects, see the Evidence Base section of the sanctions portal. Explore more policy briefs on sanctioning Russia here.
Sanctions on Russia: How They Impact Europe Energy Security and the Region
As Russia’s war in Ukraine continues, Western sanctions are beginning to chip away at the Kremlin’s war machine. Although President Vladimir Putin appears undeterred, the sanctions are draining resources that could otherwise fund the conflict.
How Sanctions Work?
According to Maria Perrotta Berlin, Assistant Professor at the Stockholm Institute of Transition Economics (SITE), sanctions are most effective when they come as a surprise. “If the threat of sanctions didn’t deter aggression, their implementation is unlikely to change behavior — unless they are more severe than expected,” she explains.
Sanctions, however, are a blunt instrument. They can unintentionally harm other economies and are rarely effective on their own. Maria Perrotta Berlin notes that “the stick of sanctions works best when paired with a carrot”. For instance, offering a clear path toward lifting restrictions, as was done in Iran’s nuclear negotiations.
The Three Types of Sanctions on Russia
Currently, three main categories of sanctions are in place against Russia:
- Financial sanctions: including restrictions on the Russian Central Bank, disconnection from the SWIFT system, and asset freezes. These measures have the most immediate impact.
- Trade sanctions: particularly on technology imports and energy exports. These take longer to affect the Russian economy and are more costly to sender countries.
- Sanctions of inconvenience: such as airspace closures, travel bans, and exclusion from international sports and cultural events. While symbolic, they contribute to isolating Russia on the global stage.
Such isolation can influence public opinion within Russia. It may generate opposition to the government — or conversely, trigger a “rally around the flag” effect that strengthens domestic support for Putin.
Signaling and Solidarity
Despite Putin’s resistance, the sanctions are sending a powerful signal both within Russia and abroad. They demonstrate the unity of Western nations and highlight that much of the world condemns Russia’s actions in Ukraine.
Experts say there is still room to tighten sanctions by expanding the list of targeted individuals, banks, and sectors, as well as closing loopholes used to bypass restrictions.
Regional Impacts: Belarus and Georgia
The FREE Network webinar, “The Sanctions on Russia, and Their Impact on the Region,” brought together experts from Belarus and Georgia to assess the broader consequences.
Belarus faces additional sanctions due to its support for Russia’s aggression. The country has already lost key export routes through both Russia and Ukraine. Its economy is reeling from the depreciation of the Russian ruble and fears of a banking crisis.
In Georgia, the war in Ukraine revives painful memories of the 2008 Russian invasion. While Georgia relies less on Russian gas than the EU, it remains vulnerable to rising oil prices and inflation, already at 13.7%. Nearly 90% of Georgia’s wheat comes from Russia, making food security a growing concern.
Learn More About the Russian War Economy and Sanctions
To learn more about Western sanctions and Russia’s countermeasures, visit the Sanctions Timeline. And for details on sanctions imposed on Russia and their effects, see the Evidence Base section of the sanctions portal. Explore more policy briefs on sanctioning Russia here.
Disclaimer: Opinions expressed during events, seminars and conferences are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.