War by Other Means

Western Sanctions on
Russia and Moscow’s
Response

Angela Borozna
Lada V. Kochtcheeva
 War by Other Means

“War by Other Means is required reading to grasp the dynamic of economic

sanctions. Drawing on Western sanctions imposed on the Russian economy
from 2014 to 2023, Borozna and Kochtcheeva provide a detailed and persuasive
corrective to the dominant perspective that sanctions undermine target countries.
This book convincingly shows that sanctions have had unintended consequences
on the Russian economy, which remained resilient through geostrategic posturing
to the East. The War by Other Means is required reading to understand economic
sanctions.”
—Immanuel Ness, Chairperson and Professor of Political Science, Brooklyn
College, NY, author of Sanctions as War and Migration as Economic
Imperialism

“War by Other Means is an outstanding contribution to the literature on this

increasingly important form of economic and political warfare. In this impor-
tant work Angela Borozna and Lada Kochtcheeva provide a comprehensive and
balanced analysis of the role of sanctions in the contemporary era including the
role played by trading partners in enabling Russia’s response, the economic and
political impact of sanctions on Russia, and the implications of sanctions for the
rest of the world.”
—Alan W. Cafruny, Henry Bristol Professor of International Affairs, Department
of Government, Hamilton College, USA, author of The Political Economy of
the Pandemic: National and Global Perspectives

“War by Others Means is an important study which shows how Russia has survived
being the most sanctioned country in the world by reorienting its trade towards
the East and through import-substitution policies and investment in local indus-
tries. The U.S. has imposed continued waves of sanctions on Russia since 2012,
but these sanctions have not altered Russia’s foreign policies or helped undermine
the Putin government as they were intended. Instead the sanctions have helped
fortify Putin’s hold on power as he is seen by most Russians as having protected
Russian interests in the face of a form of foreign aggression whose purpose is to
collapse Russia’s economy and weaken the country, reducing it to vassal status
of the West. The sanctions have caused even more damage to Germany than
Russia because of Germany’s dependence on Russian natural gas and oil imports
and helped accelerate a process of de-dollarization, which is undermining U.S.
global economic power. Angela Borozna and Lada Kochtcheeva have done their
homework and provide extensive data to back up their expert political-economic
analysis, which points to a failed public policy by the U.S. that is having ripple
effects on the global economy and helping to accelerate the transition to a
multi-polar world order.”
—Jeremy Kuzmarov, author of The Russians are Coming, Again: The First
Cold War as Tragedy, the Second as Farce, with John Marciano (Monthly
Review Press, 2018)

“In this outstanding book Angela Borozna and Lada Kochtcheeva explore the
paradox of sanctions as a foreign policy tool. Their carefully researched and
balanced examination of the case of Russia suggests that rather than driving
regime change sanctions are more often seen by the population as an unjust form
of collective punishment and national security threat that leads to confrontation
with the West. While the long-term effect of sanctions on Russia is yet to be deter-
mined the authors show that the Russian economy has proven far more resilient
than anticipated. The broader implication of their analysis is that economic coer-
cion by sender states risks undermining the very mechanisms that they rely on
for their success—excessive supply chain control and dollar hegemony—as target
states and their allies develop alternative financial and legal instruments. ‘War
by Other Means’ is timely contribution to the growing sanctions literature that
urges policy adjustment to new geopolitical realities.”
—Dr. Ksenia Kirkham, Lecturer in the Department of War Studies, King’s
College London
Angela Borozna · Lada V. Kochtcheeva

War by Other Means

Western Sanctions on Russia and Moscow’s
Response
Angela Borozna Lada V. Kochtcheeva
California State University North Carolina State University
Fullerton, CA, USA Raleigh, NC, USA

ISBN 978-3-031-51369-5 ISBN 978-3-031-51370-1 (eBook)

https://doi.org/10.1007/978-3-031-51370-1

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 Competing Interests

The authors have no conflicts of interest to declare that are relevant to

the content of this book.

vii
 Contents

1 Introduction 1
References 9
2 Sanctions: A Theoretical Review 13
2.1 Defining Sanctions 15
2.2 The Legal Aspect of Sanctions 16
2.3 Types of Sanctions 17
2.4 Sanctions as a Source of Destabilization and Regime
Change 18
2.5 Sanctions as a Hegemonic Tool 19
2.6 Goals of Sanctions 21
2.7 Sanctions Effectiveness 22
2.8 Mechanisms of Resistance to Sanctions in the Target
State 27
2.9 Securitization of Sanctions by the Target 28
2.10 Sanctions as War 30
References 32
3 Annexation of Crimea: Western Sanctions and Russia’s
Response (2014–2021) 41
3.1 Goals of Sanctions 42
3.2 Russia’s Response 45
3.3 The Effects of Sanctions 46
References 53

ix
x CONTENTS

4 The War in Ukraine: Avalanche of Western Sanctions

and Russia’s Reaction 59
4.1 Goals of Sanctions 60
4.2 Russia’s Perception and Response 69
References 75
5 Sanctions Busting: The Role of Various States
in Russia’s Resistance to Sanctions 81
5.1 China 83
5.2 Turkey 87
5.3 India 89
5.4 Iran 90
5.5 Cyprus 92
5.6 UAE 93
5.7 Belarus 94
5.8 Georgia 95
5.9 Kazakhstan 96
5.10 Kyrgyzstan 96
5.11 Armenia 99
5.12 Lithuania 100
References 100
6 Assessing Sanctions Effectiveness 107
6.1 Impact on Russian Economy 109
6.1.1 Foreign Trade 113
6.1.2 Energy Industry 117
6.1.3 Defense Industry 120
6.1.4 Banking and Finance 121
6.1.5 Aviation and Automotive Sector 124
6.1.6 Information Technology (IT) Sector 127
6.1.7 Retail 129
6.1.8 Travel 130
6.2 Achievement of Stated Political Goals 132
6.3 Countermeasures and Remedies 137
References 140
7 Implications of Sanctions to the Rest of the World 151
7.1 The United States 153
7.2 Europe 155
7.3 Asia 158
 CONTENTS xi

7.4 Post-soviet States 161

References 163
8 Conclusion 167
References 174

References 175
Index 211
 About the Authors

Dr. Angela Borozna is an Adjunct Professor of Political Science at Cali-

fornia State University Fullerton. Her current research interests focus on
Russian foreign policy, economic sanctions, Arctic policy, the political
economy of Russia, and Russia’s strategic culture. She is the author of the
book The Sources of Russian Foreign Policy Assertiveness, published with
Palgrave Macmillan in 2022. She previously worked for several finance
companies in London, New York, and San Francisco.

Dr. Lada V. Kochtcheeva is a Professor of Political Science in the School

of Public and International Affairs at the North Carolina State Univer-
sity. Her research speaks to the theories of governance, globalization,
policy innovation, comparative public policy, government-society rela-
tions, environmental regulation, and post-communist politics, especially
Russian politics. She has conducted research in the United States and
abroad, including the UNEP, state agencies, research institutes, and think
tanks. She is the author of two books, Russian Politics and Response
to Globalization (Palgrave) and Comparative Environmental Regulation
in the United States and Russia: Institutions, Flexible Instruments, and
Governance (SUNY).

xiii
 List of Figures

Fig. 5.1 Chip shipments to Russia before and after Ukraine

Invasion (*Includes Hong Kong. Source Export Genius.
Before invasion data covers February 24–December 31,
2021) 86
Fig. 5.2 Russia’s share in Georgia’s export (Source Transparency
International Georgia) 95
Fig. 6.1 Russia’s GDP, 1991–2022 (Source World Bank [2022]) 111
Fig. 6.2 Russia’s current account and trade balance, 2018–2023,
Billions of US dollars (Source Russia’s Ministry of Finance) 111
Fig. 6.3 Companies leaving Russia by country, percent of total
(Source Yale Chief Executive Leadership Institute, As
of July 2023; Note The Figure includes only companies
that are 1% or above of total) 113
Fig. 6.4 Russian products that show largest export growth,
compared to 2021, % (Source RF Federal Customs Service
and RBC) 114
Fig. 6.5 Russian products that show largest export growth in 2022,
USD billions (Source RF Federal Customs Service and RBC) 115
Fig. 6.6 Imported products that show the largest decline in 2022,
compared to 2021, % (Source RF Federal Customs Service
and RBC) 116

xv
xvi LIST OF FIGURES

Fig. 6.7 Russia’s Retail Sales Growth, September 2022–August

2023 (Source Rosstat and CEIC Data. www.ceicdata.com) 130
Fig. 6.8 President Putin’s Approval Rating, January
2010–September 2023 (Source Levada Center. https://
www.levada.ru/en/ratings/) 134
 List of Tables

Table 5.1 Kazakhstan: trade flows of dual-use goods, 2021–2022 97

Table 5.2 Kyrgyzstan: trade flows of dual-use goods, 2021–2022 98
Table 6.1 List of 20 largest economies in terms of GDP (PPP),
as of 2022 110

xvii
 CHAPTER 1

Introduction

Abstract In this chapter, Borozna and Kochtcheeva demonstrate that the

sanctions imposed on Russia following the annexation of Crimea in 2014
and the conflict in Ukraine in 2022 stand out due to their rapid imple-
mentation and extensive coverage, targeting various aspects of Russia’s
economy and political establishment. What makes them unique is not
only their swiftness and scope but also that for the first time in history,
the most comprehensive sanctions were imposed on the largest country
in the world, a permanent seat on the UN Security Council, and the
world’s largest nuclear arsenal. The West pursued multiple goals in the
imposition of sanctions on Russia. The leading goals were to change the
country’s behavior, isolate it from the international economy and hinder
Russia’s ability to obtain the capital and materials; contain and punish
the country by significantly weakening Russia’s economy, depriving it
of crucial technologies and markets, and curbing its ability to wage
war. This unprecedented use of sanctions against a major global player
reflects a shift in international politics and has far-reaching economic and
geopolitical implications, impacting global diplomacy and energy markets.

Keywords Sanctions · Russia · Russian economy · Smart sanctions ·

Instrument of foreign policy · Economy · Coercion · Import
substitution · Non-military pressure · Economic deprivation ·
Containment · Regime change · War · Confrontation · Social
implications · Securitization

© The Author(s), under exclusive license to Springer Nature 1

Switzerland AG 2024
A. Borozna and L. V. Kochtcheeva, War by Other Means,
https://doi.org/10.1007/978-3-031-51370-1_1
2 A. BOROZNA AND L. V. KOCHTCHEEVA

Following Russia’s annexation of Crimea and its involvement in the

conflict in eastern Ukraine in March 2014, sanctions became a primary
instrument employed by Western countries to exert pressure on Russia.
The aim of the Western sanctions since 2014 was mainly to change
Russia’s policy toward Ukraine. The severity and the scope of sanc-
tions increased as the conflict intensified. In response to Russia’s Special
Military Operation (SMO) in February of 2022, the collective West
once again responded with the policy of sanctions—only this time, the
United States and its allies imposed unprecedented in number and depth
sanctions, reflecting an intensification of economic pressure and coer-
cive measures, similar to the impact of a wartime economic blockade.
By November 2023, Russia emerged as the most sanctioned country in
the world, with more than 3,119 Russian companies and 9,669 Russian
individuals on the list of Western sanctions (Russia Sanctions Database,
2023).
The West pursued multiple goals in the imposition of sanctions on
Russia. The leading aims were to change the country’s behavior, isolate
it from the international economy and hinder Russia’s ability to obtain
foreign capital and materials; contain and punish the country by signif-
icantly weakening Russia’s economy, depriving it of crucial technologies
and markets, and curbing its ability to wage war (Council of E.U, 2022;
Dubinin, 2022; Harrell, 2023; Kosachev, 2023; U.S. Department of
Treasury, 2023a). The sanctions included all known types of non-military
pressure used before, such as a wide range of financial, trade, transporta-
tion, logistics, travel, and other restrictions, as well as “smart sanctions”
(Cortright & Lopez, 2002). The 2022 sanctions on Russia encompassed
all major sectors of the Russian economy. The deployment of compre-
hensive sanctions by the West against Russia after February 2022 is
compared by analysts as similar in quality and quantity to the “economic
carpet bombing” (Timofeev, 2022a) or “a weapon of mass destruction”
(Gerasimov et al., 2023). However, another implicit goal was to inflict
sufficient pain on the Russian population to produce public discontent
that would pave the ground for a regime change in the Kremlin or
even a breakdown of Russia as a state. The coalition of sanctioning
states employed severe economic pressure against Russia, anticipating that
the economic disruption caused by the coercion would endanger the
legitimacy and authority of the regime. The hopes of Russia’s breakdown
are reflected in American think tanks’ reports. Thus, Hudson Institute
spearheaded a study, “Preparing for Dissolution of Russia” (Hudson
 1 INTRODUCTION 3

Institute, 2023), while RAND published a study in 2019, “Overex-

tending and Unbalancing Russia: Assessing the Impact of Cost-Imposing
Options,” which “examines nonviolent, cost-imposing options that the
United States and its allies could pursue across economic, political, and
military areas to stress—overextend and unbalance—Russia’s economy
and armed forces and the regime’s political standing at home and abroad”
(Dobbins, 2019).
While sanctions as an instrument of pressure have been used exten-
sively since WWI, what distinguishes sanctions on Russia in the wake
of the annexation of Crimea in 2014 and the war in Ukraine in 2022
is not only the speed and scope of the imposed sanctions but also that
for the first time in history, the most comprehensive number of sanc-
tions were imposed on the largest country in the world with immense
natural and human capital resources, the permanent member of U.N.
Security Council, a former member of G-8, and a country with the largest
arsenal of nuclear weapons in the world. Additionally, Russia is a major
power fully integrated into the global economy, with many countries
relying significantly on energy and resource supplies from Russia. Russia
ranked as the eleventh largest economy in 2022 (ranked fifth in terms of
purchasing power parity), which makes it a significant political, military,
and economic actor in world affairs—a distinction that previous recipients
of Western sanctions did not possess (World Bank, 2022).
Theoretically, sanctions as an instrument of foreign policy represent
the best alternative to diplomatic and military measures to restrain the
target (Hufbauer et al., 2009). Based on coercion, sanctions are aimed at
achieving political goals and, as a deliberate foreign policy tool, are less
costly than military intervention. Sanctions are a key practical embod-
iment of economic power employed to force individual states (target
countries) to comply with the political requirements of the initiating
countries (sender countries). In other words, sanctions aim to pressure
and alter the behavior of a target state so it complies with the demands of
the sender state (Afesorgbor, 2019; Bapat & Kwon, 2015; Galtung, 1967;
Ghomi, 2022). The application of sanctions increased after the end of the
Cold War when the United States emerged as a hegemon and achieved
an exceptionally favorable position for using economic sanctions as an
instrument of power. The global character of dollar payments allows U.S.
financial authorities to track transactions around the world, limiting them
where they conflict with their political interests. In a global economy and
a US-centric financial system, blocking U.S. sanctions are likely to mean
4 A. BOROZNA AND L. V. KOCHTCHEEVA

major losses or even collapse for large companies with any widespread
active international activity (Timofeev, 2022c). Thus, as a foreign policy
tool and an instrument of power, sanctions frequently reflect the disparity
in economic power between the U.S. and other governments (Arnold,
2019; Beal, 2021).
Despite the increased use of sanctions as a foreign policy tool, liter-
ature on sanctions effectiveness shows that they do not always lead to
the desired effects, sometimes even producing opposite effects (Hufbauer
et al., 2009). Although many analysts point out the ineffectiveness of
sanctions (Elliott, 1997; Jerin, 2015; Jones, 2015; Kirkham, 2020; Siegel,
2022; Pape, 1997), the implementation of sanctions has increased since
the 1990s (Morgan et al., 2014), and sanctions on Russia are among the
latest examples of using sanctions as a foreign policy tool, i.e., employing
economic power to achieve political goals.
The main objective of this book is to analyze the aims of sanc-
tions on Russia and assess their effectiveness. Did sanctions succeed in
achieving stated goals, and in what areas were their efforts futile? What
are Russia’s mechanisms for surviving the avalanche of sanctions? What
are the implications of sanctions to the senders and the third parties?
The proposed questions constitute the research problem of this book.
This book goes beyond the traditional political economy perspective on
sanctions. It examines the political nature of sanctions and responses to
them, especially how the Russian government uses sanctions for securiti-
zation. The Copenhagen School argues that an issue can be securitized
(framed as a security issue) by the political elite (a securitizing actor) by
articulating it as an existential threat to a state. Framing issues as an exis-
tential threat allows the political elite to adopt extraordinary measures
beyond conventional political processes (Buzan & Hansen, 2009). Thus,
imposed sanctions became instrumental to those actors in Russia who
have placed much suspicion on the actions of the West and even consid-
ered it an existential threat to the country. The avalanche of sanctions
became a confirmation of the long-standing narrative in Russia that the
West is determined to weaken Russia. Applying the language of security
threats from sanctions allowed the Russian political elite to treat sanc-
tions as a tool for strengthening domestic cohesion and gathering support
against external threats. Therefore, the securitization of sanctions became
an intrinsic part of Russia’s adaptation mechanism to sanctions.
There are several major findings in the book. First, from the Western
perspective, the close-knit consolidated imposition of a sweeping number
 1 INTRODUCTION 5

of sanctions can paralyze the Russian economy and degrade its military,
forcing it to abandon its aggression against Ukraine. Crippling sanctions
can stop an inflow of revenue to the Russian economy, and stumble
its productivity, innovation, and effectiveness, thus bringing Russia to
its knees and making it more compliant with Western demands. Addi-
tionally, the proponents of sanctions believe that social frustration due
to the economic damage may force Russia to change its foreign policy
course. However, the sanctions proved to be ineffective as an instrument
of foreign policy—they have not changed Moscow’s determination to
continue its military operation in Ukraine and are unlikely to change it in
the near future. Moreover, since Russia views its confrontation with the
West as existential, the fate of Russia, its borders, its position in the world,
and the very question of its further existence will be determined by the
outcome of this confrontation. That is why Russia’s ability to adapt to
sanctions by securitizing them and reorienting itself toward the non-West
became crucial.
Second, sanctions can be considered relatively effective in terms of
inflicting additional costs to Russia’s economic transactions. The West and
its allies could not immediately crush the Russian economy, and the fore-
casts for the economy from international financial institutions are positive.
However, the cost to the Russian economy can still be considerable, espe-
cially in the years to come. While the Russian government managed to
maintain financial stability, including through the pre-arranged steps to
create a sovereign financial infrastructure, shifting exports to new markets
promises to be distressing and prolonged. Import substitution will be
challenging, especially in the high-tech industries, yet in other sectors, it is
gaining momentum, benefitting domestic producers. The crucial condi-
tion for reducing costs will be the creation of alternative channels for
transactions with foreign countries.
Third, the ramifications of sanctions go far beyond the expected
impacts on Russia, such as spillover impacts into neighboring countries,
boomerang impacts on the sender states, and universal effects on the
global economy. Sanctions on Russia resulted in a global reorientation of
trade, finance, and transportation links and started creating new economic
and political blocks.
Finally, the book points out the necessity to disentangle the rhetoric
on sanctions in Western capitals from specific objectives of sanctions to
make proper assessments of their effectiveness. It stresses the importance
of assessing not only the economic and political effectiveness of sanctions
6 A. BOROZNA AND L. V. KOCHTCHEEVA

but also Russia’s perception of sanctions, their social implications, the

mechanisms of Russia’s adaptation to sanctions, and the implications of
sanctions to the rest of the world.
The rest of the book proceeds as follows. Chapter 2 reviews the
research on the types, goals, and effectiveness of sanctions in changing
the foreign policy course of the target states and demonstrates that
there is little evidence for sanctions’ effectiveness in the literature. While
target states often find ways to adapt, sanctions can backfire and make
the senders also feel the pain. The review of the empirical literature
suggests that economic sanctions are usually ineffective tools of coercive
diplomacy. Often, target countries do not alter their foreign policy and
maintain their political course. In most cases, sanctions cannot change
the behavior of the targeted state due to the increased economic inte-
gration of the international system, the ability of the targeted states to
find alternative suppliers and markets, and become more independent and
self-sufficient following the imposition of the sanctions. The literature on
security shows how the discourse on sanctions can be securitized by the
state and used as an instrument to mobilize the population to withstand
the pain of sanctions.
Chapter 3 focuses on sanctions imposed on Russia in the wake of the
Ukrainian crisis and Russia’s annexation of Crimea in 2014. The chapter
starts by discussing the aims of sanctions and analyzes the development
and escalation of sanctions over time. The overall goal of the sanctions was
to inflict sufficient damage to the Russian economy that would force the
country’s leadership to radically change its foreign policy. Western sanc-
tions of 2014 targeted Russia’s defense sector, Russian financial system,
the export of goods and services, and the technology sector. Sanctions
also targeted individuals operating in the Russian defense sector. The
chapter also brings attention to mechanisms developed by Russia to with-
stand the sanctions. By turning to import substitution, cultivating closer
relations with non-Western sources of technology and capital, and devel-
oping its strategic industries, Russia could provide itself with necessities
in most sectors of the national economy. The book demonstrates that the
main political goals of Western sanctions imposed after 2014 have not
been accomplished, as Russia did not change its political course, did not
leave Crimea, and did not make unilateral concessions. The Russian polit-
ical system remained largely consolidated, while Moscow evaded political
isolation, growing its customary connections further and developing new
ones.
 1 INTRODUCTION 7

