Western Sanctions Have Yet To Deliver KO Punch vs Russia

Russia is now the world’s most heavily sanctioned country after it invade Ukraine. The ruble did take a temporary dive and has been slipping again in recent months. But as the war nears its one-year mark, it’s clear the sanctions didn’t pack the instantaneous punch that many had hoped, Fatima Hussein reported for the Associated Press (AP).

Photo Insert: A December Congressional Research Service (CRS) report said that “the sanctions have created challenges for Russia but to date, have not delivered the economic ‘knockout’ that many predicted.”

The ruble trades around the same 75-per-dollar rate seen in the weeks before the war, though Russia is using capital controls to prop up the currency. And while Russia’s economy did shrink 2.2% in 2022, that was far short of predictions of 15% or more that Biden administration officials had showcased.

This year, its economy is projected to outperform the UK’s, growing 0.3% while the UK faces a 0.6% contraction, according to the International Monetary Fund (IMF).

The West’s export controls and financial sanctions appear, instead, to be gradually eroding Russia’s industrial capacity, even as its oil and other energy exports last year enabled it to keep funding a catastrophic war.

US Treasury Deputy Secretary Wally Adeyemo stressed in an interview that the Western sanctions are only one “tool as part of a larger strategy” and that the US continues to adjust its sanctions to outmaneuver Russia’s own shifts in strategy.

“You look at the exodus, the brain drain from Russia,” Adeyemo said. “The Russian economy is far smaller, far more closed and will look more like Venezuela, North Korea and Iran than like a major G-7 economy.”

Still, a December Congressional Research Service (CRS) report said that “the sanctions have created challenges for Russia but to date, have not delivered the economic ‘knockout’ that many predicted,” Aamer Madhani, Eric Tucker and Martha Mendoza also reported for AP.

Tom Firestone, a sanctions attorney, said more time is needed for the sanctions to take their course.

“Anyone who expects massive sanctions on Monday, and on Tuesday the Russian regime would fall is not reasonable,” Firestone said. “It’s a large economy that has large reserves. It has a large variety of trading partners. What we’re seeing and what the government is saying is they’re on track and it’s seriously curtailed Russia’s ability to operate.”

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