Russia was expected to face a 30% drop in oil production and a 15% fall in GDP, yet none of this happened. What went wrong?

It’s March 2022. The harshest sanctions against Russia in history are being debated in government offices across the world. Every time a new package of restrictions is introduced, the prognosis for the Kremlin looks progressively worse.

Russia was expected to experience a 30% drop in oil production, a 15% fall in GDP, and a 50% decline in imports. Regrettably, none of these predictions came true. Nowadays, Russians mock these forecasts in the same way Ukrainians laughed at Russian plans of "taking Kyiv in three days".

Western sanctions proved to be too much of a compromise. Some restrictions were abandoned, others were not pushed hard enough, leaving many loopholes, and some were postponed for a year or even two, giving the aggressor time to adapt.

Ultimately, instead of facing justice for its military aggression, Russia increased its profits in 2022. The state sponsor of terrorism is earning no less than before its full-scale invasion of Ukraine.

The core goal of the sanctions imposed is to force Russia to end the war. War means huge expenditure, and money comes from trade. If the blows to trade are not genuinely devastating for the Kremlin, then the current sanctions policy must be profoundly changed.

It got no worse

Trade consists of imports and exports. The difference between them is known as the trade balance. The idea of sanctions is to hit the aggressor's trade flows via reducing its exports as much as possible and limiting its imports.

In theory, Russia would then no longer be able to finance the war; the government would retract their policy of aggression against Ukraine and be forced to back down. In practice, the impact that Western sanctions have had on Russian trade is much less significant than the Western world would have liked.

There is still potential for toughening the technology embargo. This would require increasing diplomatic and sanction pressure on intermediaries, and strengthening control over components and their journey to the final consumer. 

According to Vladyslav Vlasiuk, Ukraine is also promoting the idea of synchronising sanctions with all its allies and confiscating Russian assets. The latter is the only chance to force the aggressor to feel the financial consequences of its actions.

If Ukraine’s Western allies want them to have a "second wind" in the fight against the aggressor, they must change their attitude to this war by working on their previous mistakes and taking new, more decisive sanctions against the Kremlin.

This article was written as part of an ANTS project titled Russian Assets as a Source of Recovery of the Ukrainian Economy, implemented in cooperation with the National Democratic Institute (NDI) and with financial support from the National Endowment for Democracy (NED).

Translation: Artem Yakymyshyn

Editing: Bea Barnes