Chapter 4 demonstrates that Western sanctions imposed on Russia

in 2022 differ significantly from sanctions in 2014–2021 in terms of
their goals, scope, and depth. The sanctions imposed after 2022 aimed
to isolate Russia from the international economy by blocking Moscow’s
ability to obtain foreign capital, materials, and technology that could
support the war against Ukraine. Similar to the 2014–2021 sanctions,
Russia’s energy and defense industries became one of the main targets of
the 2022 sanctions. The distinction between the two periods also lies in
the level of risk that Europe was prepared to accept in 2022 in applying
the sanctions, which involved weaning itself from Russian energy in a very
short period. In the financial sector, by obstructing Russia’s access to its
foreign reserves shortly after Russia invaded Ukraine, the West anticipated
that the Kremlin would have difficulty mitigating the effects of sanctions.
The goal of freezing reserves was to spark a banking crisis, causing a
collapse of the Russian ruble and, as such, to take away from the Russian
government its main tool of managing its macroeconomy. The US and
its allies also imposed unprecedented export control measures aimed
at cutting off more than half of Russia’s high-tech imports, restricting
Russia’s access to vital technological inputs, atrophying Russia’s industrial
base, and undercutting Russia’s strategic ambitions to exert influence on
the world stage. By the end of the first year of Russia’s war in Ukraine,
the sanctions turned into an avalanche that impacted major industries and
sectors of the Russian economy. The chapter highlights that one other
anticipation among the senders of sanctions, not overtly written in the
documents but stated by Western politicians, was to inflict hardship on the
Russian population in hopes that the pain would create internal instability
and lead to a regime change in the country.
After the discussion of the goals of the sanctions, the chapter brings
attention to Russia’s perception of the sanctions by presenting the
views of Russian decision-makers, policy experts, academics, and other
stakeholders. The discussion of Russia’s perceptions is followed by an
analysis of Russia’s response to sanctions. Moscow employed an adap-
tation mechanism developed between 2014 and 2021, responded with
a counter-sanction policy, and embarked on anticipating a new phase
of sovereign development. Every new Western measure followed by a
‘mirror’ response; however, it was not symmetrical. Russia attempted to
counter damage to the senders, where possible, to clear the market in the
interests of domestic producers and turned to third countries to sustain
8 A. BOROZNA AND L. V. KOCHTCHEEVA

trade. Finally, the chapter explains that the adaptation to sanctions will be
difficult, and a political break with the collective West will likely deepen.
Chapter 5 addresses sanctions-busting and the roles of different coun-
tries that are easing Russia’s experiences as a target country. Despite the
strong support for sanctions from Western nations, a substantial portion
of the international community, including countries across Central Asia,
the Caucasus, the Middle East, Central and South America, Africa, and
the majority of Asian nations, have chosen to maintain trade relations
with Russia and remain neutral in the ongoing situation. China, in partic-
ular, has been critical of sanctions and has extended political support to
Moscow while increasing trade ties. India, Brazil, Saudi Arabia, South
Africa, and the UAE have tried to avoid taking sides in the conflict while
attempting to gain advantages from their apparent neutrality. Moreover,
numerous European and Asian businesses have actively sought ways to
bypass sanctions, thereby supplying Russia with restricted goods.
Chapter 6 examines the effectiveness of the imposed sanctions on
Russia. The analysis of Western sanctions on Russia in 2014–2021 and
sanctions imposed after 2022 demonstrates that Russia was less prepared
for the initial round of sanctions imposed in 2014, as the pain and
damage to the economy were felt more acute from 2014 through 2016.
After 2017, the Russian economy adjusted to the sanction regime and
found mechanisms for coping with and circumventing sanctions. Sanc-
tions imposed on Russia after 2022 were much more comprehensive
in scope. Nevertheless, they also proved ineffective in achieving their
primary political goal of changing the Russian foreign policy course. They
have not impacted Moscow’s resolve to persist in the conflict, and it is
improbable that they will alter this determination in the near future. The
economic impact of the sanctions imposed in 2022 is nuanced. While the
Russian economy did not crumble, there are signs that specific Russian
sectors are facing a substantial decline. Sanctions achieved one main goal
pursued by the United States—the share of Russian pipeline gas in Euro-
pean imports fell, opening the door for the U.S. to become an energy
supplier to Europe. The financial sanctions are not as effective as antici-
pated as well. The ineffectiveness of financial sanctions could be explained
by the fact that the degree of integration and, accordingly, the depen-
dence of Russia on the global financial system is much lower than that of
the West, given that, since 2005, the Russian Federation has been a net
donor of financial resources, annually sending tens of billions of dollars to
 1 INTRODUCTION 9

the West. Additionally, the role of states friendly to Russia proved crucial
to Russia’s resilience to sanctions.
Chapter 7 discusses the effects of sanctions on the sender states
and third parties. The effect of sanctions on sender states is not thor-
oughly researched in the literature. Due to the degree of integration of
Russia’s economy into international trade, the consequences of sanctions
on Russia will reverberate globally. The initial pain of sanctions is already
seen in the rising prices of energy, closing of businesses in Europe, and
increased food shortages in various parts of the world. Thus, the effect of
sanctions is felt not only in Russia but in the sender states and in the states
not involved in imposing the sanctions. Russia’s cultivation of relations
with non-Western countries and the strengthening of multilateral organi-
zations, such as BRICS and the Eurasian Union, might signify a new era
of block politics in international relations. Russia’s alignment with China
is particularly significant, as Beijing is entering a strategic confrontation
with the United States.
Chapter 8 provides conclusions, summarizes the findings on the aims
and effects of sanctions, and discusses the implications of the book’s argu-
ments for the future relations of Russia with the outside world. Russia
established adaptive strategies following the initial round of sanctions in
2014, which enabled Moscow to withstand the sanctions imposed in 2022
and beyond; even in the face of the broad and severe Western sanc-
tions imposed that year, eight years of previous sanctions made Russia
less vulnerable to their effectiveness. This is not to suggest that sanc-
tions are completely ineffective; they undeniably cause economic distress
in the Russian economy. Nevertheless, the primary political goals of sanc-
tions, aimed at altering Russia’s foreign policy direction, have not yielded
results. The economic impact of comprehensive sanctions imposed on
Russia in 2022 will likely take time to show full results. It will have long-
lasting consequences not only for Russia but for the overall structure of
international trade and relations.

References
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 CHAPTER 2

Sanctions: A Theoretical Review

Abstract In this chapter, Borozna and Kochtcheeva present a compre-

hensive analysis of research on sanctions, covering their various types,
objectives, and their effectiveness in influencing the foreign policy direc-
tion of the states they are imposed upon. The synthesis of empirical
evidence strongly suggests that, in the realm of coercive diplomacy,
economic sanctions are typically ineffective. Targeted nations frequently
do not modify their foreign policy stances and tend to maintain their
domestic political trajectories. Paradoxically, sanctions can sometimes
produce negative consequences for the states imposing them. The
research shows that due to the damage that sanctions inflict on the
economies of the targeted states, countries subject to sanctions perceive
them as a threat to their national security. The destructive effect on the
economy of the targeted state is comparable to the destruction of the
state economy during a military intervention. Additionally, the research
in security studies reveals how states can frame discussions surrounding
sanctions as matters of national security. This framing is a strategic tool
that governments use to rally their populations to endure the hardships
brought about by sanctions. This not only eases the burden on the
targeted state but also contributes to the limited success of sanctions in
terms of achieving their goals.

Keywords Sanctions · Russia · Economic sanctions · Sanctions war ·

Economic statecraft · Coercion · Sender state · Target state · Punitive

© The Author(s), under exclusive license to Springer Nature 13

Switzerland AG 2024
A. Borozna and L. V. Kochtcheeva, War by Other Means,
https://doi.org/10.1007/978-3-031-51370-1_2
14 A. BOROZNA AND L. V. KOCHTCHEEVA

measures · Coercive diplomacy · U.N. Security Council · Regime

change · Destabilization · Hegemony · United States · Sanctions
effectiveness · Resistance to sanctions · Securitization · Sanction busting

Using international economic sanctions to restrict access to foreign

markets is a long-standing practice with a long history. It spans from the
trade embargoes imposed by France during the early nineteenth-century
Napoleonic Wars to the economic sanctions imposed by the apartheid
government in the 1980s and 1990s to the sanctions imposed against
Iraq in the early 2000s (ccrelations and seen as a nonviolent approach
to affect the behavior of states and, increasingly, individuals. The use of
sanctions became a common practice and is viewed as a “pressure valve in
international relations” (Chachko & Heath, 2022). This practice marks
a departure from the previous principle of neutrality, wherein opting to
limit trade with one side of a conflict could be seen as an unfriendly
action. Sanctions and embargoes have been employed in a variety of
contexts, such as to weaken a nation-state during periods of conflict or
war or to alter the policy of a targeted government in order to avert a mili-
tary conflict. In some cases, sanctions have been employed as a substitute
for war since their aim is weakening the military power of the targeted
state.
While sanctions as an instrument of influence on other states have been
used throughout history, their use has significantly increased since the
1990s (Allen, 2005; Morgan et al., 2014). For most of modern history,
various forms of sanctions have often been employed before using mili-
tary force or in conjunction with it, such as embargoes, blockades, or
trade wars (Kern, 2009). U.S. President Woodrow Willson wrote that
there is “something more tremendous than war”—“an absolute isola-
tion,” since “It does not cost a life outside of the nation boycotted, but
it brings a pressure upon the nation which, in my judgment, no modern
nation could resist” (Mulder, 2022, pp. 1–2; Wilson, 1923, pp. 71–72).
More than physical harm, Wilson believed that isolating a country from
the international community can cause psychological harm to a target
country.
The imposition of the blockade against Germany, Austro-Hungary,
and the Ottoman Empire during WWI resulted in disruption in inter-
national trade and the flow of goods, leading to the death of hundreds
 2 SANCTIONS: A THEORETICAL REVIEW 15

of thousands of people. Despite the huge human toll inflicted by sanc-

tions, the League of Nations incorporated sanctions into Article 16 of the
Covenant of the League of Nations, transforming them into a peacetime
institution, thus shifting a boundary between war and peace (Mulder,
2022, p. 2). The use of sanctions significantly increased after the end
of the Cold War, with the United States rising as a sanctions champion.
The U.S. enthusiasm for sanctions resulted in half of the world’s popula-
tion being under American sanctions by the mid-1990s (Demarais, 2022,
p. 4; Hufbauer, 1998). The use of sanctions has become increasingly
prevalent in recent years, with 405 active sanctions in force as of 2022
and approximately 300 of them having been implemented in the past
decade (Felbermayr et al., 2020). Thus, while conceived as an instrument
of peace, sanctions emerged as a common tool of international pressure,
reshaping the international order.

2.1 Defining Sanctions

The early literature on sanctions lacked conceptual clarity on what consti-
tutes sanctions, resulting in the tendency to use the term ‘sanctions’
interchangeably with other terms, such as ‘economic coercion,’ ‘economic
statecraft,’ ‘economic diplomacy,’ ‘economic leverage,’ etc. (Taylor, 2010,
p. 11).
Common to all these terms is the focus on economic power as the
instrument of political pressure. After the recognition that foreign trade
can be a source of national power (Hirschman, 1980) followed the
conceptualization of sanctions as “economic statecraft” (Baldwin, 1985).
Pape (1997) stressed the importance of disintegrating the umbrella of
“economic statecraft” into specific categories. He outlined three main
strategies of international economic pressure: economic sanctions, trade
wars, and economic warfare. Economic sanctions aim to undermine the
economic basis of the power of the targeted state by reducing interna-
tional trade in order to coerce the targeted state to change its policy. In
a trade war, a state threatens to inflict harm on a targeted state by redi-
recting the course of trade. Trade wars aim to influence the international
economic policy of the targeted state, not its political behavior. Economic
warfare aims to weaken a targeted state’s economy in order to undermine
its military capabilities and overall power (Pape, 1997, pp. 93–94). From
this categorization, it is clear that what became known as “comprehensive
sanctions” on Russia is, in Pape’s definition, economic warfare since the
16 A. BOROZNA AND L. V. KOCHTCHEEVA

goal of “comprehensive sanctions” is to weaken Russia’s economic base

in order to reduce its military power.
While some authors argue that sanctions can vary based on whether
their objective is economic or political (Jentleson, 2022), there is a greater
acceptance in the literature that sanctions are always a political tool
since they pressure the receiver of sanctions to comply with the polit-
ical demands of the sender of sanctions (see Connolly, 2018; Galtung,
1967; Kirshner, 1999; Kochtcheeva, 2020; Kuzmarov, 2021). Although
the most common type of sanctions is economic sanctions, there are
a variety of other restrictive and punitive measures used to coerce the
targeted states, and therefore, the expanded definition of sanctions as a
tool of coercive diplomacy would be more appropriate. Thus, Risa Brooks
(2002, p. 6) proposed a broadened definition of sanctions, stating that
“sanctions involve the imposition of punitive measures on a target state,
measures which seek to limit the state’s access to resources or cultural
and social engagement and limit movements of its nationals in order to
elicit a change in the target’s policies.” Consistent with this broader view
of sanctions, we will define sanctions as follows. International sanctions
are a deliberate instrument of coercive diplomacy employed by indi-
vidual states, coalitions of states, or international organizations designed
to impose pressure on the target state or substate actors with the goal of
either producing compliance with the norms and requests of the sender of
sanctions or obtaining a political change in the target country. Since sanc-
tions belong to non-military instruments of statecraft, they are focused on
undermining the power of the target state by non-military means with the
goal of inflicting costs on unwanted behavior (Stein, 2012, p. 42).

2.2 The Legal Aspect of Sanctions

According to international law, the U.N. Security Council is the only
legitimate body with the legal authority to introduce sanctions. In reality,
however, individual countries or coalitions of countries extensively employ
sanctions unilaterally (Hofer, 2018). The imposition of sanctions by the
United Nations on Iraq, Yugoslavia, and Haiti in the 1990s became
known as the “Sanctions Decade” (Cortright & Lopez, 2000; Hufbauer
& Oegg, 2003). Therefore, the literature customarily distinguishes the
U.N. sanctions from unilateral sanctions imposed by individual states or
regional institutions and views sanctions as “part and parcel of interna-
tional diplomacy, a tool for coercing target governments into particular
 2 SANCTIONS: A THEORETICAL REVIEW 17

avenues of response” (Hufbauer et al., 2009, p. 5). While the U.N. is the
only organization whose sanctions are universal and binding on all, there
has been an increase in the application of unilateral sanctions.
Additionally, since 1990, more than two-thirds of U.N. Security
Council sanctions have been preceded by unilateral measures by indi-
vidual states (Brzoska, 2015). Sender states try to legitimize the use
of sanctions through the norms of international law, including the UN
Charter, domestic legislation, and allusion to the norms of their morality
and beliefs (Timofeev, 2018; Timofeev et al., 2020b). However, there
is still a relative lack of clear legal limits regulating the use of sanc-
tions (Chachko & Heath, 2022) despite their potential for inflicting
catastrophic damage on third parties and global economic relations.

2.3 Types of Sanctions

Sanctions vary by type, including economic (e.g., financial, trade, energy
and raw materials, services), political and diplomatic (e.g., lock nego-
tiations, memberships, cooperation), military (deny access to military-
related hardware), technological (impairing technological development
of a target state), media (curbing the target state media reach outside
its borders), travel (restricting the travel of citizens of the targeted
states), cultural (canceling cultural events with participants of the targeted
country, or even removing classical works from the textbooks), sports
(not allowing citizens of the targeted country to participate in inter-
national sports events), and others. Sanctions can also be divided by
scope: comprehensive, sectoral, targeted, individual (e.g., asset freezes
and visa and travel restrictions), and secondary (secondary sanctions seek
to prevent, on a global basis, third parties from transacting with those
subjected to sanctions). Depending on the number of senders, sanctions
can be unilateral and multilateral. Sanctions can also be divided into those
that have already been imposed and those whose imposition is threatened
(Afesorgbor, 2019; Bapat et al., 2013; Drezner, 2015).
Recently, the model of “smart” or “targeted” sanctions has gained
attention in the literature and political vocabulary (Drezner, 2015). In
contrast to blanket sanctions against an entire country, these types of sanc-
tions are envisioned to affect certain individuals, companies, or sectors of
the target country in a specific way (Cortright & Lopez, 2002; Weiss,
1999). Targeted sanctions—often called “smart sanctions”—began in
1990 and 1991 as a response to the U.N. Security Council sanctions
18 A. BOROZNA AND L. V. KOCHTCHEEVA

imposed on Iraq after its invasion of Kuwait. Already by 1991, it became

clear that smart sanctions, which were initially viewed as a peaceful alter-
native to military action, were devastating to the Iraq economy and
infrastructure, resulting in widespread malnutrition, epidemics of water-
borne diseases, and the collapse of every system necessary to ensure
human well-being in modern society (Gordon, 2011). Despite the nega-
tive experience with targeted sanctions in Iraq, their use continues.
Overall, there is no consistent evidence that smart sanctions provide better
policy outcomes in relation to the targeted countries (Drezner, 2011).

2.4 Sanctions as a Source

of Destabilization and Regime Change
The study of U.S. sanctions programs frequently mentions ‘destabiliza-
tion’ as a purpose of sanctions (Hufbauer et al., 2009). Destabilization
happens when the public loses faith in their government’s ability to rule
the nation, and the door is left open to alternative ideas (Marinov, 2005).
The list of countries under such sanctions is long. It includes smaller
countries, such as Syria, Iran, Libya, Chile, Cuba, and Venezuela, and
rivals, such as Russia and China. Successful or not, destabilization makes
the general public into participants rather than observers, punishing the
entire population of the target states and making people suffer as a
necessary component of the sanctions, not as some sort of “unintended
consequence” (Beal, 2021; Davis & Ness, 2021). The traditional expla-
nation for the coercive instrument at work when sanctions, especially
economic ones, are used is that they will hurt the people of the target
state, sufficiently compelling leaders to change their behavior and poli-
cies as a result of pressure from the general population (Galtung, 1967).
Economic sanctions are usually implemented to decrease the target state’s
resource availability, which lowers national income and instills a sense of
hardship in the targeted populace. While other coercive mechanisms for
sanctions are also at play, the majority of contemporary sanctions have
their roots in the deprivation-based concept (Allen & Lektizian, 2013;
Seitz & Zazzaro, 2020).
Despite being promoted as a benign instrument, economic coercion
frequently results in massive suffering, as the drive to apply sanctions
comes from the ability of sanctions to destroy the economy (McCor-
mack & Pascoe, 2017; Peksen, 2010). Sanctions may imperil the
economic and political capacity of the targeted regimes while significantly
 2 SANCTIONS: A THEORETICAL REVIEW 19

impairing the socio-economic and political well-being of the general

population in the target country as well as in the sender countries (Seitz &
Zazzaro, 2020). Therefore, critics began insisting that sanctions are a
potentially unethical foreign policy tool that unfairly and indiscriminately
targets poor and defenseless actors (Allen & Lektizian, 2013). Former
U.N. Secretary-General Kofi Annan (2000) referred to sanctions as ‘a
blunt instrument which hurt large numbers of people who are not their
primary targets.’ While not necessarily resulting in regime change, desta-
bilizing sanctions can make the target government more repressive, which
can promote a wave of emigration, thus demonstrating the malicious-
ness of the government even further and paving the way for even more
sanctions.
Sanctions often lead to a significant decrease in the target govern-
ment’s capacity to govern, as it is no longer able to access the military and
economic resources it needs to project power, which may also reduce its
capacity to carry out reprisals and suppress domestic opposition. In such
a situation, sanctions-driven economic hardship and reduced resources
may also reduce the target leader’s capacity to offer selective inducements
to their base in exchange for loyalty. These incentives could include tax
deductions, access to limited luxury items, improved housing, and higher
salaries. If these incentives are no longer available, regime loyalists or
other key public figures may decide to defect from the governing coalition
and join opposition groups. The population suffering economic hardship
due to sanctions could become more dissatisfied with their government.
Growing dissatisfaction with poor living conditions could encourage anti-
regime opposition groups to recruit more followers and mobilize against
an existing government (Peksen, 2023).

