Follow us on social

Xi Jinping Vladimir Putin Tayyip Erdogan

Shifting goals cloud utility of  sanctions on Russia

The West's economic war on Moscow post Ukraine invasion has had limited near term success

Analysis | Europe

On September 26-27 the Fletcher School at Tufts University hosted a workshop on “Global repercussions of Russia-West economic warfare.” It brought together two dozen experts, both academics and practitioners, to discuss the impact of the sweeping sanctions imposed on Russia by some 50 countries in the wake of the full-scale invasion of Ukraine.

The meeting, organized by Tufts professors Christopher Miller and Daniel Drezner, did not come up with a decisive answer to the key question: are the sanctions working — and the related question, should they be wound up, continued, or intensified?

In part, this is because Western leaders have been vague when it comes to defining the goals of the sanctions, which have shifted over time. Initially, the goal was to deter Russia from launching the invasion. That did not work. So then the goal was to crash the Russian economy, force a bank run and collapse of the ruble, which would hopefully cause Russian elites, and/or the Russian people, to rise up against Putin and force him to abandon the war. For a week or two, that seemed to be working. But the Russian Central Bank imposed strict controls to stop the outflow of capital and ended the convertibility of the ruble. The Russian economy did not collapse.

After that, the goal shifted to one of attrition, increasing the cost to Putin in the hope that it will make him more willing to come to the negotiating table and end the war. By ratcheting down the declared goals, leaders can keep insisting that the sanctions are working.

Edward Fishman, a former U.S. Treasury official, said the “Goal was to shock the system, create chaos, and force Russian policy makers to redirect attention to developments inside Russia.” But we underestimated the skill of Russian financial managers and the extent to which they had been preparing for sanctions in the wake of the annexation of Crimea in 2014.

Maximilian Hess, author of the new book, “Economic War: Ukraine and the Global Conflict Between Russia and the West,” argued that Putin has been preparing Russia for economic war with the West since the passage of the Magnitsky Act in 2012, which sanctioned individuals involved in the death of Russian banker Sergei Magnitsky.

Historically, sanctions have only worked in about one third of the cases. Success only comes if they are multilateral, involving a majority of key economic players. In the case of Russia, there was unexpected solidarity amongst the Europeans and between the Europeans and the U.S., which hit Russia hard given its dependence on oil and gas exports to Europe. However, only a few nations outside the West joined the sanctions (Japan, South Korea, Singapore, Australia). China, India, Turkey and others increased their trade with Russia, buying the oil which was no longer flowing to Europe.

Despite the relative lack of success, sanctions are a popular tool, in large part because they are better than the alternatives — doing nothing, or going to war. They may be more important as a way of signaling political commitment amongst allies, rather than for their economic impact. Peter Harrell, a former National Security Council official, noted that “sanctions have been a growth industry over the past 20 years,” starting with Bill Clinton’s use of sanctions to target drug cartels and expanding as part of the post-9/11 War on Terror.

The U.S. was later encouraged by the success of the sanctions on Iran, which forced it to negotiate the Joint Comprehensive Plan of Action (JCPOA) in 2015 limiting its nuclear program. However, the Russian economy is much larger, more diverse, and globally integrated than that of Iran, so the impact of the sanctions has been more modest. Harrell concluded that we “need to be realistic about what sanctions can achieve, and not expect that they are a magic bullet.”

While the sanctions were extensive, they mainly focused on the financial sector — cutting Russia out of the SWIFT financial transaction network, barring transactions with most Russian banks. Interestingly, Fishman revealed that the decision to freeze the Central Bank’s assets was only taken after the full-scale invasion. However, the West feared that an abrupt interruption of Russian energy exports would cause inflation to spike, so oil and gas continued to flow into Europe through 2022. And the banks handling payments for oil and gas exports were exempt from the sanctions.

The U.S. controls critical nodes in the finance sector, and the dollar remains the main currency for international trade and investment. But Elina Rybakova of the Peterson Institute pointed out that Washington has no such critical leverage over energy markets, and is still struggling to come up with ways to monitor and regulate the export of critical dual-use technologies.

Meanwhile, Harvard’s Craig Kennedy alluded to the fact that sanctions can be a negative-sum game, harming the country that is imposing them just as much as the target. This has certainly been true for Germany, hit by a 400% rise in the price of natural gas in 2022.

