In response to the Russian invasion of Ukraine in late February 2022, the European Union imposed six sanctions packages and agreed to a seventh against Russia. The sanctions did not include: gas, oil supplied by pipelines, food, grain and some types of fertilizers.

Half of the reserves of the Central Bank of Russia were frozen, Russian banks were disconnected from the international SWIFT payment system. The export of Western technology, aviation technology, electronics and luxury goods is prohibited. In addition to the EU, the United States, Canada, Japan, Switzerland and the United Kingdom have also imposed sanctions against Russia. In its Sanctions Monitor, the Correctiv research network counted 6,825 individual restrictive measures taken by the international community since the beginning of Russia’s war of Russian aggression against Ukraine. Under EU sanctions, in particular, 1,212 people have fallen, including Russian President Vladimir Putin himself, people in his inner circle, oligarchs and 108 companies and businesses. There have never been so many sanctions against a country in history.

When and how will sanctions work?

In this sense, the main question is: how do these sanctions work and lead to a change in the aggressive course of the Kremlin? EU High Representative for Foreign Affairs and Security Policy Josep Borrell told DW on July 29 that the restrictions are taking a heavy toll on the Russian economy. “Russian economic output is reduced by 10 percent. They will survive the worst recession since the end of the Second World War”, guarantees the politician.

These words are confirmed, for example, by a study carried out by scientists at the American Yale University. The expert panel, in particular, used consumer data and indicators from Russia’s international trade and transport partners to measure economic activity in the country five months after the invasion of Ukraine.

The study says Russian imports have collapsed since the start of the war and the country faces major challenges securing critical inputs, components and technology. “Russian domestic production has fallen into complete decline, unable to replace the lost companies, products and professionals who have left the country,” the scientists said.

As a result of the departure of nearly 1,000 global companies, Russia lost businesses that account for nearly 40% of its gross domestic product, according to the study. The Russian state budget is in deficit for the first time, and the Kremlin’s finances are “in a much more difficult position than is believed,” the researchers note.

However, according to the authors, the Russian financial markets – taking into account the prospects for the future – present the worst performance in the world, which limits the ability to attract new investments to revive the economy.

Russia has trouble attracting new investment

The results of several studies on the possible consequences of sanctions and their impact on Russia also suggest a sharp decline in the economic performance of the Russian Federation in 2022. The EU estimates the Russian economy to fall by 10%, and researcher Maria Shagina of the Institute International Strategic Studies Institute (IISS) in Zurich suggests a decline of 6%, based on the latest International Monetary Fund (IMF) estimates.

biased statistics

The sanctions are, in fact, doing enormous damage to the Russian economy, according to a study by Yale University. To prove the contrary to its citizens, Russian authorities resort to specially selected statistics. “Since the invasion of Ukraine, the Kremlin has increasingly manipulated economic data, selectively discarding unfavorable indicators and releasing only those that are most favorable,” says the Yale University study. Kremlin.”

“Russia continues to sell oil and gas at record prices, filling its military budget, which it already had before the war. So we have a unique situation where it seems that Russia is not particularly affected by sanctions,” Maria Shagina told DW. However, at the microeconomic level, things look very different, especially in the automotive and aviation industries. You can see drops of 80 to 90 percent there.” Russia must change its economic model because it no longer has access to Western financial sources and markets, says Shagina.

The Russian economy is suffering more than the western one

Julian Hinz of the Kiel Institute for World Economics firmly believes that the notion that the West is more affected by its own sanctions than Russia is wrong. Import substitution, promoted in Russian media, is a very complex process, as Russian industry is in great need of Western raw materials and technologies, he told DW.

The Power of Siberia pipeline was built to supply Russian gas to China

It is also difficult, says the economist, to find new buyers for oil and gas that are no longer supplied to Europe or the US: “To be honest, advertising is an illusion because there are no pipelines, for example. to China, but that, maybe ten percent of the capacity that was used for export to Europe.” According to Hinz, the sanctions will have full effect in the long run.

What’s next for the Russian economy?

The authors of the Yale study said Russia has no way out of the “economic abyss” as long as Western allies remain united on sanctions. “The self-defeating headlines that the Russian economy is recovering are simply not true – the facts are that, by any measure, at any level, the Russian economy is stagnating and now is not the time to stop,” the study reads.

“The effects of sanctions are just starting to show: supply chain problems are intensifying and demand is falling rapidly. In the long term, the Russian economy will become more primitive as it partially decouples from international trade,” the statement said. German Institute of International Affairs. and Security said in a report.

Sanctions rarely lead to different policies

The answer to another question: whether economic sanctions will change the political will of the authoritarian regime in Russia remains open. The damage done to the economy is not impressive for Vladimir Putin, Alexander Lipman, head of the Institute for Eastern European Studies at the Free University of Berlin, told Deutschlandfunk. “In any case, sanctions won’t change anything for weeks or months. You also have to be honest: in most cases, sanctions have not affected the behavior of states subject to restrictions,” says Lipman.