2.5 Sanctions as a Hegemonic Tool

The United States has applied sanctions against other states more often
than any other country in the world (Hufbauer et al., 2007; Kirkham,
2022, p. 61; Morgan et al., 2014). The preponderance of power and
ability to absorb the costs of imposing sanctions allows the United States
to exploit the dependence of weaker states and create economic and
social stress to force the target states to change their domestic or foreign
political behavior, interfere in their affairs, or coerce them to transform
their political systems while remaining relatively invulnerable to reciprocal
measures (Early, 2015, p. 5). As such, “sanctions are a weapon wielded by
20 A. BOROZNA AND L. V. KOCHTCHEEVA

the most powerful, the U.S. and its allies in Western Europe and beyond,
against the poor and weak” (Davis & Ness, 2021, p. 3). Several studies
indicate that the United States emerged as the most frequent sender
of unilateral sanctions (Hufbauer et al., 1990; Morgan et al., 2014).
Through its dominance of the international financial and banking system,
the United States is able to control access of the targeted state to global
finance. Applying economic sanctions by the U.S. often involves limiting
or completely cutting the target state’s ability to trade on international
markets (Arnold, 2019). Therefore, sanctions can be viewed as “a mode
of war and an instrument of coercion usually in pursuit of hegemonic
objectives” (Beal, 2021, p. 43). The study by Early and Peksen (2022)
on the effect of sanctions on 149 countries during the 1971–2015 period
demonstrates the widening gap between the sender of the sanctions (the
United States) and the targeted states, thus cementing global inequality,
impoverishment of the target states, and increase in human rights viola-
tions–despite the original proclaimed goal of protecting human rights in
the targeted states.
Sanctions can decrease, restrict, or block completely trade or financial
operations of a target, with the expectation that the restrictions will also
achieve political results, such as forcing a change of political strategy of
the targeted regime or its domestic or foreign policy. Often, sanctions are
used to defend the sender’s strategic interests and protect its fundamental
objectives abroad.
Generally, the purpose of sanctions and other forms of coercion is
to benefit the coercer at the expense of the coerced (Beal, 2021). This
is especially relevant for the United States, which frequently has imple-
mented sanctions to emphasize its leadership in global affairs (Hufbauer
et al., 2009). Cafruny and Kirkham (2020, p. 91) write that: “the United
States seeks not only to punish targeted states in the name of human
rights but also to enhance U.S. state power, to promote the interests of
American corporations in global markets and to advance domestic polit-
ical agendas.” In the last fifty years, the United States has emerged as
the leading sender of sanctions, although the European Union joined the
U.S., especially since the end of the Cold War (Hufbauer et al., 2009;
Hufbauer & Jung, 2020; Jentleson, 2022, p. 183; Timofeev, 2018). The
U.S. employs sanctions most frequently and with significant consequences
and serves as an instigator and enforcer of sanctions by other coun-
tries (Arnold, 2019). Therefore, any analysis of modern sanctions cannot
 2 SANCTIONS: A THEORETICAL REVIEW 21

circumvent the United States, as at the moment, “the global sanctions

regime speaks with an American accent” (Beal, 2021, p. 27).

2.6 Goals of Sanctions

The primary purpose of implementing sanctions is to discourage and deter
undesirable behavior, exact punishment on the targeted country, and
exert pressure to prompt a change in that country’s conduct (Hufbauer
et al., 2009). Sanctions are frequently represented not merely as a
“humane alternative to war” (Beal, 2021, p. 29) but driven by genuine
concern and virtuous intentions (Allen & Lektizian, 2013). However, the
real, underlying goals can be frequently obscured by official statements.
Sanctions achieve their goals through the following three compo-
nents: coercion, constraint, and signaling (Pape, 1997). Coercion has
both domestic and foreign policy dimensions. In the first case, sanctions
are often associated with the theme of democratization and are imposed
in case of violation of human rights, internal conflicts, and coup d’état.
Using sanctions in the interest of deterrence implies the application of
such restrictions as restraining the target country’s military, technological,
or another aspect of power. Sanctions may prohibit the supply of certain
materials and technologies and limit investment in specific sectors of the
economy. The imposition of sanctions can be used to deter the target
country from further escalation. The signal function, as a rule, involves
using sanctions as a symbolic measure (Pape, 1997). The economic
damage from them is usually minor. However, they emphasize a polit-
ical position and signal a willingness to take decisive action. The senders
proceed from the “theory of restraint,” believing that sanctions can either
send a signal or make the costs of an offensive policy unacceptable. A
sender seeks to coerce a target by threatening or imposing restrictions
if the target does not consent to its demands (Bapat & Kwon, 2015).
Overall, the objectives pursued are to modify the behavior of a target,
diminish its capacity to maneuver or weaken its position, and publicly
condemn those targets that threaten international peace, prosperity, and
security.
22 A. BOROZNA AND L. V. KOCHTCHEEVA

2.7 Sanctions Effectiveness

Most of the existing literature examining the effectiveness of sanctions has
emphasized their impact on trade, investments, and the economic growth
of both the targeted country and the countries imposing the sanctions.
Additionally, studies on the effectiveness of sanctions in achieving their
desired goals, such as coercing the sanctioned entities to adhere to the
wishes of the sanctioned country, show that the net effect of sanctions is
not apparent (Shin et al., 2016). The evidence is mixed, with some studies
indicating a negative impact on the target countries and their firms, while
others indicate that sanctions may not always be effective in altering a
country’s policy and may have only a limited economic effect on the GDP
and trading patterns of sanctioned countries (Bapat et al., 2013; Bapat &
Kwon, 2015; Galtung, 1967; Hufbauer et al., 2007).
Assessing and measuring the effectiveness of sanctions poses several
methodological challenges. How can senders of sanctions determine if
sanctions achieved the desired outcome? A key question is how to define
success. Is success determined in terms of full compliance with the
demands of the senders of sanctions, or would partial compliance be
considered a degree of success? There are three major perspectives on the
effectiveness of sanctions. The first perspective is that sanctions do not
work. The second perspective is that sanctions play a symbolic role and
are used as an instrument of signaling. The third perspective is that sanc-
tions can work if appropriately designed (Taylor, 2010, p. 18). Galtung
(1967) was among the first who attempted to trace the mechanism of
sanctions and link it to their effectiveness. He introduced a “general
theory of economic sanctions,” aiming to elucidate the causal mechanisms
of “economic boycott.” He traced the link between sanctions and the
subsequent steps of value deprivation, political disintegration, and even-
tual compliance. However, many authors argue that this link is hard to
trace and evaluate due to the possibility of many different causal mech-
anisms through which sanctions can and have worked (Baldwin & Pape,
1998, p. 193). There are also problems with coding and operationalizing
various steps in the sanctions process. Hufbauer et al. (1990) sought to
evaluate the effectiveness of economic sanctions from 1914 to 1990 and
claimed that sanctions were effective in 40 cases, or 34% of the time.
However, after the review of their methods, standards for determining
success or failure by Pape (1997, p.106) demonstrated that sanctions have
been successful less than 5% of the time, not 34%, as claimed by Hufbauer,
 2 SANCTIONS: A THEORETICAL REVIEW 23

Schott, and Elliot. Another study by Elliott (1997) showed that U.S.
sanctions from the 1970s till 1997 altered targeted states’ behavior only
13% of the time.
Another issue with assessing sanctions effectiveness is calculating the
net effect of sanctions–what is the cost to the sender compared to the
benefits of sanctioning the target? There is also a potential for sanctions
blowback effect on the sender—the unanticipated disruption of trade that
affects the sender. Disruption in trade could negatively impact both the
sender and the target state, and that is not limited to states with strong
trade relations. The cost of trade disruption is difficult to estimate in
advance. While the sender of the sanctions can attempt to protect itself
from the harmful effect of sanctions on its economy, it cannot completely
ensure that trade disruptions will be limited to those goods on its sanction
list. One of the common responses of the targeted states is by disrupting
trade in commodities that are important to the sender of sanctions.
Existing literature and research demonstrate that imposing sanctions
imposes a notable economic burden on countries and their financial
markets (Gaur et al., 2023). For instance, studies on South Africa, Iraq,
and Iran reveal that sanctions resulted in a substantial decrease in national
economic growth and a decline in living standards (Becker et al., 1990;
Cannes, 2000; Torbat, 2005). In the South African case, sanctions had
a significantly adverse effect on various country-level economic indica-
tors, and these repercussions persisted for many years, even after lifting
the sanctions (Evenett, 2002). Furthermore, an examination of finan-
cial sanctions imposed by Germany on twenty countries from 2005 to
2014 indicated a reduction in financial transactions with the targeted
country (Besedeš et al., 2017). Regarding Russia, the imposition of finan-
cial sanctions resulted in diminished access to capital markets for Russian
banks, prompting increased government intervention in the banking
sector and substantial decreases in capital inflows following the initial
sanctions imposed on Russia in 2014 (Gurvich & Prilepskiy, 2015).
The research on the effectiveness of sanctions in changing the foreign
policy course of the target states finds little evidence for sanctions’ effec-
tiveness (e.g. Jerin, 2015; Jones, 2015; Kirkham, 2020; Kirshner, 2002;
Pape, 1997). In most cases, sanctions cannot change the behavior of the
targeted state due to the increased economic integration of the interna-
tional system, the ability of the targeted states to find alternative suppliers
and markets (Bapat & Kwon, 2015), and become more independent and
self-sufficient (Timofeev, 2022a, 2022b), following the imposition of the
24 A. BOROZNA AND L. V. KOCHTCHEEVA

sanctions. Not only do target states find ways to adapt, but sanctions often
backfire and make the sender of sanctions feel the pain (Demarais, 2022).
Alternatively, sanctions also often lead to unintended consequences. Thus,
Mulder (2022), analyzing the continental blockade on Germany and
Austro-Hungary, found that while sanctions inflicted economic costs on
Berlin and Vienna, this did not translate into an immediate weakening
of their military power and did not shorten the war. Instead, fear of
the imposition of sanctions gave incentive and strengthened the fascist
regimes in Germany, Italy, and Japan.
Both anecdotal and empirical evidence suggest that the effectiveness
of sanctions tends to diminish over time (Gaur et al., 2023). Dashti-
Gibson et al. (1997) provided empirical findings supporting the idea that
as sanctions persist, their ability to achieve the objectives of the sanc-
tioning countries weakens. The countermeasures adopted by a sanctioned
country appear to erode the efficacy of sanctions, and when a sanc-
tioned country possesses centralized and concentrated political authority,
it is better equipped to develop and implement these countermeasures
(Bolks & Al-Sowayel, 2000). Coulibaly’s (2009) study of South Africa
found that while sanctions did reduce investment, the economy and
companies adjusted to the restrictions on their access to the global finan-
cial system. In a more recent study, Dorff and Minhas (2017) found a
decrease in international sanctions compliance over time.
Since sanctions rarely achieve full compliance with the demands of
the senders of sanctions, it might be more fitting to speak in terms
of degrees of success (Jentleson, 2022, p. 23). From the literature on
sanctions (Cortright & Lopez, 1998; Hufbauer et al., 2009; Krustev &
Morgan, 2011; McLean & Wang, 2010; Nephew, 2018), it follows that
the following key factors play a role in sanctions effectiveness. The first
group of factors for sanctions success relates to the timing, strength,
clarity of goals, and character of sanctions. The longer the time between
the threat and application, the more time the target and sender have
to stockpile to mitigate the effects of the sanctions, making the applica-
tion less effective (Afesorgbor, 2019). As Demarais (2022, p. 39) writes,
“Sanctions work fast or never.” If the sanctions are inadequate for the
task, have vague goals, and have weak means of implementation, they may
fail (Hufbauer et al., 2009). The more often sanctions are used, the less
effective they become. Using sanctions to combat any dispute between
states generally depreciates the value and effectiveness of sanctions more
broadly (Drezner, 1998).
 2 SANCTIONS: A THEORETICAL REVIEW 25

The second factor of sanctions effectiveness is a degree of consolida-

tion and agreement among the sender countries. While unilateral threats
can be more persuasive, multilateral imposition stands a higher chance of
success (Weber & Schneider, 2019). The stronger the so-called “sanctions
coalition,” the stronger the effect of the restrictions (Keatinge, 2023;
Timofeev, 2018). Multilateral sanctions have the advantage of enabling
the hegemon to employ its power to multiply the reach of sanctions.
The advance of globalization and the development of international supply
networks make this even more crucial (Beal, 2021). Sanctions by states
are all the more effective when used through international institutions
(Bapat & Kwon, 2015; Grauvogel et al., 2017). The approval of sanctions
by the U.N. Security Council gives them a wider reach, being compul-
sory for all U.N. member states and providing a more legitimate look.
When sanctions are used, the hegemon exerts pressure on countries and
on international institutions by applying pressure on governments and
individuals from aligning or subsidiary states. In the globalized economy,
this extraterritorial reach is both a need and a force multiplier, strength-
ening the ability to cause economic and other harm within targets (Beal,
2021; Martin, 1992).
However, Drezner (1999) claimed that a sanctions paradox appeared
when sanctions against allies led to a change in a political course much
more often than sanctions against opponents. In most successful cases,
sanctions worked before the application (Drezner, 2003). However, when
a sender’s allies and other actors in the international community do not
share its goals, they may question the probability of a successful outcome
and refuse to take stern or any measures requested against the target.
The criticism from the sender’s allies may be intensified if the sender
attempts to enforce the sanctions on an extraterritorial basis. Another
possible reason for ineffectiveness is that sanctions may alienate poten-
tial allies abroad and business interests at home, as well as produce a
domestic societal outcry. The consequences of sanctions are even more
likely to be pronounced when the target state is a democracy in economic
or political turmoil and the incumbent government requires the backing
of a large proportion of the populace (Allen, 2005; Letkzian & Souva,
2007). Domestic business firms may also experience severe losses when
sanctions interrupt trade and financial contracts (Hufbauer et al., 2009).
Besides the immediate loss of sales, they may lose their reputation for reli-
ability. After the first expression of patriotic enthusiasm or moral necessity,
such business grievances can undercut a sanctions scheme. Additionally,
26 A. BOROZNA AND L. V. KOCHTCHEEVA

globalization has made more countries potentially vulnerable to economic

sanctions; at the same time, it has also provided a more diverse market-
place to subvert and replace the market disruption they caused (Hufbauer
& Oegg, 2003).
The third factor is the cost of the sanctions for the target and sender
countries. The literature demonstrates that high costs of sanctions for
the target state and low costs for the sender are notable indications of
sanctions’ success (Drury, 1998; Hufbauer et al., 1990; Stein, 2012,
p. 42). For the target countries, sanctions can lead to a reduction in
trade relations (Hinz, 2017), a crisis in the banking system (Hatipoglu &
Peksen, 2018), reduced investment, increased corruption, and problems
in public administration (Rosenberg et al., 2016), the falling performance
of companies in strategic industries (Ahn & Ludema, 2020). In other
words, they raise the costs of the policy pursued and make sanctions
meaningful for the senders even if the target does not change their polit-
ical course. The restrictions will make it stay the course. On the other
hand, the greater the losses and instability in a sender’s economy, the
more likely it is to make political concessions. The sanctions can be highly
destabilizing and cause significant harm to the economic interests of the
sender and its allies (Cafruny & Kirkham, 2020).
The fourth factor of sanctions effectiveness is the presence of coun-
termeasures and remedies, both domestic and international. A notable
rationale for sanctions’ ineffectiveness is that they might cause a “rally-
around-the-flag” mentality (Galtung, 1967; Mayall, 1984; Nooruddin,
2002) among the sanctioned country’s population, producing “support
for domestic policies, patriotism, and nationalism” (Seitz & Zazzaro,
2020, p. 818). For instance, economic sanctions may unify the target
population in support of its government and encourage the search for
alternatives and substitutions. The target government can gather public
opinion around its domestic leaders’ ideas by charging the senders and
branding their actions as a threat to the security, integrity, and values of
the country. Imposed restrictions may provoke strong or affluent allies
of the target country to adopt the role of supporters, counterbalancing
whatever deprivation ensues from sanctions themselves. Allies of the
targeted states may help find alternative means that would make it possible
to counterbalance the effect of sanctions, maintain and strengthen the
necessary development of the country’s international relations, benefit
from participation in the global economy, and consistently eradicate social
 2 SANCTIONS: A THEORETICAL REVIEW 27

and economic vulnerabilities (Early, 2015; Hufbauer et al., 2009; Timo-

feev et al., 2020a). In research on why sanctions often fail, Bryan Early
found that the success of sanctions is significantly reduced by sanction
“busters”—states unwilling to sanction the targeted state. Early writes
that having one trade-based sanctions buster significantly reduces the
likelihood of sanctions success; having more than one buster almost guar-
antees sanctions failure (Early, 2015, p. 210). Sanction-busting behavior
sometimes comes even from the firms of sanctions sender countries (Stein,
2012, p. 40).
The fifth factor is the regime type of the targeted country (Allen, 2008;
Nossal, 1999; Smith, 1998; Tomz, 2007) and the structure of its political
economy (Connolly, 2018; Golikova & Kuznetsov, 2017; Jones, 2015;
Kirkham, 2022). The most effective sanctions have been in place against
democracies with significant ties with the United States (Demarais, 2022,
p. 43). The less democratic the regime, the less incentive for the leaders
to change their domestic or foreign policy course that would lead to the
lifting of sanctions. The structure of the political economy of the targeted
state can mitigate the pains of sanctions.

2.8 Mechanisms of Resistance

to Sanctions in the Target State
The target states are constantly reinventing mechanisms for circumventing
sanctions and mitigating their impact on national economies and internal
stability. One of the main mechanisms of the targeted states’ resistance
to sanctions is sanctions’ politically integrative effect. Galtung (1967,
pp. 411, 413) suggested that faced with economic deprivation, societies
unite around the ruling regime and search for ways around sanctions,
be it import substitution, smuggling, or openly establishing ties with
third-party states, companies, or individuals, which are willing to risk
being themselves a target of secondary sanctions and endure the punish-
ment (Nephew, 2018). There are two main mechanisms of circumventing
and resisting sanctions–through trade and politics. The first mechanism
involves businesses and international traders finding new channels of trade
and commerce, often with protection from their respective governments.
The second mechanism involves third-party states that do not support
the imposition of sanctions and help the targeted regime with various
types of aid. These “sanctions busters” can be trade-based and aid-based
(Early, 2015). Hufbauer et al. (1990, 2007) argued that third-party states
28 A. BOROZNA AND L. V. KOCHTCHEEVA

(“black nights”), providing assistance to targeted regimes and usually

motivated by political goals, are crucial to targeted states’ resistance to
sanctions.
The adaptation to sanctions also happens at the lower level–the level
of the firm. Research by Gaur (2023) demonstrates that while sanctions
may have a short-term detrimental impact on sanctioned entities, in the
long term, these individuals and firms attempt to evade the sanctions
by restructuring and adapting to them. There are two potential expla-
nations for this success: first, as time passes, the internal and external
pressures become less intense. As the domestic government attempts to
protect its domestic economy, firms have more flexibility to implement
strategies to address sanctions without fear of losing their legitimacy in
the domestic context. Second, even when firms are restructuring to meet
international requirements, there is more acceptance of this approach as
people and other stakeholders in the domestic context view the success of
the firms from a nationalist perspective (Gaur, 2023, p. 1398). Companies
impacted by sanctions also acquire knowledge and proficiency in navi-
gating them as time progresses (Ahn & Ludema, 2020). In the Russian
scenario, initial indications suggest that businesses have actively under-
taken restructuring and implemented various strategies to mitigate the
impact of global sanctions.

2.9 Securitization of Sanctions by the Target

In order to understand why international sanctions are ineffective in
changing the target states’ behavior, it is also essential to focus on the
concepts of threat and security and how the leadership of the target
country uses securitization. The Copenhagen School scholars argue that
an issue can be securitized (framed as a security issue) by the political elite
(a securitizing actor) by articulating it as an existential threat to a state.
Framing issues as an existential threat allows the political elite to adopt
extraordinary measures beyond conventional political processes (Buzan
et al., 1998; Buzan & Hansen, 2010). Buzan and Hansen (2010, p. 34)
stress that it is crucial to understand “the process through which particular
‘threats’ manifest themselves as security problems on the political agenda.
‘Threats’ are ‘objective’ when they are accepted by significant political
actors, not because they have an inherent threatening status. Security is,
in short, a self-referential practice.”
 2 SANCTIONS: A THEORETICAL REVIEW 29

Sanctions can be viewed as “a foreign challenge to the security of

the targeted state’s domestic economy” (Lektzian & Mkrtchian, 2021,
p. 2779). As the senders increase the perception of the exogenous threat
in the target states, ensuring survival and security becomes paramount.
The target state may start securitizing if antagonistic measures like
sanctions are introduced and sustained.
Following the perspective of the Copenhagen school, international
sanctions imposed on Russia became a tool of securitization by the
Russian political elite. The discourse on sanctions became instrumental
to the most nationalistic actors in Russia who suspected malign Western
intentions since the 1990s. The scope and depth of Western sanctions
became a confirmation of the long-standing narrative in Russia that the
West is determined to weaken Russia. Using the language of security
threats from sanctions allowed the Russian political elite to treat sanc-
tions as a tool for strengthening domestic cohesion, mobilization, and
gathering support against external threats. Thus, the securitization of
sanctions became an intrinsic part of Russia’s adaptation mechanism to
sanctions.
Treating sanctions as an existential threat to the state by Russian lead-
ership is based on the interconnectedness of economic and military power.
Since the overall state power is built on the foundation of a strong
economy, any threat to the state’s economic interests constitutes a threat
to that state (Kirshner, 1999). The threat to the economic security of
a state can come from internal and external factors. Internal sources of
economic threat can often be attributed to the failure of government
economic policies. On the other hand, external economic threats can
come from various sources, including trade disruption, price decreases on
exported commodities, and sanctions. In Russia, energy exports and the
sale of defense industry products have had significant security implications
(Borozna, 2022, pp. 176–179). Thus, the imposition of sanctions and the
resulting disruption of trade has given ground to the country’s leadership
to treat sanctions as a security issue, resulting in the securitization of sanc-
tions. Because Russia perceives its conflict with the West as existential, the
future of Russia, its territorial boundaries, its global standing, and even
the issue of its continued existence will be shaped by the resolution of this
confrontation. That is why Russia’s ability to adapt to sanctions by secu-
ritizing them and reorienting itself toward the non-West became crucial.
Synthesis of insights from securitization literature and literature on the
30 A. BOROZNA AND L. V. KOCHTCHEEVA

political economy of sanctions allows us to show the role of securitization

in Russia’s resilience to sanctions.

