In December 2021, the American President Joe Biden warned the President of Russia Vladimir Putin that “any invasion of Ukrainian territory would have unprecedented economic consequences.” The Americans and their European allies remained consistent in their threat, imposing the most extensive sanctions in modern history. However, a year later, the Russian economy weathered the shock much better than expected. On March 22, 2022, the Institute of International Finance predicted that the Russian economy would contract by 15% by the end of the year. However, last year the decline exceeded only 3%, and for 2023 the IMF even predicted a slight recovery of 0.3%. Why has the Russian economy proved so resistant to sanctions? The limited impact is related to the political reaction, the size of the country, the trading position and the importance of the non-aligned countries in the world economy. A quick response can mitigate the short-term effects of sanctions. Thanks to capital controls and aggressive interest rate hikes, the Russian central bank avoided a catastrophic financial crisis in the spring of 2022.

State foreign exchange reserves provide a “safety cushion” for a certain period of time. A year ago, expectations of financial Armageddon were widespread. This does not mean that the sanctions did not have serious consequences. Under the current conditions, the Russian economy will be lucky if it ever manages to reach the income level of 2021 again. Last year was certainly a bad year for Russian citizens. But the crises of 1998, 2008 and the pandemic recession reduced GDP more than last year’s sanctions, dubbed the “nuclear alternative.” Perhaps the most urgent message is one that we continue to ignore: Ukraine’s economic plight. By highlighting the economic performance of Russia, which ranked 11th in the world in 2021, the sanctions campaign overlooks the apparently more devastating effects of the war on Ukraine’s much smaller and weaker economy. What’s worse? Economy 1.8 trillion. dollars that are shrinking by 3%, or a 200 billion dollar economy that has lost a third of its GDP?

* Dr. Nicholas Mulder is a historian who teaches international history at Cornell. He wrote the book Economic Weapons: Strengthening Sanctions as a Tool of Modern Warfare.