After Russia invaded Ukraine in 2022, Western nations imposed the most extensive sanctions and trade restrictions in history on Moscow. Today, Russia appears to be doing OK.
Its economy is growing steadily. Russia can’t buy much from the West but has found new providers for drones, surveillance gear, computer chips and other gear. Its oil and gas sales are still strong, despite attempts to stop them. Russian officials say they have plenty of money to pay for their war.
Moscow’s continued strength is a humbling result for the U.S. and its allies. These nations make up more than half of the global economy, and they tried to weaponize their influence over trade and finance to weaken Russia. They hoped to make President Vladimir Putin a pariah and maybe even stop the war. Today, I’ll explain why those efforts have fallen short — and whether they can be made to work again.
Absorbing the blows
The measures against Russia go far beyond traditional sanctions, which historically have targeted banks and elites. Those rules limit how much tech Russia can import, and they direct shipping companies and insurers to cap the price of Russia’s oil at $60 per barrel — well below market rate.
The sanctions took a toll. They raised the cost of many items for Russian civilians and forced the military to buy shoddier missiles and semiconductors. For Russian energy companies like Gazprom and Rosneft, exports to the West have plunged. But the Russian economy has proved surprisingly adaptable, thanks partly to its relationship with China.
It may seem surprising that Russia could so quickly replace so much of its trade with the U.S., Japan and the E.U. But the rest of the global economy — especially China’s — is large enough that the shift didn’t take long. China already makes much of what Russia needs and can buy much of what it sells. Trade between China and Russia hit a record high last year as Russians turned to Chinese cars, electronics and weapons components. “China has to a large extent blunted the pain,” said Eswar Prasad, a trade economist at Cornell University.