2.10 Sanctions as War

The damage of sanctions on the target country is, in many cases, as lethal
as military intervention by producing malnutrition, restricting access to
medical supplies, worsening safety, increasing human rights violations,
and stumbling the targeted state’s overall development (Arnove, 2003;
Davis & Ness, 2021; Demarais, 2022; Dyson & Cetorelli, 2017; Early &
Peksen, 2022). Due to the damage that sanctions inflict on the economies
of the targeted states, countries subject to sanctions perceive them as a
threat to their national security. The destructive effect on the economy of
the targeted state is comparable to the destruction of the state economy
during a military intervention. For that reason, an imposition of sanctions
can be viewed as the economic war waged by the US against the rest of
the world.
One of the goals of the sanctions war is to prolong the US financial
hegemony and to prevent the failure of the US dollar as the global reserve
currency. This war takes many forms and applies many instruments.
First, the United States uses its predominant position in the international
financial system to inflict pressure on the states unwilling to submit to
US political demands. While during wars, the property of the targeted
state is destroyed during the battle, the modern-day freezing of financial
assets through sanctions also aims to destroy the material power of the
sanctioned state. Second, the United States often uses its legal system,
especially through FCLA, to extract economic gains for US corporations.
Pierucci and Aron (2019) documents the use by the American judicial
system of FCLA to subjugate foreign multinational corporations and even
foreign governments to serve American economic interests.
The implementation of economic sanctions has been linked to an
increase in human rights violations and a decrease in political freedoms
in the targeted countries. Political leaders in the targeted countries often
view sanctions as a potential threat to their authority and use them
as a pretext to suppress domestic opposition. Sanctions have also been
linked to a rise in the level of political repression in the targeted coun-
tries (Peksen & Drury, 2010; Peksen, 2009; Wood, 2008). A review
of more than thirty studies by Rodriguez (2023) concludes that sanc-
tions have negative effects on the standard of living in the targeted state,
 2 SANCTIONS: A THEORETICAL REVIEW 31

resulting in declining income, inequality, mortality, and human rights

violations. In 2020, the Human Rights Council of the United Nations
adopted a resolution stating that unilateral coercive measures in the form
of economic sanctions have far-reaching implications for the human rights
of the general population of targeted States, disproportionately affecting
the poor and the most vulnerable classes,” and that “most current unilat-
eral coercive measures have been imposed, at great cost, in terms of
the human rights of the poorest and of the persons in vulnerable situ-
ations, on developing countries by developed countries” (United Nations
General Assembly, 2020).
What distinguishes the sanctions on Russia is the openly war-like
language of the sanctions. The language of sanctions on Russia, imposed
in 2022, became more openly aggressive in nature, using various terms,
such as “containment,” “isolation,” “pariah state,” “rogue state,” etc.
(Dobbins et al., 2018; Norrlöf, 2022; Vershbow, 2023). Thus, Vershbow
proposes an effective containment strategy applied to Russia that should
“seek to maximize Russia’s economic and political isolation. Economic
decoupling should be achieved through a long-term policy of sanctions on
the Russian economy and following through on moves to end the West’s
dependence on Russian energy and raw materials. In terms of political
isolation, we need to treat Russia as a pariah or rogue state and avoid any
premature return to business as usual” (Vershbow, 2023).
Many studies demonstrate that sanctions are a form of economic coer-
cion that can have a far-reaching impact on society, including social, polit-
ical, and humanitarian damage (Early & Peksen, 2022; Gordan, 2010;
Von Sponeck, 2006; Weiss et al., 1997). For these reasons, economic
sanctions should be treated for what they are–economic warfare–it is a war
that aims to inflict damage that is commensurate or can exceed material
damage on the battlefield.
The upcoming two chapters will examine the objectives of Western
sanctions on Russia in two distinct periods: from 2014 to 2021 and from
February 2022 onward. These chapters will also delve into Russia’s under-
standing of the goals behind the sanctions and how Russia responded to
them.
32 A. BOROZNA AND L. V. KOCHTCHEEVA

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 CHAPTER 3

Annexation of Crimea: Western Sanctions

and Russia’s Response (2014–2021)

Abstract This chapter centers on the sanctions levied against Russia

following the Ukrainian crisis and the annexation of Crimea in 2014. It
begins by examining the objectives behind these sanctions. The chapter
scrutinizes how the sanctions evolved and intensified over time. The over-
arching aim of these sanctions was to impose enough economic damage
on Russia to compel a significant shift in its foreign policy. Borozna
and Kochtcheeva highlight Russia’s strategies to counter these sanctions,
including state action, import substitution, forging stronger ties with
non-Western sources of technology and capital, and fostering its strategic
industries to fulfill domestic economic needs. The chapter underscores
that the primary political objectives of sanctions have not been achieved.
Russia did not alter its political trajectory, retained control of Crimea,
and refrained from making unilateral concessions. The Russian political
system remained predominantly cohesive, and Moscow avoided political
isolation by deepening existing international connections and establishing
new ones.

Keywords Russia · Sanctions · Russian economy · Ukraine crisis ·

Crimea · United States · European Union · Regime change · Economy ·
Anti-crisis plan · Import substitution · State support · Foreign policy
course · Counter-sanctions · Strategic industries · Russian political
system · Effect of sanctions · Sanctions effectiveness

© The Author(s), under exclusive license to Springer Nature 41

Switzerland AG 2024
A. Borozna and L. V. Kochtcheeva, War by Other Means,
https://doi.org/10.1007/978-3-031-51370-1_3
42 A. BOROZNA AND L. V. KOCHTCHEEVA

In the early 2010s, the initial wave of sanctions was imposed on the
Russian Federation, primarily beginning with the enactment of the so-
called Magnitsky Act. The sanctions of mid-December 2012 were a
response to the death in the Russian prison of Sergei Magnitsky, which
targeted those found responsible for his death. With the help of a massive
lobbying campaign by William Browder, who was the head of the invest-
ment fund Hermitage Capital Management, the U.S. legislature was
convinced that Magnitsky exposed corruption, misconduct, and viola-
tion of human rights by Russian government officials. As a result, such
consistent work led to a strong coalition of legislators in both houses
of Congress (Galstian, 2020; Kuzmarov, 2021). The Act allowed the
White House to introduce financial and visa-blocking sanctions against
Russian individuals and organizations involved in human rights violations
and corruption. Considered as passed in response to the Magnitsky Act,
Russia’s vastly debated “Dima Yakovlev” law that banned the adoption of
Russian orphans by U.S. citizens produced some powerful anti-Russian
attitudes in the United States while also causing anti-American sentiments
in Russia (Kochtcheeva, 2020a; Timofeev, 2022b).
Following the annexation of Crimea after the Maidan Revolution in the
winter of 2013–2014 and the rebellion in Donbas, all E.U. countries, the
United States and Japan, imposed sanctions on Russia starting in March
of 2014. The sanctions intensified in successive waves, with Russia’s non-
symmetrical retaliation.

3.1 Goals of Sanctions

The Western sanctions against Russia were rooted in the conflict in
eastern Ukraine and the annexed Crimea. The first set of sanctions, mainly
consisting of targeted sanctions in the form of individual travel bans
and asset freezes, focused on implicated political and military personnel
believed to be responsible or involved in the violence in eastern Ukraine,
and the seizure of Crimea, as well as first select Russian financial institu-
tions (Ashford, 2016; Crozet & Hinz, 2020; Kuzmarov, 2021). President
Obama signed an Executive Order denouncing Russia’s action in Crimea
and imposed sanctions on the actors that were deemed to destabilize
or threaten the Ukrainian democratic process (Connolly, 2018). The
White House (2014) announced that: “We have fashioned these sanc-
tions to impose costs on named individuals who wield influence in the
 3 ANNEXATION OF CRIMEA: WESTERN SANCTIONS … 43

Russian government and those responsible for the deteriorating situation

in Ukraine.”
After the crash of a Malaysian Airlines flight MH17 civilian airplane,
which was downed over the Donbas territory, the West escalated its sanc-
tions regime. This round of measures included economic and financial
sanctions with restrictions on the export of certain goods, military and
dual-use goods, and mining equipment, as well as sanctions on major
banks and defense and energy companies (Ashford, 2016). Western sanc-
tions of 2014 also initially restricted defense cooperation with Russia,
and by September 2014, started targeting other sectors of the Russian
economy, the Russian financial system, export of goods and services
(except financial services), technology in support of oil exploration or
production in Russia from deep-water, Arctic, or shale projects that
have production potential. Sanctions also targeted individuals operating
in the Russian defense sector (Nephew, 2018, pp. 158–159). Diplo-
matic sanctions included the expulsion of Russia from the G8 meetings,
with bilateral talks on cooperation agreements and visa regulations also
suspended (Dreger et al., 2016).
Sanctions were imposed in multiple rounds from March and April
2014 to July and September 2014 and again in September and October
2017 (Bayramov et al., 2020). However, since 2016, the process of
sanctions escalation has started taking shape, which is a consistent expan-
sion of reasons for imposing sanctions and their categories (Timofeev,
2018). In 2016, an investigation erupted as a result of hacking attacks on
the DNC systems, which resulted in end-of-year sanctions. The 2017–
2018 were spent investigating the alleged Russian interference in the
U.S. elections. The U.S. presidential administration followed a consis-
tent approach to strengthening sanctions. While the E.U. somewhat
detached itself from the U.S. sanctioning effort, the issue of election
meddling still contributed to bringing a new low between the E.U. and
Russia. The Skripal case, Moscow’s support for Bashar al-Assad, and the
Kerch Strait incident paved the way for more new sanctions. Throughout
2019, sanctions against Nord Stream 2 were discussed and approved in
December as part of the National Defense Authorization Act (NDAA
2020, section 7503).
The overall goal of the sanctions was to inflict enough damage on the
Russian economy that would force the country’s leadership to radically
change its foreign policy course. At the same time, the goals and scope of
the sanctions from the U.S. and E.U. differed significantly. The tactical
44 A. BOROZNA AND L. V. KOCHTCHEEVA

E.U. sanctions focused on the Ukrainian issue and were mostly associated
with the implementation of the Minsk Accords. The E.U. used sanctions
as a way of forcing Russia to mainly achieve a ceasefire. This stance itself
was very contradictory since the implementation of the Minsk agreements
was largely dependent on Ukraine as well, against which there were no
sanctions for non-compliance (Timofeev, 2018).
The aims of U.S. sanctions against Russia varied but could be divided
into two categories: sanctions that aimed at specific changes in Russian
behavior and sanctions that sought to impose costs without being linked
to a specific policy outcome (Mankoff & Newlin, 2018). In contrast to
the more instrumental E.U. sanctions, the U.S. sanctions constituted
a comprehensive strategy. The strategic U.S. sanctions, in addition to
Ukraine, and especially through the Countering America’s Adversaries
Through Sanctions Act of 2017 (CAATSA), included numerous restric-
tions, such as cybersecurity, human rights in Russia, Russia’s policy in the
Middle East, nuclear non-proliferation, Russia’s energy policy, the Russian
media and others (Office of Foreign Assets, 2017). Based on the content
of this law, some of the main aims became influencing the Russian polit-
ical system via defamation and isolation of the political leadership of the
country, making Russia an undesirable trading partner, isolating it from
investments, transforming it into European and even post-Soviet regions
outcast, and pushing it out of the European energy markets.
The 2018 Defending American Security from Kremlin Aggression
Act (DASKA) revised its lists of sanctioned entities and imposed restric-
tions against companies involved in Russian domestic and foreign energy
projects. Moreover, the 2018 Defending Elections from Threats by Estab-
lishing Redlines Act (DETER) aimed at Russian financial institutions and
energy firms, with extraterritorial reach on European entities (Cafruny &
Kirkham, 2020). Overall, between 2012 and 2019, the U.S. imposed
more than sixty rounds of sanctions on Russian individuals and private
and governmental entities (Kuzmarov, 2021). In 2019, sanctions were
initiated in response to previously identified political issues. While none
of the existing problems in Russia-Western relations were resolved, none
were aggravated either (Timofeev et al., 2020). In comparison to prior
years, the imposition of sanctions against Russia has grown much more
stable by 2020.
 3 ANNEXATION OF CRIMEA: WESTERN SANCTIONS … 45

3.2 Russia’s Response

Moscow perceived the overall goal of the sanctions had been to disrupt
the Russian economy to such a degree and in such a way that it would
cause the country’s leadership to drastically change its foreign policy
course and society to challenge domestic political arrangements. Addi-
tionally, the waves of sanctions signaled a shifting emphasis in the use
of sanctions from restoring the territorial integrity of Ukraine within the
borders of 2013 to counteracting Russia’s action on a broad front of its
foreign policy priorities, especially in the Eurasian space (Afontsev, 2020).
Since 2016, a trend of mounting sanctions and the constant expan-
sion of the reasons for imposing further sanctions and their classification
has persisted (Dubinin, 2022; Timofeev, 2018; Timofeev et al., 2020). In
Moscow’s view, continued conflict in Eastern Ukraine, military and diplo-
matic victories in Syria, and regional assertiveness in Eurasia produced
a lot of condemnation in the West, leading to sanctions (Kochtcheeva,
2020b). Additionally, the alleged meddling in the U.S. elections and
Skripal’s case became fertile ground for the United States to arrange its
sanctions into law. The sender countries aimed at the most susceptible
segments of the Russian economy, political community, and society. The
U.S. and E.U. restrictions targeted Russia’s need for investments and
dependence on the US-based global financial system. The senders also
targeted Russia’s reliance on the import of high-tech equipment in various
sectors of the economy, including the energy sector, the sensitivity of the
economy to changes in the commodities markets, the vulnerability of the
social sphere, and the level of integration of the Russian elites, as well as
business and scientific communities.
Sergey Karaganov, the Kremlin’s foreign policy advisor and head of
Russia’s Council on Foreign and Defense Policy, expressed Russia’s senti-
ment about sanctions as follows: “American politicians have openly said
that the sanctions are aimed at bringing about regime change in Russia.
That’s aggressive enough” (Neef, 2016). Thus, the Russian political class
and Russian think tanks viewed the U.S. sanctions as a part of a larger
effort to weaken Russia and punish its leadership for standing up for its
state interests. This sentiment was expressed by all mainstream media in
Russia and widely accepted by the Russian public, providing the political
elite with the tools of securitization, which allowed conducting policies
commensurate with security threats.
46 A. BOROZNA AND L. V. KOCHTCHEEVA

3.3 The Effects of Sanctions

The imposition of sanctions, the continued Ukrainian crisis, falling oil
prices, and persisting geopolitical uncertainty created an increasingly diffi-
cult situation in the Russian economy. Speaking in November 2014,
Minister of Finance of the RF Anton Siluanov stated that the economic
damage to Russia as a result of the first year of the sanctions was around
$40 billion, with a further $100 billion in losses due to the fall in oil
prices (Antonova, 2014). The relative openness of markets and efforts
to stabilize the ruble had relieved some pressure in 2015. The financial
dynamics depended on the ruble’s exchange rate, fluctuations in external
demand, and normalization of domestic financial conditions (Dreger
et al., 2016; IMF, 2015). The fall of the ruble produced considerable
inflation (15.8% by August 2015), which made imports more expen-
sive and decreased incomes and wages. Russian banks were significantly
limited in their ability to borrow, and the oil and gas sector was limited
in access to a number of technologies and projects. Russia’s economy
slipped into a recession, which peaked in the second quarter of 2015
(World Bank, 2016). Living standards plunged, car sales dropped (36%),
and international travel declined (20%) (Kuzmarov, 2021).
Decreasing oil revenues limited the government’s ability to fight the
decline in real income, and nominal increases in pensions and social
benefits were below the headline inflation rate, accelerating an already
concerning increase in the poverty rate, which rose from about 13% in
2014 to about 15% in 2015 (Gaidar Institute, 2016; World Bank, 2015).
Although the inflow of direct foreign investment continued, its scale
significantly decreased: $22.0 billion in 2014 and $6.9 billion in 2015
compared to $69.2 billion in 2013 (Afontsev, 2020). Weak institutional
reforms, fatigued investment, lack of competition, and concentration in
a number of sectors have also contributed to low productivity growth
(IMF, 2015). The IMF estimated that sanctions caused between one to
one and a half percent loss of Russian GDP (Harrell, 2018). According to
Sergey Drobyshevsky, the Head of the Center for Macroeconomics and
Finance at the Gaidar Institute in Moscow (2015): “Sanctions and the
fall of oil prices …only made it possible for the existing negative trends
to become more apparent” (Kochtcheeva, 2020a).
In March 2016, Presidential Advisor Sergey Glaziev estimated that
the total economic damage over the two years since the sanctions were
imposed amounted to $250 billion (Lenta.ru, 2016). Another estimate
 3 ANNEXATION OF CRIMEA: WESTERN SANCTIONS … 47

of losses comes from the members of the Economic Expert Center

(Russian think tank), where losses as a result of the financial sanc-
tions were estimated to amount to $170 billion for the period of
2014–2017 (Kuvshinova, 2016). Nevertheless, in 2016–2017, Russia’s
economy demonstrated recovery, with tradable sectors getting more
muscle from the relative price adjustment and stabilizing commodity (oil)
prices, which became the main causes of economic growth (World Bank,
2017a, 2017b). While the Russian economy was able to adapt to the
sanctions, overall, worsening market conditions, especially the fall in oil
prices, which produced the shortfall in energy exports, and accounting for
an additional $400 billion in losses, have deepened the effect of the sanc-
tions. Russian analysts estimate that by 2020, the deployment of sanctions
against Russia has stabilized compared to previous years (Timofeev et al.,
2020). In 2019, their contribution to the slowdown in economic growth
was estimated at around 0.2% per year (IMF, 2019).
From Moscow’s perspective, the policy of Russia’s counter-sanctions
has shown noteworthy trends. In alleviating the crisis of 2014–2015, the
government produced the “Anti-crisis Plan” (RUB 2.4 trillion) with more
than 2,000 projects across 19 sectors of the economy to achieve stabiliza-
tion and growth (R.F. Government, 2015a). The focus was placed on
actions supporting the most vulnerable sectors in the economy, the finan-
cial sector, and the social sphere, as well as promoting the process of
import substitution (Kochtcheeva, 2020a). Russia was able to stand up to
sanctions because the state response was “coordinated, substantial, and
sophisticated” (Connolly, 2018, p. 4). According to Denis Manturov, the
Minister of Industry and Trade, twenty-two sectors of the economy were
receiving state support to increase import substitution by the summer of
2017. The Central Bank decided to transition to a free-floating exchange
rate, which made it possible for imports to adjust to a 17% deprecia-
tion in the real effective exchange rate during 2015, strengthening the
current account balance. The government’s decision to utilize a short-
term fiscal stimulus in the 2015 budget helped rebuild buffers and
safeguard intergenerational equity (IMF, 2015; World Bank, 2015).
Moscow also initiated a series of processes to affect the foreign direct
ownership of the crucial sectors of the national economy under targeted
sanctions. Putin started the nationalization process of privately owned oil
companies, promoted the development of energy extraction equipment
in the country, and approved the creation of a state-owned oil services
company, RBC (Kramer, 2014; Kuzmarov, 2021). While the decrease in
48 A. BOROZNA AND L. V. KOCHTCHEEVA

