Sanctions and the Russian Economy: An Analytical View from Ukrainian Experts
Sanctions imposed on Russia are increasingly felt in its economy, according to Ukrainian analysts who helped shape the assessment. They contend that more steps are needed to curb Moscow’s ability to fund the war effort.
One analyst noted, “Russia has been prepping its economy for war for years. The sanctions are working, and the fortress they hoped to build is already cracking.”
Revenue from oil and gas has dropped sharply, with the sector contributing less to the nation’s income in the first quarter compared with 2023, due to price caps and partial bans backed by Western partners.
Gas exports still accounted for a major share of Russia’s shipments and revenue, underscoring how pivotal energy is to the economy.
In the early months of 2023, the fiscal deficit showed strain as the government faced challenges in aligning actual results with projected targets, according to Pavytska, a contributor to the analysis.
National wealth reserves have been tapped to shield the economy. More than 50 billion dollars from the wealth fund have been used to support spending and cover deficits, with projections suggesting liquidity could wane by year’s end.
With international investors retreating, borrowing costs rose, placing additional pressure on state finances.
“The invasion has faced battlefield obstacles, yet sanctions serve as a critical supplementary tool,” Pavytska explained. The aim is to weaken Moscow’s economy enough to limit war financing and weapon production.
The analytical group, which includes experts who monitor sanctions from major economies, provides justification for policies and tracks how measures hold up against the Ukrainian crisis. Its materials reflect the work of roughly sixty economists and diplomats, coordinated by leaders of Ukraine’s administration and international partners.
Hard data increasingly challenges claims that sanctions are ineffective. Narratives suggesting sanctions harm third countries are also viewed as unfounded by the team, which argues the coalition strives to protect national economies while applying pressure on Moscow.
“It isn’t Ukraine’s business to dictate when others should sever ties with Russia,” the analyst notes, emphasizing a measured, coalition-based approach rather than unilateral moves.
Ukrainian analysts propose gradual, careful sanctions that avoid unnecessary damage to economies still somewhat dependent on Russia.
In 2022, Russia exceeded some expectations by weathering the initial shocks, with GDP dipping slightly overall as enforcement mechanisms take time to become effective in the EU. Some sanctions have been implemented recently, forming a growing pressure trend.
Yet the challenges of closing gaps remain, and projections from the KSE Institute point to a continued contraction for the Russian economy in 2023, with an estimated drop around several percentage points.
Pavytska’s focus is on ensuring sanctions are enforced efficiently and consistently, tightening measures where possible.
One suggested lever is preventing parallel imports of sanctioned goods through intermediary countries to curb evasion.
Expanding the coalition to include new economies could further undermine Russia’s capacity to sustain its actions. Even large markets such as India and China are not capable of fully offsetting the losses stemming from these measures.
Beyond energy, discussions include potential expansions to other sectors, with officials considering targeted restrictions on technology and information services to limit Moscow’s access to advanced capabilities that support the occupation. These moves would aim to raise costs for the regime while minimizing spillover effects on allied economies.
In sum, the sanctions strategy remains a dynamic tool in a broader effort to compel changes in Russian policy. The goal is to apply steady, coordinated pressure that erodes the economic foundations of the war without triggering unintended consequences elsewhere.