What is the status of sanctions against Russia? Do they allow the desired effects?
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What is certain is that the country has not suffered the “collapse” announced by French Economy Minister Bruno Le Maire in the early hours of the invasion of Ukraine and the implementation of Western sanctions – amplified in ten consecutive waves since March 2022.
The International Monetary Fund (IMF) surprised in late January with a diagnosis that was as disappointing for westerners as it was encouraging for Vladimir Putin: the recession was capped at −2.2% in 2022, a far cry from the 8.5% reduction scheduled for March 2022; Activity would increase by 0.3% in 2023 and 2.1% in 2024. Barring a sudden turnaround, these data would therefore confirm the country’s resilience to sanctions.
Several factors explain this apparent resilience, starting with the policy of the Central Bank of the Russian Federation, which stabilized the ruble from the start of the war and prevented a surge in inflation. Despite the $300 billion (around €281 billion) freeze abroad, the country still has sizeable foreign exchange reserves of black gold. Since the sanctions following the annexation of Crimea in 2014, it has developed local production (food, textiles, etc.). Customs data also shows a significant increase in imports from former Soviet republics such as Armenia and Kazakhstan.
The closure of subsea gas pipelines and the gradual drying up of land flows have not prevented an 80% ($138 billion) increase in gas revenues. Nevertheless, the sinews of war remain black gold, the household’s main source of income. The IMF recognizes that the country has not yet been affected by the sea freight embargo in place since December 5th. They are diverted to their big neighbors who refuse the sanctions (China, India, Turkey, etc.) or transhipped onto ships with an unknown flag.