oil prices post-2014 had a notable influence on the Russian economy

(Oxenstierna, 2020), Russia increased its cooperation with OPEC and
was able to reach a deal in 2016 on oil output cuts in order to stabilize
oil prices on world markets (Lomagin, 2019, pp. 172–173).
The counter-sanctions were used by Russia as an instrument of protec-
tionism unacceptable in a different political context. Every new Western
measure was followed by a ‘mirror’ response; however, the responses were
not symmetrical. Russia did not introduce blocking sanctions, with the
exception of targeted visa restrictions. Russian attempts to return damage
to the senders, where it was possible, such as the food embargo, was to
clear the market in the interests of domestic producers. In the summer
of 2014, Russia restricted imports of food products, including meat, fish
and seafood, vegetables, fruits, and dairy products from countries that had
imposed sanctions against it: USA, EU, Canada, Australia, and Norway,
while domestic food producers received a push to increase production
and revenue (Kochtcheeva, 2020a). Almost a year later, in response to
the extension of sanctions, Russia prolonged the grocery embargo for a
year until August 5, 2016 (R.F. Government, 2015b, 2015c). Notwith-
standing quite a few problems, including the initial rise in food prices and
unexpected weather conditions, agricultural production had increased by
more than 20%, making the country the world’s leading exporter of wheat
in 2016 (Kochtcheeva, 2020a). Agricultural export revenues accounted
for over $20 billion in 2017, which came close to being compared to
armament sales (The Economist, 2018). Due to the self-sufficiency in agri-
culture, the government was able to spend more on economic recovery
(Kramer, 2020).
Russian politics turned out to be quite pragmatic. First, new institu-
tions dealing with sanctions have been created. If, before 2014, Russian
special economic measures were episodic and non-systemic, then after the
Ukrainian crisis, the government updated both legislation and mecha-
nisms for its application. Secondly, for the years 2014–2015, the govern-
ment helped the economy by stabilizing the banking system and financing
the most critical projects in the real sector (Medvedev, 2015; Zarubin,
2015). In particular, the government indexed pensions, financed infras-
tructure, housing construction, and transport projects in the regions, and
provided tax breaks for small businesses (Kochtcheeva, 2020a). Third,
Moscow, without much advertising, adjusted the financial structure by
developing a new National Payment System, called Mir, to ensure the
 3 ANNEXATION OF CRIMEA: WESTERN SANCTIONS … 49

sovereignty of domestic transactions, especially after Visa and Master-

card terminated services to some Russian banks. The country also created
a system for transmission of payment messages, and started a cautious
reduction of settlements in dollars (Timofeev, 2022a). From March 2018
to June 2021, the share of the dollar in the reserves of the R.F. decreased
from 43.7% to 16.4%, the share of the euro increased from 22.2% to
32.3%, and the share of the yuan increased from 5% to 13.1% (Kuznetsov,
2022). Fourth, the Russian state felt the support of the people. According
to the Russian Public Opinion Research Center (VCIOM, 2018), the
absolute majority of Russians (73%) stood behind the continuation of
an assertive, independent domestic and foreign policy without regard
to sanctions. The Levada Center (2018) produced very similar data
confirming that the majority of Russians (close to 70%) thought that the
country should pursue its own way of development notwithstanding sanc-
tions, even though the crisis significantly increased the number of people
who claim the years of 2014–2015 were more difficult for them.
Ultimately, sanctions pushed Russia to acknowledge that it was overly
reliant on the West. In the words of Vladimir Evseev, the Head of
the Department of the Eurasian Integration and Expansion of Shanghai
Cooperation Organization (SCO) in the Commonwealth of Independent
States (CIS): “The sanctions imposed by the West against Russia, reached
their goal in the sense that Russia realized that it had excessive depen-
dence on the West. And, they pushed Russia to adjust its vector of devel-
opment… to introduce the policy of import substitution and development
of the national economy” (Evseev in Ardaev, 2016). Additionally, the
continued development of tighter economic relations with the Eurasian
Union, especially with the Central Asian countries, contributed to Russia’s
ability to withstand the sanctions (Kirkham, 2016). Russia also increased
its trade with China, measuring $108 billion in 2018, a 25% increase
from the year before (Kramer, 2019). Russia shifted toward increased
reliance on domestic assets and structures and toward a more multi-
vector economic policy that emphasizes closer relations with non-Western
countries (Connolly, 2018; Kochtcheeva, 2020a).
Overall, eight years of sanctions on Russia before February 24, 2022,
have produced contradictory outcomes. The main political goals of the
restrictions have not been accomplished. Russia did not change its foreign
policy course, did not leave Crimea, and did not make unilateral conces-
sions. Moreover, Russia stepped on a path of “sovereignization” or even a
“seismic” change of politics to strengthen Russia domestically and project
50 A. BOROZNA AND L. V. KOCHTCHEEVA

its influence internationally (Rutland, 2014; Trenin, 2013). The country

succeeded in employing a number of instruments and resources to soften
the blow to the targeted sectors from the worst effects of global challenges
and, most importantly, sanctions. The Russian political system remained
largely consolidated, while Moscow evaded political isolation, growing its
customary connections further and developing new ones. The Russian
government was able to maintain macroeconomic stability as well. In the
words of David Siegel (2022, pp. 260, 268): “After nearly eight years
since sanctions were first imposed, it appears that they have had the oppo-
site effect of what was intended … the outcome of U.S. sanctions is not
merely that Russia has not given up Crimea… rather it is that Russian
foreign policy became increasingly more aggressive and belligerent after
the sanctions were imposed and in precisely the ways that the sanctions
were intended to mitigate.”
While Western sanctions imposed in 2014 caused initial disruption at
the end of 2014 and in early 2015, their impact was only felt in the
short term. In response to Western sanctions, Russia focused on the
monopolization of strategic sectors of the economy, developing import
substitution, and nurturing strategic partnerships with non-Western states
in order to secure access to financial resources, investment opportuni-
ties, and export markets (Kirkham, 2023, pp. 354, 361, 366). Thus,
in the energy industry, sanctions limited Russia’s access to technology
but overall did not have a negative impact on oil and gas production;
instead, oil production rose until Russia concluded an agreement with
OPEC to limit production. The ability of Russian firms to access public
financing and their access to alternative sources of foreign capital allowed
Russian energy companies to not only survive but also engage in invest-
ments and acquisition (Connolly, 2018, p. 192). In the defense industry,
2014–2021 sanctions disrupted Russia’s plans for naval modernization,
delaying the production of several classes of warships. Other areas of the
defense industry were not influenced by sanctions, which allowed Russia
to proceed with military modernization and fulfill its export obligations.
In the financial industry, the decision by monetary authorities to move
toward a floating exchange rate helped mitigate the impact of the reduced
availability of foreign capital.
Russia’s ability to adapt to sanctions was largely achievable because
of the role played by the state in Russia’s system of political economy.
Connolly’s (2018) review of the effect of sanctions on Russia concludes
 3 ANNEXATION OF CRIMEA: WESTERN SANCTIONS … 51

that the role of the state in the Russian economy allowed it to imple-
ment prompt and coordinated responses to sanctions that cushioned the
targeted sectors from their intended effects. Additionally, ‘Russification’
of the military and the energy sectors, as well as “sanitization,” were
important instruments of Russia’s adaptation to sanctions and permitted
the country to evade a ‘full-blown credit crunch’ (Connolly, 2018,
p. 189). The adaptation to sanctions also happened at the lower level–
the level of the firm. Russia responded similarly in all targeted sectors.
First, Moscow promptly securitized policy in each sector by designating
Western sanctions as a threat to national security, which allowed the state
to be more involved in directing the energy, defense industry, and finan-
cial sectors. Second, a process of import substitution took place, which
resulted in increased domestic production of goods and technology in the
energy and defense industry sectors. In the financial sector, there was an
increase in domestic sources of capital. Third, Russia became more proac-
tive in its search for alternative foreign sources of goods, technology, and
capital in all three sanctioned sectors to supplement domestic sources of
technology and capital (Connolly, 2018, pp. 192–193).
Western sanctions imposed on Russia in 2014 resulted in the reshaping
of the Russian economy, especially in the sectors that were targeted
the most by the sanctions. The successful anti-crisis measures mini-
mized the decline, focused on domestic resources, exerted control over
basic macroeconomic parameters, maintained reserves, and suppressed
inflation, as well as further oriented economic policy to closer rela-
tions with non-Western countries (Fortescue, 2017; Kochtcheeva, 2020a;
Mau, 2018). Russia made efforts to protect its key strategic indus-
tries by nurturing alternative, non-Western ties with the providers of
technology and capital. In the words of Cafruny and Kirkham (2020,
p. 96): “increasingly due to the mobilizing potential of Russia’s state-
led monopoly capitalism, anti-sanctions measures—trade diversification,
counter-sanctions, import substitution, industrial modernization, tech-
nical innovation, and human resource development initiatives—have been
quite effective.” As a result of the Western sanctions since 2014, the
Russian economy became less vulnerable to outside political pressure.
Russia did not appear to be the only sufferer that felt the effects, as the
senders, especially the EU, as Russia was the fourth largest export desti-
nation for E.U. goods, experienced negative outcomes as well. Exports
from the E.U. decreased by more than 20% annually from 2013 to 2016,
52 A. BOROZNA AND L. V. KOCHTCHEEVA

having grown by 20% per year in the previous four-year period (2009–
2012). In terms of exports, Germany and Russia’s neighbors in Central
and Eastern Europe, especially the Czech Republic, Austria, Hungary,
and the Baltic countries, have suffered the most. The damage to the E.U.
economy is estimated at fractions of a percent, whereas the damage to the
Russian economy can be counted in much greater percentages (Timo-
feev, 2018; Timofeev et al., 2020). For the senders, the damages were
assessed in the amount of $60.2 billion for the period from 2014 to mid-
2015. Moreover, 76.5% of the damage occurred in the E.U. countries.
Importantly, 83.1% of the losses fell on goods that were not used in trade
embargoes; that is, the indirect damage from the sanctions turned out to
be high (Crozet & Hintz, 2016).
While U.S. exports to Russia also declined, given the weak trade rela-
tions between the two countries, the American side has hardly felt the
effects. Russia accounted for less than 1% of U.S. trade. The decline in
trade with Russia was due to more fundamental factors associated with the
slowdown in the Russian economy even before the crisis of 2014. Given
the strong economic growth in the USA, the damage from sanctions on
the American economy was virtually invisible (Giumelli & Bastial-Jarosz,
2017).
Crozet and Hinz (2020, p. 100) found the overall damage the sanc-
tioning countries resulted from their own sanction regimes and policies,
be it indirect or unintentional. Loss to trade amounted to U.S. $96
billion, or about 0.7% of the total predicted trade of the affected coun-
tries, until the end of 2015, with 56% being borne by Russia. However,
the loss in exports in the sender countries was about U.S. $42 billion, of
which 92% is suffered by E.U. countries (Crozet & Hinz, 2020).
Instigated by the sanctions, the difficult political and economic context
around Russia as the promoter of Eurasian integration put the members
of the Eurasian Union in a problematic position. Despite the emphasized
economic nature of the EAEU, relations within the Eurasian integra-
tion project have a pronounced political component mostly due to
the uneven economic development of the members, the presence of a
pronounced leader capable of accumulating economic potential, as well
as a variety of interests, with which all members have embarked on
the path of integration. However, the EAEU members receive pref-
erential access to the markets of partner countries, most importantly
the Russian market, which significantly contributed to overcoming crisis
events and increasing economic maneuverability in comparison with
 3 ANNEXATION OF CRIMEA: WESTERN SANCTIONS … 53

actors outside the union (Makhmutova, 2020). Additionally, the Central

Asian and South Caucasian countries, which were closely tied to the
Russian economy, experienced a slowdown in economic growth and faced
pressures on their foreign exchange markets (Karapetyan, 2023). Overall,
historical ties, geographical closeness, and changes in Russia’s economic
situation adversely affected the economies of CIS and Baltic nations
(Stepanyan et al., 2015), mainly through effects on trade, remittances,
and foreign direct investment.

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 CHAPTER 4

The War in Ukraine: Avalanche of Western

Sanctions and Russia’s Reaction

Abstract This chapter illustrates the substantial differences between

Western sanctions imposed on Russia in 2022 and those from 2014 to
2021 concerning their objectives, scale, and impact. These new sanctions
were designed to isolate Russia from the global economy and disrupt
Moscow’s ability to access capital, materials, technology, and support for
its ongoing conflict in Ukraine, with the hope that this suffering might
lead to internal instability and eventually result in a change of govern-
ment. By the end of the first year of Russia’s war in Ukraine, the sanctions
turned into an avalanche that impacted major industries and sectors of the
Russian economy. Borozna and Kochtcheeva also provide insights into the
perspectives of Russian decision-makers, policy experts, and academics.
They analyze Russia’s response to the sanctions, which involved adapting
mechanisms and initiating plans for a new phase of economic develop-
ment that puts more emphasis on sovereignty and fostering strategic
partnerships with non-Western centers of power.

Keywords Sanctions · Russian economy · Ukraine war · Russia · United

States · European Union · G7 · Sanctions · Economic containment ·
Punitive measures · Security · Military capabilities · Supply chains ·
Moscow perception · Foreign companies · Political elites · Regime ·
Secondary sanctions · Import substitution

© The Author(s), under exclusive license to Springer Nature 59

Switzerland AG 2024
A. Borozna and L. V. Kochtcheeva, War by Other Means,
https://doi.org/10.1007/978-3-031-51370-1_4
60 A. BOROZNA AND L. V. KOCHTCHEEVA

4.1 Goals of Sanctions

The tension between the West and Russia has been growing since 2014,
but three crucial events precipitated Russia’s build-up of its military
on the Ukrainian border. First, in 2019, Ukraine incorporated into its
constitution the aspiration to join NATO (“Ukrainian president signs,”
2019). Second, in 2020, under the new President Volodymyr Zelensky,
Ukraine became a NATO “enhanced opportunities partner” (“NATO
recognizes,” 2020). And third, from March to June 2021, the U.S. Army
led its largest-ever military exercise in Europe, bringing together 28,000
troops from 27 countries. The exercise, Defender Europe 2021, involved
nearly simultaneous operations in over 30 training areas in a dozen coun-
tries (South, 2021). It was the largest U.S. military exercise in Europe
in many years. In April 2021, in preparation for holding joint NATO-
Ukraine military drills, the Ukrainian Armed Forces made a statement
about the upcoming drills: “In particular, defensive actions will be worked
out, followed by an offensive in order to restore the state border and
territorial integrity of a state that has been subjected to aggression by one
of the hostile neighboring countries” (“Ukraine lines up,” 2021). Russia
responded to the perceived threats of escalation by building up its mili-
tary troops on the Russian side of the border with Ukraine. On April
14, 2021, the Secretary of the Russian Security Council, Nikolay Patru-
shev, declared that Ukrainian special forces and extremist groups regularly
engage in provocative activities on the state border. He further asserted
that at the request of Western donors, training facilities for sabotage and
reconnaissance units have been established in Ukraine (Yegorov, 2022).
The following day, April 15, 2021, the President of the United States, Joe
Biden, signed a new Executive Order in which Russia was described as
presenting an “unusual and extraordinary threat to the national security,
foreign policy, and economy of the United States” (White House, 2021).
This Executive Order outlined a new set of sanctions related to Russia’s
technology sector and defense, as well as specific individuals working in
the Russian government.
After the build-up of Russian troops on the border of Ukraine at
the end of 2021, there was a new set of Western sanctions on Russia.
Furthermore, one month prior to Russia’s SMO and in response to
Russia’s amassing of military forces along Ukraine’s border, the U.S.
Secretary of State, Antony Blinken (2022), commented in anticipation
of Russia’s military action in Ukraine: “it’s bigger than a conflict between
 4 THE WAR IN UKRAINE: AVALANCHE OF WESTERN … 61

two countries. It is bigger than Russia and NATO. It is a crisis with global
consequences, and it requires global attention and action.” As a result, the
administration of U.S. President Biden prepared “sanctions with massive
consequences” in the event of an invasion, planning to “start at the top of
the escalation ladder and stay there” (White House Press Release, January
25, 2022c). On February 21, 2022, the same day that Russia recognized
the independence of the Donetsk People’s Republic (DNR) and Luhansk
People’s Republic (LNR) regions of Ukraine, the White House issued a
new Executive Order imposing comprehensive sanctions on these regions
(White House, 2022a) and on February 22, 2022, the U.S. Government
implemented a series of additional sanctions measures against Russia (U.S.
Department of State, 2022).
However, sanctions imposed at the end of 2021 and the beginning
of 2022 failed to deter Russia’s invasion of Ukraine on February 24,
2022. After Russia started its SMO, the Group of Seven (G7) coun-
tries (Canada, France, Germany, Italy, Japan, United Kingdom, and the
United States), together with the European Union, responded in concert
to the Russian invasion of Ukraine (European Commission, 2023). The
new set of sanctions was introduced with the objective of isolating Russia
from the international economy and hindering Moscow’s ability to obtain
the capital, materials, technology, and support that sustain its war against
Ukraine (White House, 2022b). On March 1, 2022, the European
Union, United Kingdom, Canada, and the United States jointly agreed
to exclude seven Russian banks from the SWIFT messaging system. These
banks included Bank Otkritie, Novikombank, Promsvyazbank, Rossiya
Bank, Sovcombank, VEB, and VTB (“E.U. cuts seven,” 2022). Notably,
the E.U. ambassadors initially refrained from imposing restrictions on
Sberbank, the largest bank in Russia, which is partially owned by the
Russian gas giant Gazprom. Gazprombank was also not subjected to
sanctions. However, on May 31, 2022, the European Union decided to
remove Sberbank from the SWIFT system as part of its sixth package
of sanctions. It also prohibits U.S. financial institutions from engaging
in secondary market trading for ruble bonds or from engaging in the
SWIFT global financial system. In his annual State of the Nation address,
President Putin declared that U.S. sanctions were unlawful, politically
motivated, and part of an attempt by the United States to impose its will
on other countries. Putin warned of an “asymmetric, swift and severe”
response if the West crossed” “red lines” that would harm Russia’s
external security or interfere in Russian internal affairs (Herd, 2022).
62 A. BOROZNA AND L. V. KOCHTCHEEVA

Thus, the goal became—economic attrition—“sapping Russia’s economic

vitality” (Fishman, 2023).
The Western nations aimed to hinder Russia’s economic and military
capacities in the hope of preventing Russia from causing further damage
to Ukraine. Western sanctions imposed on Russia in 2022 differ signifi-
cantly from the sanctions in 2014–2021 in terms of their goals and scope.
Shortly after Russia started its SMO, the U.S. and its allies in Europe
made a joint statement about imposing “severe and immediate economic
costs on Russia in response to Putin’s war of choice against Ukraine.”
The measures included “sweeping financial sanctions and stringent export
controls that will have a profound impact on Russia’s economy, financial
system, and access to cutting-edge technology” (White House, 2022b).
The sanctions aimed to “impose severe costs on Russia’s largest finan-
cial institutions and . . . further isolate Russia from the global financial
system” and “suppress Russia’s economic growth, increase its borrowing
costs, raise inflation, intensify capital outflows.” Sanctions targeted all
ten of Russia’s largest financial institutions, including the imposition of
full blocking and correspondent and payable-through account sanctions
and debt and equity restrictions on institutions holding nearly 80% of
Russian banking sector assets (White House, 2022b). Financial sanctions
aimed to paralyze the Russian financial system, hoping to trigger panic
and currency collapse in Russia.
Banning Russian banks from using SWIFT meant that the affected
banks could neither get foreign currency nor transfer assets abroad, and
while, technically, these banks could continue their international transac-
tions without SWIFT, these transactions became more expensive, complex
and required mutual trust between financial institutions (Council of E.U.,
2022). However, the most severe financial measure imposed on Russia
was freezing its foreign exchange reserves. On February 28, the Central
Bank of Russia was blocked from accessing close to $300 billion in its
foreign exchange reserves abroad (Cohen & Smialek, 2022; “Value of
assets,” 2023). The Biden Administration expanded sanctions on Russian
sovereign debt (bonds issued by the Russian government), including
prohibiting U.S. financial institutions from processing debt payments
from the Russian government to foreign investors. As a result, Russia
defaulted on its debt in June 2022 (Nelson et al., 2023).
The U.S. administration also banned new investment in Russia. In
collaboration with its allies, these sanctions are designed to restrict
Russia’s access to financial resources from the United States and its
 4 THE WAR IN UKRAINE: AVALANCHE OF WESTERN … 63

partner nations. The goal of such a severe financial measure was to under-
mine Russia’s ability to prop up its currency by selling foreign reserve
assets. By blocking access to the foreign reserves, the West took away
from Russia a cushion of foreign assets to provide funds to its banks.
Despite Russia possessing the gold reserves stored inside the country,
selling this gold is complicated by sanctions. The E.U. has also prohib-
ited the sale, supply, transfer, and export of euro-denominated banknotes
to Russia, aiming to limit Russia’s access to cash in the euro (Council of
E.U., 2022). By blocking Russia’s access to its foreign reserves, the West
anticipated that the Kremlin would have difficulty mitigating the effects of
sanctions. The goal of the sanctions was to spark a banking crisis, causing
a collapse of the Russian ruble and, as such, to take away from the Russian
government its main tool of managing its macroeconomy. The collapse of
the ruble would inevitably cause the collapse of the Russian economy.
Besides financial sanctions, the U.S. and its allies imposed unprece-
dented export control measures aimed at cutting off more than half of
Russia’s high-tech imports, restricting Russia’s access to vital technolog-
ical inputs, atrophy Russia’s industrial base, and “undercutting Russia’s
strategic ambitions to exert influence on the world stage” (White House,
2022b). The goal of the sanctions was to take down the “Fortress
Russia,” in the words of Josh Lipsky, director of the Atlantic Coun-
cil’s Geo Economics Center and a former adviser at the International
Monetary Fund (Davidson & Weaver, 2022).
One week after Russia invaded Ukraine, President Biden stated in his
2022 State of the Union address that the U.S. was building a coalition
months before Russia’s invasion: “We prepared extensively and carefully.
We spent months building coalitions of other freedom-loving nations in
Europe and the Americas to — from America to the Asian and African
continents to confront Putin” (White House, 2022d). Biden made it
clear that the goal of the sanctions was to weaken Russia economically
and militarily: “we’re choking Russia’s access to technology that will sap
its economic strength and weaken its military for years to come” (White
House, 2022d). The goal of curbing Russia’s access to microelectronics,
chips, and semiconductors was to stumble Russia’s production of cars
and aircraft, thus crippling not just Russia’s ability to produce military
arsenal but also products for civilian needs. The United States and its allies
imposed bans or restrictions on products intended for military purposes,
as well as restrictions on the export of foreign-originating items such
as semiconductors manufactured with American advanced technologies.
64 A. BOROZNA AND L. V. KOCHTCHEEVA