Organizer Daniel Drezner pointed out there has been a number of unintended consequences for which ramifications have yet to be unpacked. They include the rise of a “shadow fleet” of uninsured tankers shipping Russian oil to India and China, and the expansion of a shadow network of financial transactions facilitating Russia’s evasion of the sanctions.

By making it harder for Russians to export capital, the sanctions have boosted investment in the Russian economy, and has tied the business elite — the main advocates of Westernization — even more closely to the Kremlin. The war has further institutionalized the militarization of Russian economy, polity and society and it might be very hard to get the country off that path in a post-Putin future.

Finally, Drezner noted one important unintended consequence for Russia — that the war united the West, led Sweden and Finland to join NATO, and Germany to rearm. This nullifies a decades-long strategic goal of Russia to separate Europe and the U.S.

Analysts agreed to the assertions that the sanctions, for all their limitations, are squeezing the Russian economy’s prospects for long-term economic growth, particularly with regard to access to the investment and technology to develop new oil fields. Sergei Vakulenko, a fellow at Carnegie’s Russia Eurasia Center, argued that Russia is “facing graceful decline [in oil output] but not a sudden drop.” That seems to be a price Putin is willing to pay to continue his war in Ukraine.

It is hard to say how (and when) this conflict will end or what the end state will be. Will a future Russia rejoin the West at some point? Or is Russia destined to become a resource base for China and other nations now unaligned with the West or willing to “multi-vector” on the geopolitical landscape?


Chinese President Xi Jinping (L), Russian President Vladimir Putin (R), Turkey's President Tayyip Erdogan pose for a group picture during the G20 Summit in Hangzhou, Zhejiang province, China September 4, 2016. REUTERS/Damir Sagolj

Analysis | Europe
Afghanistan withdrawal
Lloyd Austin, Kenneth McKenzie, and Mark Milley in 2021. (MSNBC screengrab)

Turns out leaving Afghanistan did not unleash terror on US or region

Military Industrial Complex

It will be four years since the U.S. withdrew from Afghanistan on Aug. 30, 2021, ending a nearly 20-year occupation that could serve as a poster child for mission creep.

What began in October 2001 as a narrow intervention to destroy al-Qaeda, the terrorist group that perpetrated the 9/11 attacks, and topple the Taliban government for refusing to hand over al-Qaeda’s leader, Osama bin Laden, morphed into an open-ended nation-building operation that killed 2,334 U.S. military personnel and wounded over 20,000 more.

keep readingShow less
Francois Bayrou Emmanuel Macron
Top image credit: France's Prime Minister Francois Bayrou arrives to hear France's President Emmanuel Macron deliver a speech to army leaders at l'Hotel de Brienne in Paris on July 13, 2025, on the eve of the annual Bastille Day Parade in the French capital. LUDOVIC MARIN/Pool via REUTERS

Europe facing revolts, promising more guns with no money

Europe

If you wanted to create a classic recipe for political crisis, you could well choose a mixture of a stagnant economy, a huge and growing public debt, a perceived need radically to increase military spending, an immigration crisis, a deeply unpopular president, a government without a majority in parliament, and growing radical parties on the right and left.

In other words, France today. And France’s crisis is only one part of the growing crisis of Western Europe as a whole, with serious implications for the future of transatlantic relations.

keep readingShow less
Starmer Macron Merz
Top image credit: France's President Emmanuel Macron, Britain's Prime Minister Keir Starmer and Germany's Chancellor Friedrich Merz arrive at Kyiv railway station on May 10, 2025, ahead of a gathering of European leaders in the Ukrainian capital. LUDOVIC MARIN/Pool via REUTERS

Europe's snapback gamble risks killing diplomacy with Iran

Middle East

Europe appears set to move from threats to action. According to reports, the E3 — Britain, France, and Germany — will likely trigger the United Nations “snapback” process this week. Created under the 2015 Iran nuclear deal (JCPOA), this mechanism allows any participant to restore pre-2015 U.N. sanctions if Iran is judged to be in violation of its commitments.

The mechanism contains a twist that makes it so potent. Normally, the Security Council operates on the assumption that sanctions need affirmative consensus to pass. But under snapback, the logic is reversed. Once invoked, a 30-day clock begins. Sanctions automatically return unless the Security Council votes to keep them suspended, meaning any permanent member can force their reimposition with a single veto.

keep readingShow less

LATEST

QIOSK

Newsletter

Subscribe now to our weekly round-up and don't miss a beat with your favorite RS contributors and reporters, as well as staff analysis, opinion, and news promoting a positive, non-partisan vision of U.S. foreign policy.