Semiconductors, or integrated circuits, are a dual-use technology that

can be employed in a variety of applications, from smartphones to rocket
systems. The U.S. and its allies sought to penalize Russian imports of
these components. In addition to financial and trade sanctions, the U.S.
and its allies closed off their air space to all Russian flights, imposed visa
restrictions on Russian citizens, and went after the processions of Russian
oligarchs. Furthermore, numerous multinational companies have either
closed their Russian facilities or suspended their exports to Russia.
While the main stated goal of sanctions was to curb Russia’s ability
to fight war against Ukraine, the implied goal was always to punish the
Russian leadership, and in particular, its President–Vladimir Putin. Thus,
most of the Western leaders who supported sanctioning Russia addressed
their goals directly to President Putin. Biden warned: “He [Putin] has
no idea what’s coming. The ruble has already lost 30% of its value,
the Russian stock market has lost 40% of its value, and trading remains
suspended. The Russian economy is reeling, and Putin alone is the one to
blame” (White House, 2022d). U.K. Foreign Secretary Liz Truss made a
similar message on March 3, 2022: “Our message to Putin and his allies
has been clear from day one – invading Ukraine would have serious and
crippling economic consequences. Sanctioning Usmanov and Shuvalov
sends a clear message that we will hit oligarchs and individuals closely
associated with the Putin regime and his barbarous war. We won’t stop
here. Our aim is to cripple the Russian economy and starve Putin’s war
machine” (Truss, 2022). The French Finance Minister Bruno Le Maire
joined the U.S. and U.K. and declared an “all-out economic and financial
war” against Russia to bring down its economy (Lough, 2022).
The E.U. explains the goal of its sanctions on Russia as follows: “The
aim of the economic sanctions is to impose severe consequences on
Russia for its actions and to effectively thwart Russian abilities to continue
the aggression. The individual sanctions target people responsible for
supporting, financing or implementing actions which undermine the terri-
torial integrity, sovereignty and independence of Ukraine or who benefit
from these actions” (Council of E.U., 2022). The U.K. also radically
strengthened its sanctions policy due to the Russian SMO in Ukraine.
Two weeks before the SMO, as a reaction to the maneuvers of the Russian
army in the southwestern direction, the British Foreign Office amended
the Russia Sanctions Regulations (2019). Accordingly, any person who
directly or indirectly participated in the events around the Ukrainian crisis,
 4 THE WAR IN UKRAINE: AVALANCHE OF WESTERN … 65

as well as any person directly or indirectly related to the Russian govern-

ment, and also those working in strategic sectors of the Russian economy
in the interests of the Russian government, could be subject to blocking
sanctions. Overall, the U.K. has imposed sanctions on over 1,500 Russian
individuals since February 2022. Additionally, Russian assets, including
private residencies, yachts, bank accounts, and other personal proper-
ties amounting to £26 billion, have been frozen in the U.K. Similar to
approaches in other Western nations, London is actively seeking lawful
means to seize and subsequently sell these assets, bypassing legal recourse
for the original owners, and redirect the funds to Ukraine. Moscow has
criticized these actions, labeling them as ‘theft’ (Devonshire-Ellis, 2023).
After the start of the SMO, the Sanctions Regulations incorporated
another nine amendments, including but not limited to restrictions on
dual-purpose products, military goods, and goods “critical of the most
important industrial sectors,” restrictions on access to U.K. ports of sea
vessels flying the Russian flag, financial sanctions against assets of the
Central Bank, National Welfare Fund, Ministry of Finance of Russia and
entities controlled by them, export controls on aerospace and services
insurance for this industry, and export of luxury goods to Russia. Along
with other G7 members, the U.K. Government (2022) canceled a most
favored nation treatment in trade with Russia and Belarus. Overall, G7
countries broke off normal trade relations with Russia, Australia, Switzer-
land, and several other countries also joined the mentioned financial,
transport, and trade measures by varying degrees.
Further, on April 8, 2022, the U.S. Congress adopted into Law the
“Suspending Normal Trade Relations with Russia and Belarus Act,”
which prevented normal trade relations with Russia and Belarus and
permanently authorized the U.S. President to impose visa- and property-
blocking sanctions based on violations of human rights, and to proclaim
increases in the rates of duty applicable to products of Russia or Belarus
(U.S. Congress, 2022). The stated aim of the bill was to: “(1) condemn
the recent aggression in Ukraine, (2) encourage other World Trade Orga-
nization (WTO) members to suspend trade concessions to Russia and
Belarus, (3) consider steps to suspend Russia’s participation in the WTO,
and (4) seek to halt the accession process of Belarus” (U.S. Congress,
2022).
Similar to 2014–2021 sanctions, Russia’s energy became one of the
main targets of the 2022 sanctions. Considering that the energy industry
is a main contributor to Russia’s GDP, the goal of the sanctions was
66 A. BOROZNA AND L. V. KOCHTCHEEVA

to destroy Russia’s economy. Shortly after the invasion, the U.S., UK,
Canada, Australia, and the E.U. introduced an import ban on Russian
crude oil and refined oil products. The U.S. banned all Russian oil and
gas imports in March 2022, and the U.K.’s initial goal to phase out
Russian oil imports by the end of the year was achieved by June 2022
(Elliott, 2022). On February 3, 2023, the G7, the E.U., and Australia
set price caps for Russian diesel and other refined petroleum products
with the goal of limiting Russia’s revenues while keeping Western markets
supplied. The cap officially took effect on February 5 and followed an
earlier E.U. embargo on Russian seaborne crude oil, for which a crude
price cap at $60 per barrel was set on December 5, 2022 (“Factbox: G7-
led coalition,” 2023). Companies from the countries imposing price caps
are forbidden from providing shipping or insurance services to facilitate
the trade of Russian oil unless the trade is verifiably below the price cap
(Heussaff et al., 2023).
In several weeks following Russia’s SMO in Ukraine, the extent of
Western sanctions reached a volume comparable to the volume of sanc-
tions imposed on Iran over four decades (Timofeev, 2022d). The West
was very swift in imposing sanctions on Russia. No other country in
history experienced such an unprecedented number of sanctions imposed
in a short period of time. In just two months from the beginning of SMO,
there were 7,374 sanctions imposed on Russia, compared to 2,754 sanc-
tions imposed on Russia between 2014 and February 2022, to make it a
total of 10,128 sanctions (“Volodin Podschital,” 2022).
Some analysts compare Western sanctions on Russia to economic
containment. Thus, Norrlöf (2022) writes: “The allied strategy amounts
to financial and security entrapment, decoupling Russia from the world
economy and military suppliers. The immediate goal is to stop the killing
spree by raising the price of financing the war and the overall cost of not
reaching a peace settlement. The long-term goal is to punish Russia by
cutting its financial and security ties to the outside world, weakening the
basis of Russia’s global power, and thus deterring future revision of the
international order.”
While the initial stated goals of the Western sanctions were to punish
Russia for its aggression in Ukraine, as time passed, the goal of sanctions
started to look more aimed at changing Russia’s regime. Thus, on March
26, 2022, during his visit to Poland, President Biden said of Russian Pres-
ident Vladimir Putin: “For God’s sake, this man cannot remain in power.”
Though Biden’s administration tried to downplay the President’s speech,
 4 THE WAR IN UKRAINE: AVALANCHE OF WESTERN … 67

saying that the U.S. is not seeking a regime change in Russia, Biden’s
statement did not go unnoticed in Russia (Shivaram & Schneider, 2022).
One year after the start of the Russian invasion of Ukraine, the U.S.
Department of the Treasury’s Office of Foreign Assets Control (OFAC)
initiated a new set of sanctions against Russia to diminish its ability to
continue the war by targeting the metals and mining sector of the Russian
Federation economy. In order to prevent Russia’s evasion of sanctions
and export controls, the U.S. government ramped up efforts to counter
such evasion around the world by designating over 30 third-country indi-
viduals and companies connected to Russia’s sanctions evasion efforts,
including those related to arms trafficking and illicit finance. The U.S.
targeted more financial institutions and banks, including smaller ones,
as well as wealth-management firms, accounting firms, and individuals
that play key roles in Russia’s financial services sector (U.S. Depart-
ment of Treasury, 2023a). The new set of sanctions in February 2023
targeted Russia’s military-industrial complex and military supply chains by
imposing restrictions on key entities and individuals that support Russia’s
military capabilities, such as entities that produce carbon fiber and related
advanced materials, since carbon fiber and related materials are used in
almost all defense-related platforms including aircraft, ground combat
vehicles, ballistic missiles, and military personal protection gear, as well
as other weapons systems (U.S. Department of Treasury, 2023a).
Thus, by the end of the first year of Russia’s war in Ukraine,
the sanctions turned into an avalanche and impacted major industries
and sectors of the Russian economy: financial services, energy sector,
defense, and related material sectors of the Russian Federation economy,
including insurance, accounting, trust and corporate formation, manage-
ment consulting, quantum computing, aerospace, marine, electronics,
technology, trade of metals and minerals, research institutes, and many
others.
The Department of Treasury imposed an additional round of sanc-
tions on August 11, 2023, targeting this time specific members of the
Russian Elites and a Russian Business Association (U.S. Department Trea-
sury, 2023c). The focus of the sanctions is on influential figures within
Russia’s financial circles, as well as a prominent Russian business associ-
ation. The individuals targeted are Petr Aven, Mikhail Fridman, German
Khan, and Alexey Kuzmichev—all previously served on the supervisory
board of the Alfa Group Consortium, a major financial and investment
conglomerate in Russia. Australia, Canada, the European Union, New
68 A. BOROZNA AND L. V. KOCHTCHEEVA

Zealand, and the United Kingdom have previously imposed sanctions on

these individuals. The United States also targeted The Russian Union of
Industrialists and Entrepreneurs (RSPP), also known as the Russian Asso-
ciation of Employers, a technology sector-focused organization within the
Russian Federation. U.S. sanctions targeted the RSPP due to its dedi-
cation to Russia’s technological self-sufficiency. Additionally, the RSPP
has actively participated in endeavors concerning Russia’s reactions to
sanctions imposed following Russia’s complete invasion of Ukraine. The
RSPP was identified under Executive Order (E.O.) 14024 for its involve-
ment in the technology sector of the Russian Federation economy (U.S.
Department of Treasury, 2023c).
Furthermore, the U.S. and E.U. also target businesses in the coun-
tries that continue trade and economic relations with Russia. Blocking
sanctions are already used quite often on small intermediary firms that
are focused on sanctioned jurisdictions. On February 24, 2023, the U.S.
Department of Treasury applied blocking sanctions on a Swiss-Italian
businessman, Walter Moretti, and his partners from Germany and India
and on two Indian legal entities that were used as intermediaries for the
supply of high-tech goods to Russia. At the same time, the U.S. blocked
a number of companies and persons associated with them from Liecht-
enstein, the Netherlands, Poland, Germany, Finland, and Estonia (U.S.
Department of Treasury, 2023a). In March and April 2023, companies
from Armenia, China, the United Arab Emirates, Turkey, and Uzbek-
istan fell under blocking sanctions for similar reasons. On July 20, 2023,
the U.S. Department of the Treasury’s Office of Foreign Assets Control
placed four companies from Kyrgyzstan into the next round of blocking
U.S. financial sanctions against Russia due to their engaging in the
supply of dual-use goods under U.S. export control to Russian customers
through Kyrgyz jurisdiction. In the words of Deputy Secretary of the
Treasury Wally Adeyemo, these measures: “represent another step in our
efforts to constrain Russia’s military capabilities, its access to battlefield
supplies, and its economic bottom line” (U.S. Department of Treasury,
2023b). The European Union has also introduced instruments into its
Law that allow the application of similar sanctions. For example, the E.U.
Council Regulation 269/2014 empowers the Council to impose blocking
sanctions against any individuals and legal entities involved in circum-
venting sanctions against Russia. The 11th round of sanctions also named
 4 THE WAR IN UKRAINE: AVALANCHE OF WESTERN … 69

87 companies from third countries, which, according to the E.U. author-

ities, bypass the Union’s export controls and are subject to restrictive
measures (European Commission, 2023).
Thus, the overall goals of Western sanctions are to isolate Russia from
the international economy and hinder Russia’s ability to access foreign
capital, materials, technology, and support that sustain its war against
Ukraine. One other anticipation among the senders of sanctions, not
overtly written in the documents but stated by Western politicians, is to
inflict harm and pain on the Russian population in hopes of producing
a regime change in Russia. Russia’s perception of the sanctions and their
effectiveness will be addressed in the next section.

4.2 Russia’s Perception and Response

Russia’s President Vladimir Putin described the first round of sanctions in
the wake of SMO in February 2022 as a “declaration of war” (Schwirtz
et al., 2022). The avalanche of sanctions against Russia due to its military
operation in Ukraine is unparalleled. More than 14,000 sanctions and
restrictive measures have been introduced against the country. Supporting
the U.S. lead, the E.U. alone has adopted eleven packages (Sapir, 2023).
Although Russia is a major nuclear power, such consolidated pressure
from a collective West coalition and its allies, which account for more than
60% of the world’s GDP, clearly confronts the typical pattern (Arapova,
2022). Almost all known instruments of sanctions are now being used
against Russia, including blocking sanctions, trade restrictions, transport
bans, and even such an exceptional anti-free market measure as an oil price
cap. Most Russian banks lost access to the SWIFT system, an embargo was
imposed on the supply of oil and gas to Western markets, and the West
froze 50% of Russian foreign reserves.
Sanctions were targeting not only Russian businesses directly but
anyone doing business with Russia, which resulted in a mass exodus
of foreign companies from Russia. The departure of foreign companies
was aimed to affect the work of many important sectors of the Russian
economy, including aviation, finance, intellectual technologies, agricul-
ture, and hydrocarbon production. As a result of sanctions, Russia has
been cut off from supplies of everything that can be called dual-use goods,
including electronics, machinery, lasers, navigation equipment, cars and
trucks, and even household appliances. These are hundreds of items that
are not only those produced in the West but also those produced in third
70 A. BOROZNA AND L. V. KOCHTCHEEVA

countries using Western technologies. In addition, all these measures were

introduced in a record-breaking period of time. Many Western businesses
produced enormous and speedy imposition of voluntary sanctions, with
more than 1,000 Western companies declaring full or partial withdrawal
from Russia, succumbing to pressure from their governments and fearing
reputational risks (Blinov, 2022; Chachko & Heath, 2022; Gerasimov
et al., 2023; Kuznetsov, 2022; Sonnefeld & Tien, 2023; Primakov et al.,
2023; Timofeev, 2022b, 2022c, 2023).
In Moscow’s view, the initial design of sanctions has been introduced
as a means of forcing Russia to a ceasefire and restoring the territo-
rial integrity of Ukraine (Sapir, 2023). At the same time, restrictions
are actually collective in nature and affect all citizens of the Russian
Federation, despite the initial assurances of Western countries that the
sanctions aim only to “force the Russian political regime” to stop the
special operation in Ukraine (“Kakie sanktsii vvodili,” 2022). Sanctions
are increasingly perceived not as “individual” or targeted but as “territo-
rial,” that is, extending to everyone without exclusion (Gerasimov et al.,
2023). According to former President Dmitri Medvedev (2022), sanc-
tions are based on hatred of Russia, Russians, Russian culture and religion.
Another obvious goal is to increase the costs of a military campaign, to
deplete the country’s technological, financial, and industrial capabilities,
and to deny its place in the U.N. Security Council, culminating in the so-
called strategic defeat (Kosachev, 2023). Overall, sanctions are perceived
as “short-sighted, exaggerated political ambitions and Russophobia, at the
expense of their [senders] own national interests (Putin, 2022).
Russian decision-makers view the rift in relations between Russia and
the West as going beyond the Ukrainian issue (Dubinin, 2022). In this
view, Russia, in its current political configuration, is fundamentally unac-
ceptable to the West. In the words of Russian Foreign Minister Sergey
Lavrov, the collective West is “waging war against our country with
the task of finally resolving the ‘Russian question’” (Lavrov, 2023a). All
Western sanctions, in the Russian elite’s view, are designed to overthrow
the current Russian government and incite a revolution in the country
(Lavrov, 2023b). The West expects that under the burden of sanctions,
Russia will lose its strength, its elite will split, and society will become
embittered, which will create opportunities for reformatting Russia in the
way the West needs. The strategic goal of sanctions, as viewed by the
Russian political elite, is to create conditions for the transformation of
 4 THE WAR IN UKRAINE: AVALANCHE OF WESTERN … 71

the political regime and the disarmament of Russia to such an extent that
it can no longer pose a threat.
The view of sanctions as an existential security threat to the state led to
the securitization of sanctions–using the rhetoric of security in all public
discourse related to sanctions. Securitizations of threat by the Russian
elite found a fertile ground among the majority of the Russian popula-
tion that sees the West as intent on weakening Russia. During his address
to the Federal Assembly on February 21, 2023, President Putin stated
that the West: “plan[s] to finish us once and for all. In other words,
they plan to grow a local conflict into a global confrontation. This is
how we understand it” (Putin, 2023). Moscow also views the key goal of
economic sanctions as aiming to impose enough economic damage and
social frustration on Russia to force it to change its course, one which is
unacceptable to the senders (Timofeev, 2022c, 2023). This view of sanc-
tions has long become a prevailing one among the Russian foreign policy
elite.
Russia’s response to sanctions is consistent with the previous research
on sanctions, which demonstrates that in the overwhelming majority of
cases, while sanctions are damaging to the economy of the target state, the
political goal of sanctions remains unattained (Sapir, 2023). The senders
of sanctions are often aware of the limited impact of restrictions on polit-
ical behavior, but they continue to impose them in an attempt to curtail
the military and economic development of the target country. It is espe-
cially difficult to implement such sanctions when it comes to using them
against a more or less major power, relations with which are confronta-
tional, and the subject of contradictions is a matter of principle for both
sides. The fact that the wave of sanctions does not change Russia’s course
of action is a pattern, not an exception. Consequently, from the point of
view of influencing the political course of Russia towards Ukraine, the
restrictive measures are ineffective. Despite the imposition of sanctions,
Russia expanded its jurisdiction by incorporating four Ukrainian regions,
a move ratified into law by President Putin, while the conflict persists.
Russia’s behavior amid the 2022 wave of sanctions turned out to
be not merely reactive but proactive. Despite the severity of the blow,
the government managed to mitigate its effects and create prerequisites
for further adaptation. Russian financial authorities have built a national
payment system that is technically independent of external players (Timo-
feev, 2022c). In combination with the actions of the Bank of Russia,
72 A. BOROZNA AND L. V. KOCHTCHEEVA

the Ministry of Finance, and other departments, the authorities main-

tained financial stability (Dubinin, 2022). The rise in energy prices also
played a role by supporting the exchange rate of the national currency and
partly compensating (at least temporarily) for the loss of Western markets.
The impossibility of an instant rejection of Russian natural resources and
goods without unacceptable damage to the senders gives Moscow time
to implement emergency measures. Their success is not guaranteed, but
it buys time to dissolve the cumulative effect of sanctions. In other words,
both damage and adaptation are typical.
Many Russian observers view the Western economic blockade, with all
its costs, as opening a new page in the history of the Russian economy.
A so-called forced restructuring of the economy is taking place in Russia
(Dubinin, 2022). According to Dmitry Trenin (2023): “sanctions dealt
a crushing blow to the former model of Russia as a ‘petro station coun-
try’.” The Russian economy not only survived but was also pushed onto
a path that had previously been prevented by the powerful inertia of
elite interests and Western-oriented thinking. As Russia is moving away
from the Western-centric global economy, it may be replaced by closer
integration with the Chinese market, as well as the markets of other
friendly countries (Timofeev, 2022b, 2022c). Third, Moscow is deter-
mined to preserve the market system and not pursue centralization. The
role of individual entrepreneurs, their energy, and their adaptability to
new conditions, however, will be no less, and possibly even more signifi-
cant, than state regulation. The need to replace falling imports stimulates
domestic industrial production. Plans have already been drawn up for
the revival of the civil aircraft industry, a significant increase in space
programs, and the ambitious task of restoring the country’s technological
sovereignty (Trenin, 2023).
Sanctions, in general, and the “cancellation of culture,” in particular,
only increased the consolidation of the Russian elite and society around
the current government. Governor of the Omsk Region Alexander
Burkov (2023) stated that sanctions “only confirm the correctness of what
we are doing - we work for the needs of the front, we solve the problems
of import substitution, we defend the historical truth and the sovereignty
of the country.” The patriotic wing of the elite has increased and strength-
ened. As of December 31, 2022, the number of Russian physical and
legal persons on the sanctions lists increased by 3.2 times, reaching 3,590
against 1,126 in mid-February, and the number of Russian persons under
blocking sanctions from Western countries increased by 4.2 times and
 4 THE WAR IN UKRAINE: AVALANCHE OF WESTERN … 73

reached 3,071 (Gerasimov et al., 2023). This trend and the September
draft due to partial mobilization produced an outcry in different layers of
society. While hundreds of thousands of people, mainly from the liberal
part of society, went abroad, at least for the duration of the SMO, those
who stayed became more united, demanding not only professionalism
and accountability from the authorities but also striving to improve the
situation on their own (Trenin, 2023).
The hottest phase of sanctioning of Russian individuals and legal enti-
ties took place from February to April of 2022. The lists of measures have
been changing every day, even several times a day. To a large extent, this
was because, during this period, the senders of sanctions were competing
or catching up with each other, demonstrating consolidation, coordina-
tion, and determination. Since May 2022, sanctions activity began to slow
down somewhat. However, the senders have learned how to react faster
to certain actions of Russia (Gerasimov et al., 2023).
However, this does not mean that the West ran out of restrictive
measures, and the senders of the restrictions have nowhere else to expand.
The expansion will not be in the tools themselves but rather in the
sophistication of the tools and the enforcement measures. For instance,
sanctions from other third countries may be imposed on the persons
involved in one or another sanction list. This will entail a refusal to
cooperate with persons from countries that have not imposed restrictions
on them for fear of secondary sanctions, which carries a serious threat
(Primakov et al., 2023). The fear of secondary sanctions and coercive
measures for violating the sanctions regime shows that even in friendly
countries, businesses are excessively cautious in dealing with Russia
(Dubinin, 2022). Delays or cancellations of bank payments have become
ubiquitous, as have traditional supply chains disrupted and markets lost.
The potential remaining sanctions available to the West are of a smaller
scale than those that are already imposed, but as Russian analysts predict,
the effect will be cumulative and likely pick up in the next 2–3 years
(Lukyanov, 2023). Russia has managed to transfer significant volumes of
its oil to Asian markets, although it is selling it at a discount. It will be
more difficult with the replacement of markets for petroleum products.
In general, the reorientation to Asia is inevitable and has no alternative.
However, the costs will continue to grow, and the returns will quite likely
be smaller. The decline in production and export of oil and gas, coal, iron,
and steel products in the next few years may become inevitable.
74 A. BOROZNA AND L. V. KOCHTCHEEVA

Some Russian experts estimated that the harm from the oil and
petroleum products embargo would be more substantial compared to the
price cap (Dubinin, 2022). As for gas supplies, the situation is even more
unbalanced because there is the problem of Nord Stream sabotage, which
the international community refuses to investigate. At the same time,
Europe is making considerable efforts to abandon Russian gas as well.
The question, however, is how soon they will succeed, as diversification
of gas flows is much more difficult due to the infrastructural difficulties.
On the other hand, it is also necessary to take into account the factor
of transition to green energy. The process of moving away from gas will
likely be slow.
Another serious problem pointed out by Russian observers is the
shortage of industrial and high-tech goods and components, especially
electronics. Due to the specifics of the industry, both deliveries from alter-
native suppliers in friendly countries and rapid import substitution within
the country are demanding. As capacities wear out, the ban’s effect on
the export of machine tools, robotics, engines, and a wide range of other
industrial products to Russia will also accumulate. Domestic enterprises
are looking for relationships and suppliers in friendly states. However,
many large Russian industrial enterprises and companies in the field of
high technologies are included in the lists of blocked persons, which
means that financial transactions with them are fraught with secondary
sanctions, administrative, or even criminal prosecution, similar to the
Iranian case. A very similar situation exists with the Russian banks, where
disconnection from SWIFT is not the main concern for many of them,
but rather blocking them is the problem. The expansion of the number of
Russian banks that are under sanctions will lead to the fact that the oppor-
tunities for business in foreign transactions will narrow even with friendly
countries. The senders are likely to continue to influence the behavior of
Russia’s foreign connections. At the political level, governments may not
join the course of the West, but some companies are forced to be careful
or even curtail their partnership with Russia (Timofeev, 2022c).
There is anxiety among the Russian elite at the prospect of transferring
part of the frozen funds by the West to Ukraine for the restoration of
the armed forces and infrastructure. It should be noted that the freezing
and risk of confiscation affected Russian state property, as well as assets of
blocked individuals and organizations, such as bank accounts, real estate,
yachts, and football clubs. It could all be described as the transforma-
tion of the practice of freezing into the practice of forced seizure. Some
 4 THE WAR IN UKRAINE: AVALANCHE OF WESTERN … 75

believe that the reserves will not be returned to Russia, as well as the
assets of Russian businessmen and citizens, which are frozen. Moreover,
legal mechanisms could be created for their confiscation and transfer in
favor of Ukraine (Timofeev, 2023).
The avalanche of sanctions also prompted Russia to develop its own
sanctions policy. Previously, in response to the restrictive measures of
the West, Moscow resorted mainly to visa restrictions or banned the
import of certain goods, especially foods. Currently, the mechanisms of
Russia’s sanctions policy are somewhat reminiscent of the approaches of
Western countries. For instance, from March 15, 2022, to December
31, 2022, the Ministry of Foreign Affairs imposed a ban on entry into
Russia for 3,405 foreign individuals. The Russian Government, on March
5, 2022, ordered the creation of a list of foreign “unfriendly coun-
tries.” The list includes almost 50 countries and territories, including
the US, the UK, members of the European Union, Japan, Canada and
others. Russian legislation (No. 430-r) provides for a number of restric-
tions for persons associated with unfriendly states, such as termination or
suspension of cooperation in certain areas, a ban on committing certain
currency transactions, and a ban on exiting Russian assets (Gerasimov
et al., 2023). Russia established a ban on transactions with private citizens
under Russian sanctions. The Government Decree No. 851 of May 11,
2022, introduced some measures of economic character, including a ban
on entering into transactions with persons under sanctions and a restric-
tion on fulfilling obligations to persons under sanctions on completed
transactions if such obligations are not fulfilled fully or partially.
Overall, many Russian analysts and politicians believe that sanctions
will not be able to isolate Russia, yet they do increase costs and compli-
cate its foreign trade. While economists keep working on a complete
picture of the losses suffered by the Russian economy based on statistical
data, sanctions have not caused widespread economic collapse or halted
Russia’s military effort. Russia’s adaptation is expected to be challenging,
but inevitable, with a strong likelihood of sustaining a political divergence
from the West.

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 CHAPTER 5

Sanctions Busting: The Role of Various

States in Russia’s Resistance to Sanctions

Abstract This chapter delves into the concept of “sanctions busting” and
explores the roles played by various countries in alleviating the impact of
sanctions on Russia as a target nation. Borozna and Kochtcheeva demon-
strate that despite strong support for sanctions from Western countries, a
significant portion of the international community has chosen to maintain
trade relationships with Russia and adopt a neutral stance in the ongoing
situation. China, in particular, has been critical of sanctions and has
offered political support to Moscow while expanding trade links. Further-
more, numerous European and Asian businesses have actively explored
ways to circumvent sanctions, effectively providing Russia with restricted
goods. This chapter sheds light on the complex dynamics of interna-
tional relations in the context of sanctions and how various nations and
businesses have responded to the sanctions’ regime targeting Russia.

Keywords Sanctions · Russia · Russian economy · Resistance to

sanctions · Sanctions evasion · Sanctions busting · Dual-use technology ·
Adaptation · Exports · Trade · Semiconductors · Equipment · China ·
Turkey · India · Iran · Cyprus · UAE · Belarus · Georgia · Kazakhstan ·
Kyrgyzstan · Armenia · Lithuania

© The Author(s), under exclusive license to Springer Nature 81

Switzerland AG 2024
A. Borozna and L. V. Kochtcheeva, War by Other Means,
https://doi.org/10.1007/978-3-031-51370-1_5
82 A. BOROZNA AND L. V. KOCHTCHEEVA

Despite the enthusiasm for sanctions among Western countries, many

other states, including Central Asia, Caucasus, Middle East, Central and
South America, Africa, and most Asian countries continue to trade with
Russia and remain neutral. China, which is highly critical of sanctions
in general, provides Moscow with political support and increasing trade.
India, Brazil, Saudi Arabia, South Africa, and the UAE have been trying
hard to avoid picking sides while seeking to benefit from their apparent
neutrality. Many European and Asian businesses have been actively
circumventing sanctions, providing Russia with sanctioned products. By
the end of 2022, 8.5% of E.U. and G7 companies had divested at least
one of their Russian subsidiaries (Evenett & Pisani, 2022). Sanctioned
timber is still being traded to E.U. countries through third countries, such
as China, Turkey, Kazakhstan, and Kyrgyzstan. While some European
traders had false certifications on the origins of the timber, other traders
openly admitted to getting the timber from Russia (Acosta, 2023). Addi-
tionally, according to researchers from the Kyiv School of Economics, the
majority of European-owned companies operating in Russia prior to the
outbreak of the war continued to do so eighteen months after (Bilousova
et al., 2023). Overall, “legal loopholes, opportunistic corporate behavior,
government dithering, influential industrial lobbies in Western countries,
and lack of cooperation by emerging economies have all contributed to
blunting the impact of sanctions” (Fubini & Prokopenko, 2023).
Corisk, a Norwegian risk consultancy, analyzed customs data from
twelve European Union countries, plus Norway, the United Kingdom,
the U.S., and Japan, and found that circumventing export sanctions to
Russia amounted to $8.5 billion in 2022. Germany is the biggest exporter
of sanctions-related goods to Russia, followed by Lithuania. Together,
these two countries account for half of Western goods that Moscow
should not be able to access. Corisk’s research shows that European
companies, notably German firms, use third-country sales to sell their
goods to Russia. The analysis of export data for sanctions-related goods
shows that luxury items, such as jewelry and perfumes that Moscow’s elite
enjoy, as well as advanced technology, such as semiconductors, quantum
computers, machines, and transportation equipment, are all exported to
Russia (Lindeman & Dale, 2023).
While Western exports of goods to Russia decreased in early 2022,
those to its neighbors increased significantly. According to Eurostat data,
the volume of exports from the E.U. to the countries of the former
Soviet Union increased by 80% over the 18 months beginning in January
 5 SANCTIONS BUSTING: THE ROLE OF VARIOUS STATES … 83

2022. The volume of E.U. exports to Georgia, Azerbaijan, Armenia, and

Kyrgyzstan also increased by 80%. There are strong indications that some
of these exports may be rerouted to Russia (Briancon, 2023). Many
sanctioned products from the states that joined the “sanctions coali-
tion” found an indirect way to the Russian market. The Yermak-McFaul
expert group (consisting of Ukrainian and American experts) found
1,057 components, including microchips and microprocessors produced
in 155 foreign companies, two-thirds of which were Western, including
components from the United States and France (Bouissou, 2023).
The proliferation of semiconductors in a variety of consumer goods has
made it increasingly difficult to control the illegal trade in chips. In 2021,
companies shipped 1.15 billion chips to customers around the world,
further contributing to a large global inventory. The Semiconductor
Industry Association, a trade association representing major chip compa-
nies, has stated that it is working with the United States government and
other entities to combat the illegal trade but that controlling the flow
of semiconductors is proving to be particularly challenging (Swanson &
Stevis-Gridnef, 2023).

5.1 China
On a large range of issues, cooperation with China has no alternatives for
Russia and it is the most beneficial. While due to the risks of secondary
sanctions, many countries are avoiding trading with Russia, China
has assumed the role of Russia’s primary trade partner, accounting for
approximately 20% of Russia’s overall exports and contributing to 35% of
Russia’s total imports in 2022 (Free Russia Foundation, 2023). Russia-
China cooperation is supported by an unparalleled level of political
relations, an already created basis for economic partnership, an objective
need of Russia in Chinese goods and technologies, and the reciprocal
interest of the PRC in the emerging Russian market (Timofeev, 2023).
While Russia needs to replace Western imported goods on its market
as well as find the markets for its exports, China is highly integrated
into the global economy, while it is facing the risk of losing markets
in the U.S., E.U., or other countries as a result of restrictive measures.
In response to whether Beijing is worried about being sanctioned by the
U.S. over Russia’s war with Ukraine, China’s Foreign Ministry spokesman
Zhao Lijian stated that “China always opposes using sanctions to solve
problems” (“China says it,” 2022).
84 A. BOROZNA AND L. V. KOCHTCHEEVA

Importantly, after the exclusion of key Russian banks from the SWIFT
system, the country needs an effective financial mechanism for trans-
actions with foreign partners. As Western banks have scaled back their
activities in Russia in response to regulatory pressures, political consider-
ations, and sanctions, Chinese banks have been expanding their presence
in the country. Four of China’s largest banks have increased their financial
involvement with Russia, raising their exposure from $2.2 billion before
Russia invaded Ukraine to $9.7 billion by March 2023. Notably, the
Chinese Renminbi (RMB) is gradually replacing the dominance of the
U.S. dollar and the European euro in this context. Before Russia invaded
Ukraine, less than 1% of its export payments were in RMB, but by the
summer of 2023, the Renminbi accounted for 16% of Russia’s export
transactions (Prokopenko, 2023; Walker & Lang, 2023). Renminbi has
supplanted the dollar as Russia’s most traded currency in early 2023
(Nikoladze et al., 2023; Prokopenko, 2023). By September 2023, Russia
used the Chinese currency for at least 20% of its imports (Foy, 2023).
The threat of secondary sanctions is unlikely to stop the expansion of
trade and financial mutual settlement mechanisms, as well as the develop-
ment of market niches. The continuing rivalry between Washington and
Beijing makes China even more interested in the opening of significant
market layers in Russia for export, large volume of Russian raw materials
bought with discounts, and strengthening its role as one of the world’s
financial centers.
The growing volume of economic and trade relations further deepens
cooperation between the two countries. In early 2022, Chinese Minister
of Foreign Affairs, Wang Yi, referred to the harsh Western sanctions
against Russia as unacceptable by saying that: “The most severe sanc-
tions can harm both sides and further complicate the situation, intensify
contradictions,” as well as that these restrictions would also harm other
countries not involved in the conflict. Another representative of the
Ministry emphasized that China is contributing to the global economy
while maintaining normal trade relations with Russia (Lisitsyna, 2022). If
two decades ago, China held the third position in Russia’s list of foreign
trade partners, accounting for about 6% of Russia’s total trade turnover,
then starting in 2007, China has taken the first place in Russia’s imports,
and since 2017, it has risen to the top position in the list of buyers of
Russian goods. In 2022, imports into Russia from China saw a 13% rise,
reaching $76 billion, while Russian exports to China surged by 43% to
reach $114 billion (Shkolyar, 2023). China has increased spending on
 5 SANCTIONS BUSTING: THE ROLE OF VARIOUS STATES … 85

Russian energy from $57 billion in 2021 to $88 billion in 2022, which
allowed Russia to make up for the lost revenues in the E.U. market.
Additionally, semiconductor imports from China have increased from $67
billion in 2021 to $170 billion in 2022 (Nikoladze et al., 2023).
During the initial seven months of 2023, China experienced a 36%
increase in trade with Russia compared to the corresponding period in
2022, reaching a total of $134 billion. This placed Moscow just after
Australia and Taiwan in terms of being among China’s most signifi-
cant trading partners (Ramzy & Douglas, 2023). In 2023, Russia and
China jointly implemented 79 large-scale projects with a total invest-
ment volume of approximately $170 billion. The growth of trade between
Russia and China for the first half of 2023 exceeded 30% (“Reshetnikov
soobshchil chto”, 2023) and overall trade between the two countries
reached a record $240 billion in 2023 (Reuters, 2024). In the initial seven
months of 2023, China increased its exports to Russia by 73%, contrasting
with a 5% decline in its overall export figures. This underscores Russia’s
emergence as one of the rare markets where Chinese exports continue to
grow amidst the worldwide rise in interest rates and geopolitical tensions
(Ramzy & Douglas, 2023).
China became an indispensable supplier of microchips to Russia. Nikkei
conducted an investigation that revealed that, since the start of the
war between Russia and Ukraine in 2022, a significant proportion of
United States microchips have been shipped to Russia via Hong Kong
or China (see Fig. 5.1). Despite the claims of producers that they have
ceased or suspended their operations in Russia, the value of imported
microchips by Russia increased tenfold in 2022, reaching a total of $570
million, compared to just $51 million in 2021 (Nikkei, 2023). Goods
subject to sanctions are being funneled into the Russian market, and these
include microprocessors produced by Intel and AMD, as well as FPGAs
from Xilinx. Additionally, there are chips supplied by Analog Devices,
Texas Instruments, and On Semiconductor, along with various prod-
ucts from prominent U.S. chip manufacturers like Intel, Advanced Micro
Devices, and Texas Instruments, among others (Nikkei, 2023). A signif-
icant portion of these electronic components is making its way into the
Russian market through smaller, less prominent distributors, traders, and
shell companies (Grey et al., 2023). These entities can avoid Western
sanctions targeting Russia because they do not face the same level of
scrutiny as larger corporations.
86 A. BOROZNA AND L. V. KOCHTCHEEVA

Fig. 5.1 Chip

shipments to Russia
before and after Ukraine
Invasion (*Includes
Hong Kong. Source
Export Genius. Before
invasion data covers
February 24–December
31, 2021)

Russia and China also deepen political relations by making targeted

efforts to ensure the strategic nature of bilateral cooperation in all areas,
strengthen the material foundation of Russian-Chinese relations, and
improve the well-being of the people in both countries. In March of
2023, the Chinese Embassy in Russia published the address by Xi Jinping
to the Russian media, in which the Chinese leader reinstated that China
and Russia are neighbors and strategic partners engaged in comprehen-
sive cooperation and deepening political relations, which “follow a clear
historical logic and are driven by robust internal factors” (Jinping, 2023).
The robust channels for exchanges and high-level interactions, combined
with a diverse collaborative framework, constitute significant systematic
and institutional underpinnings for the growth of bilateral relations. Xi
Jinping affirmed that China and Russia “continuously strengthen political
trust, forging a new paradigm for relations between major powers…[and]
adhere to the concept of enduring friendship and mutually beneficial
cooperation” (Jinping, 2023).
During the visit of Xi Jinping to Moscow and meetings with Putin,
the Kremlin (2023) published a joint statement by the two countries:
“Russian-Chinese relations are mature, stable, self-sufficient, and robust.
They have withstood the challenges posed by the COVID-19 pandemic
and turbulent international conditions, remaining impervious to external
influence. These relations demonstrate resilience and a positive energy.”
Thus, as the countries are consolidating their positions on the global
stage, exerting influence at both the global and regional levels, the geopo-
litical interests of the two countries align, fostering mutually beneficial
cooperation in numerous areas of international relations.
 5 SANCTIONS BUSTING: THE ROLE OF VARIOUS STATES … 87

5.2 Turkey
The relationship between Russia and Turkey has been strained at times,
but since the imposition of sanctions, both states have benefited from
each other’s actions. For Russia, the advantages have included increased
energy and weapons sales, investment, and a close relationship with a
NATO member attempting to isolate it. For Turkey, the advantages have
been reduced energy costs, a substantial export market, revitalized Russian
tourism, and, most importantly, Russian support for Turkish efforts to
combat Kurdish separatist activity in Syria, in which Russia is a major
supporter of President Bashar Al-Assad’s regime (Koroleva, 2023).
Turkey has become a major conduit for Russia’s evasion of sanctions.
In 2022, Russia became Turkey’s top import partner, with a value of
$58.85 billion in imports, more than double the value of imports in
2021 (UN Comtrade Database, 2023). Turkey also increased its exports
to Russia, which amounted to $9.34 billion in 2022, compared to $5.8
billion in 2021. While Turkey’s domestic economic problems could be
the main reason why Ankara refused to join Western sanctions on Russia,
the sharp increase in bilateral trade volumes in 2022 suggests that Turkey
has become a major intermediary between Russia and the West and might
have helped many Russian businesses and individuals to bypass the sanc-
tions regime. Turkey’s President Recep Tayyip Erdoğan publicly disclosed
in early January 2023 that the total value of Turkish exports reached
a historic peak in 2022, amounting to US$ 254 billion (Konarzewska,
2023). However, Turkish authorities deny that Turkey ships or facili-
tates the sale of sanctioned products to Russia or goods that could aid
Russia in its war in Ukraine. Mevlut Cavusoglu, Turkey’s foreign minister,
said that the increase in trade between the two countries can only be
explained by an increase in the volume and price of Turkey’s energy
imports (Konarzewska, 2023).
After the imposition of sanctions, Russia has had to redirect its energy
exports from the E.U. market and was forced to accept the lower prices
imposed by the sanctions. Turkey has taken advantage of this opportunity
and is actively negotiating with Moscow to establish a natural gas hub
in Turkey, thus providing a gateway for Russian hydrocarbon imports
into European markets. Following the explosions that damaged the Nord
Stream gas pipeline system, Russia declared Turkey to be the most suit-
able option for rerouting gas to the European Union. Turkey has also
emerged as one of the largest importers of Russian crude oil and coal.
88 A. BOROZNA AND L. V. KOCHTCHEEVA

Turkey has been negotiating with Russia to secure a significant 25% reduc-
tion in its natural gas imports. As of 2023, CREA estimates that Turkey
has been the third largest consumer of Russia’s fossil fuels after China
and Germany, having purchased a total of USD 14.8 billion in Russian
crude oil, USD 7.5 billion in natural gas, and USD 3.6 billion in coal
(Konarzewska, 2023). The amount of oil products Turkey imports from
Russia has increased to unprecedented heights in 2023 and is currently
more than four times what it was prior to Moscow’s invasion of Ukraine
in February 2022 (Sampson & Kelly, 2023).
Turkey transports Russian crude oil by relying on the “ghost fleet”—
hundreds of aging vessels operating outside the usual industry standards,
often forgoing insurance with the P&I Clubs. The fleet is aiding Russia in
adapting to the sanctions imposed by the West. Oil and gas revenues have
underpinned the Russian economy before the ruble’s collapse in August
2023, leading to an emergency rate hike by the Russian Central Bank
(Malsin, 2023).
Numerous Turkish companies have been providing essential items to
Russian firms to manufacture military equipment or have collaborated
with Russian entities that have been sanctioned by the United States
(Sharp, 2023). At least thirteen Turkish companies had sold a range of
products, including plastics, rubber, and vehicles, worth an estimated
US$18.5 million to Russian companies that had been sanctioned by
the United States for their involvement in Russia’s aggression against
Ukraine (Malsin, 2023). Plastic and rubber are essential components for
the construction of military equipment and are therefore prohibited from
being exported to Russia under United States sanctions. Furthermore,
Turkish companies had sent Russia millions of dollars worth of equip-
ment, including U.S-made electric generators, as well as circuit boards
and conveyors, as well as steering wheels for trucks and other vehicles,
which are also subject to United States sanctions. In 2022, Turkey began
to export a substantial number of semiconductors to Russia, whereas in
2021, such exports had been minimal (Konarzewska, 2023).
Turkey is also aiding Russia in circumventing sanctions by providing
various transportation services and selling the goods, which are not offi-
cially registered as an import, transported to Russia through Turkish
cargo companies. Shipments to Russia are made through air, land, and
rail routes (Jégo, 2022; “U.S. sanctions turkey-based,” 2023).
Turkey also has become a favored destination for Russian corpora-
tions and affluent individuals to transfer their funds and assets, providing
 5 SANCTIONS BUSTING: THE ROLE OF VARIOUS STATES … 89

a secure haven. This includes oligarchs and politicians seeking to evade

sanctions imposed by Western nations or bypass Russia’s capital controls.
In addition to them, young dissidents or tech professionals from Russia
also choose to relocate to Turkey, fearing conscription into the army
to engage in the Ukraine conflict or potential imprisonment. Turkey is
actively embracing these monetary inflows and streamlining the process of
fund transfers for Russians. This is particularly crucial since Western sanc-
tions have restricted their access to widely used bank cards and excluded
certain Russian banks from the SWIFT system, making money trans-
fers challenging. Some Turkish banks are integrated into the Russian
Mir payment system—a domestic payment system that was created by
the Russian central bank. The Mir payment system is used by five of
the largest banks in Turkey: Vakıf Bank, Ziraat Bank, İş Bank, Deniz
Bank, and Halkbank (Foy et al., 2022). The influx of Russian funds is
a positive development for Ankara, as it aids in stabilizing Turkey’s lira by
bolstering foreign currency reserves. Over the past few years, the Turkish
lira has experienced significant depreciation against the U.S. dollar, and
this infusion of foreign currency helps offset the foreign trade deficit as
well (Konarzewska, 2023). Russian individuals are also establishing their
businesses within Turkey and directing investments into the domestic
economy, with a notable focus on the real estate sector.

5.3 India
India has been one of the primary beneficiaries of sanctions on Russia,
obtaining Russian crude oil at competitive prices. According to customs
data, the total value of trade between India and Russia in 2022 increased
by 2.6 times, reaching USD 35.3 billion. However, the Indian Rupee is
not a fully convertible currency, and Russia is attempting to avoid the use
of the United States dollar and other foreign currencies from “unfriendly”
Western nations. India’s ambassador to Moscow, Pavan Kapoor, noted
that the balance of trade between the two countries, which had been
largely in favor of Russia, has become even more skewed as a result
of increased Russian exports. As a result, India is looking to stimulate
investment in multiple sectors and diversify its supply of goods to Russia
(Fabrichnaya, 2023). Speaking after the G-20 meeting in New Delhi,
Russian Foreign Minister Sergey Lavrov stated, “Very many billions of
rupees, which have not yet found a use, have accumulated, and our Indian
90 A. BOROZNA AND L. V. KOCHTCHEEVA

friends have assured us that they will propose promising areas where they
can be invested” (Lavrov quoted in Fabrichnaya, 2023).
The current Russian political elites are also attaching greater signifi-
cance to their partnership with India compared to the past when India was
considered merely one among many partners in an envisioned multipolar
world (Kupriyanov, 2023). Because India, for many years, has strived to
be a player in a multipolar world, it shows no interest in Western calls
for isolating Russia and puts main efforts to protect its own interests
and remain neutral. The relationship between India and Russia has deep
historical roots dating back to the Cold War, and both nations consider
their ties as “special and privileged” (Rao, 2023). India heavily depends
on Russia for approximately 60% of its defense equipment, and Russia has
provided India with advanced weapons technologies. Apart from these
technical considerations, India has additional reasons for not aligning with
efforts against Moscow, including the desire to keep Russia at a certain
distance from China, and is concerned that isolating Russia could push it
closer to Beijing, which could affect India’s interests even though China
is the biggest trading partner in goods (Rao, 2023). India continues to
actively participate in BRICS as well as maintaining a solid relationship
with the West, thus trying to upkeep a difficult balancing act.

5.4 Iran
Russia has learned many lessons from the experience of Iran, which has
been heavily sanctioned by the West. Both countries share a common
goal of diminishing the collective West’s ability to shape the world. Both
states are seeking to project their power in the Eurasian region and
beyond. After the imposition of sanctions imposed on Russia and the
latter’s reorientation of its trade from the E.U. to Asia, Iran has risen as
a significant player in helping Russia to withstand the blow of economic
sanctions. In 2022, the Russia-Iranian trade increased by 20% and reached
$4.9 billion (“Trade turnover between,” 2023). In 2019, Iran and the
Eurasian Economic Union (EAEU) signed an interim Free Trade Agree-
ment (FTA), which was extended in 2022 until 2025 or until the entry
into force of a new agreement on a permanent free trade regime. Addi-
tionally, the ties between Russia and Iran were cemented by signing in
January 2023 an agreement between the EAEU and Iran to create a free
trade deal, which is expected to come into force by the end of the year
(Avdaliani, 2023).
 5 SANCTIONS BUSTING: THE ROLE OF VARIOUS STATES … 91

Iran has grown into a vital partner for Russia, particularly in the context
of evading sanctions related to critical electronic components. Iran plays a
significant role in not only supplying drones to Russia but also serving as
a technological collaborator. In fact, Iran is actively aiding Russia in estab-
lishing production lines for drones in the special economic zone (SEZ) of
Alabuga, Tatarstan (Bennett & Ilyushina, 2023). The Tatarstan manufac-
turer attempts to conceal the Iranian origin of these drones by affixing
Russian labels on them. Tehran has virtually franchised the drone tech-
nology for Moscow. The franchising includes specialized documentation,
project knowledge, and even the provision of training to Central Asian
workers in Iran. At least 13 components sourced from Analog Devices are
included in these drones (Sonnefeld & Wyrebkowski, 2023). Although
these components are not used exclusively in military unmanned aerial
vehicles (UAVs) and are not included in the sensitive technologies list,
they would be subject to a near-total prohibition on electronics exports
from the United States.
Russia’s main exports to Iran are metals, raw materials for agriculture,
machinery, equipment, vehicles, chemical products, and other goods.
Iran’s main imports are food and agricultural products, pharmaceuticals,
textiles, footwear, machinery, and other items. In May 2022, following
the visit of Russian Deputy Prime Minister Alexander Novak to Iran, both
countries agreed to move to a system of trade settlements in rubles and
rials as soon as possible. The two countries also discussed the possibility
of operating Shetab and Mir payment cards (Kaleji, 2022). In 2023, 90%
of trade between the two countries was settled in their national curren-
cies (“National currencies drive,” 2023). In 2023, Iranian and Russian
media reported that they were discussing the creation of a stablecoin, a
gold-backed cryptocurrency, which is often seen as a potential substitute
for the U.S. dollar in international trade (Tayeb, 2023).
By mid-2022, as Russia was subject to Western sanctions, its efforts
to foster closer investment links with Iran became increasingly evident.
Russia became the biggest foreign investor in Iran by contributing
US$2.76 billion (investing in two oil-related projects). Also, in July, the
NOC and Gazprom signed a Memorandum on Energy Cooperation,
which envisaged Russian investments of up to US$40 billion in Iran’s
oil and gas sector. However, the Iranian side has repeatedly reported
that only a fraction of the investment has been made and that planned
payments have been delayed (Avdaliani, 2023).
92 A. BOROZNA AND L. V. KOCHTCHEEVA

Additionally, Iran became an important partner for Russia’s pivot to

Asia through the International North–South Transportation Corridor
(INSTC), which will help connect Russia with the rest of the world and
aid Russia in moving its trade away from Europe and towards Asia. For
example, in May 2023, Russia agreed to make another big investment in
Iran by funding the still-unfinished 162-km rail link between the north of
Iran and Russia. This will make it easier for products to travel from Russia
to Iran and vice-versa. Russia invested $1.6 billion in the project, which
is expected to be finished by 2027 (Avdaliani, 2023).

5.5 Cyprus
Cyprus has a long history of being a safe haven for Russian money. In
2012, Cyprus, a nation with a population of approximately one million,
had accumulated bank savings totaling almost 72 billion euros. Nearly
30% of these deposits were contributed by Russian citizens (Alfonsi,
2023). However, in 2013, the situation took a downturn, as the debt
crisis unfolding in neighboring Greece posed a significant risk to the
Cyprus economy. To prevent the potential loss of substantial Russian
capital, legislators pursued a strategy previously adopted by other nations
to draw in prosperity—the implementation of a “citizenship by invest-
ment” initiative. Individuals acquiring Cyprus passports were essentially
investing in a European passport, granting them unrestricted entry to
27 nations. Between 2013 and 2020, Cyprus granted close to 7,000 of
these prestigious “golden passports,” with nearly half being obtained by
Russians (Alfonsi, 2023). Among the recipients of “golden passports”
are several Russian oligarchs, who are now subjected to Western sanc-
tions. This includes individuals like Igor Kesaev, the owner of a Russian
arms factory, and billionaire Alexander Ponomarenko, who served as the
chairman of the board of Russia’s largest airport and is regarded by the
U.S. government as one of Putin’s key “enablers.” Additionally, there
is Oleg Deripaska, an aluminum tycoon and a part of Putin’s inner
circle. The U.S. Treasury has stated that he has been under interna-
tional investigation for various allegations, including money laundering,
illegal wiretapping, and extortion, among other charges. The passports
of the oligarchs facing sanctions are currently undergoing a “revocation
process.” Cyprus has also taken action by freezing 105 million euros from
Russian deposits. Although this figure is substantial, it represents only a
 5 SANCTIONS BUSTING: THE ROLE OF VARIOUS STATES … 93

small portion of the approximately 5.6 billion euros in Russian deposits

that were made in Cyprus in 2022 (Alfonsi, 2023).
Additionally, Cyprus emerged as a hub for Russian shell companies
aiming to acquire Western technology despite being subject to sanc-
tions. An illustration of this involves the arrest in August 2023 of a
Russian-German national in Cyprus, Arthur Petrov, who initially obtained
regulated microelectronics from U.S.-based electronics exporters through
a Cyprus-based front company called Astrafteros Technokosmos LTD
(Astrafteros), which he managed. According to the U.S. Department
of Justice (2023), he deceived the U.S. exporters by claiming that
Astrafteros was purchasing electronics for fire security systems and other
commercial purposes. He misrepresented that the intended end-users and
destinations were companies in Cyprus or other third countries, while
in reality, the components were intended for Electrocom in Russia, a
supplier for Russian military manufacturers. The illicit microelectronics
acquired by Petrov as part of the scheme included microcontrollers and
integrated circuits listed on the Commerce Control List maintained by
the Commerce Department. Exporting or reexporting these components
to Russia without a license from the Commerce Department is against
U.S. law. Invoices from the U.S. distributors explicitly indicated that
these microcontrollers and integrated circuits were subject to U.S. export
controls (U.S. Department of Justice, 2023).

5.6 UAE
The United Arab Emirates is among the four countries most prominently
assisting Russia in bypassing wartime sanctions, others being China,
Turkey, and Cyprus (Free Russia Foundation, 2023, p. 4). Since the
start of the war in Ukraine, tens of thousands of Russian nationals have
relocated to the UAE, particularly Dubai, making the Russian-speaking
population one of the most prominent in the country of nine million
people. Due to the increasing number of Russian nationals, they have now
become the third largest group of property buyers in Dubai. This influx
has included members of Russia’s ruling elite, such as Igor Sechin, who
is a close associate of Russian President Vladimir Putin and the head of
a state oil company. Western sanctions on Russian crude oil have caused
Moscow’s largest export market to shift to the UAE, where, according
to the Wall Street Journal, the UAE purchases the oil at reduced prices
and resells or refines the product into market-priced products. Between
94 A. BOROZNA AND L. V. KOCHTCHEEVA

February 24, 2022, and March 3, 2023, the UAE experienced a notable
surge in its acquisition of Russian gold, totaling $4 billion, a stark contrast
to the $61 million recorded in 2021. Likewise, the UAE’s intake of
Russian oil tripled, reaching 60 million barrels during the same time frame
(“UAE denies sanctions violations,” 2023). Electronic parts exports from
the United Arab Emirates (UAE) to Russia increased seven-fold in 2022,
reaching a total of nearly $283 million, while the volume of microchip
exports increased 15-fold, rising from $1.6 million in 2021 to $24.3
million in 2022 (Sonnefeld & Wyrebkowski, 2023).

5.7 Belarus
Belarus received its own share of the Western countries’ sanctions, as
the West see Minsk assisting Russia in the war. However, the sanc-
tions have strengthened the ties between Belarus and Russia and allowed
them to develop coping mechanisms. In the words of the Deputy
Prime Minister of Belarus, Petr Parkhomchik (2022, quoted in Evrazia
Expert): “Challenges posed to Belarus and Russia by unfriendly coun-
tries today have motivated and stimulated us to undertake serious efforts
in addressing import substitution issues.” As anticipated, Belarus also
received increased support and exports to Russia, enhanced domestic
production, especially of agricultural machinery, implemented financial
stimuli, and turned to Asia for trade relations.
As a result of the government’s measures, exports of goods and services
in the first quarter of 2023 reached a record level for the past ten years,
maintaining a positive trade balance. Russia and Belarus agreed to estab-
lish joint production of “MAZ” and “KAMAZ,” which will provide a
boost to Russia’s automotive industry suffering from sanctions. While
sanction pressure persists on all types of transportation, the government
has promptly conducted work to redirect from Baltic and Ukrainian ports
to Russian ports. Deliveries to Russia increased by nearly 60% (by $2.2
billion) (Belarus Council of Ministers, 2023). Belarus is also making
efforts to replace the niches that were occupied by the foreign companies
that chose to leave Russia.
 5 SANCTIONS BUSTING: THE ROLE OF VARIOUS STATES … 95

5.8 Georgia
Since the start of the war in Ukraine, Georgia has refrained from joining
in the anti-Russian sanctions and has not openly expressed its disap-
proval of Moscow’s actions. In response, Russia has restored direct flights
to Georgia and lifted visa requirements imposed in the 2000s (Light,
2023). Georgian officials have been praised by Russian officials for their
constructive attitude, which has been seen as a sign of a sovereign country.
Trade between the two countries has seen a surge in 2022 (see Fig. 5.2),
with Georgia’s exports to Russia increasing by 6.8% to $652 million and
imports from Russia increasing by 79% to $1.8 billion, the highest level in
sixteen years (T.I.- Georgia, 2023). This is in stark contrast to the strained
relations between the two countries, which have been strained since the
beginning of the 1990s, particularly after Russia’s invasion of Georgia in
2008. Russia has since maintained control over 20% of Georgia’s territory,
including military bases in its breakaway regions.
Transparency International reported an almost 16 times increase in the
number of Russian companies registering offices in Georgia compared to
2021. In one year, since the start of war in Ukraine till February 2023,
about 15,000 Russian companies registered in Georgia (T.I.-Georgia,
2023).

700 16.0%

Russia's share in Georgia's exports

14.5% 14.4% 14.0%
600
13.0% 13.1% 13.2%
11.7% 12.0%
500
USD Million

9.6% 9.8% 10.0%

400
8.0%
7.4% 610 652
300 6.6%
497 6.0%
200 398 438 441
4.0%
275
100 2.0% 191 163 207 2.0%
47
0 0.0%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

$USD Russia's share in Georgia's total exports

Fig. 5.2 Russia’s share in Georgia’s export (Source Transparency International

Georgia)
96 A. BOROZNA AND L. V. KOCHTCHEEVA

5.9 Kazakhstan
Kazakhstan’s government declared neutrality on the Russia-Ukraine war,
but trade with Russia illustrates the opposite. Kazakhstan has emerged as
a significant source of technology export to Russia, as well as a means of
circumventing Western sanctions. In the past year, Kazakhstan’s imports
from the European Union increased by 89%, reaching e10.4 billion.
This increase included a significant number of purchases of technology
and machinery, valued at around e4 billion. About e2.6 billion worth
of goods disappeared, turning into “ghost items”—products officially
bought from the E.U. by Kazakhstan but never made it to Central Asia
consumers (Lindeman & Dale, 2023).
Almost half of Russia’s “parallel export” is routed through Kazakhstan,
with the remainder distributed to Georgia, Armenia, and Kyrgyzstan.
Polyamides, a dual-use product, have also been exported to Russia,
thus circumventing the sanctions regime. Polyamides are used in the
production of body armor, military pilots’ vests, and various other mili-
tary and civilian products. Before June 2022, Germany did not export
much polyamide to Kazakhstan; however, following the introduction
of the sanctions, the demand for polyamides in Kazakhstan increased
significantly, reaching 200 tons by October (Lindeman & Dale, 2023).
In 2022, Kazakhstan’s exports to Russia experienced a 25% increase,
reaching e8 billion. Of this amount, almost one billion euros were allo-
cated to technology and machinery goods, although Kazakhstan is not
a major exporter of these products. According to Kazakhstan’s Vice-
Minister of Foreign Affairs Serik Zhumatayarin, the goods exported to
Russia included at least 104 products that were subject to sanctions,
including a large number of dual-use items (see Table 5.1). Addi-
tionally, Kazakhstan sold 3.3 million semiconductor parts to Russia in
2022, whereas the volume of this trade was only 11,000 euros in 2021
(Romandash, 2023).

5.10 Kyrgyzstan
Kyrgyzstan has seen significant growth in import–export businesses that
engage in trade with Russia. These companies have become intermediaries
for Western and Asian products that Russia cannot legally acquire through
other means. They are capitalizing on the rising demand for sanctioned
Chinese and European goods, including items such as drones, aircraft
 5 SANCTIONS BUSTING: THE ROLE OF VARIOUS STATES … 97

Table 5.1 Kazakhstan: trade flows of dual-use goods, 2021–2022

Imports: global Imports: EU Exports: RU

Customs code Description 2021 2022 2021 2022 2021 2022

8471 Computers $168M $1.2B $114M $310M $127K $296M

and related
parts
854231 Processors and $26.2M $52.7M $5.6M $13M $30K $11.9M
controllers
854239 Electronic $5M $14M $408K $4.4M $31K $3.7M
integrated
circuits
853669 Plugs and $24M $21M $1.3M $9.2M $500K $3.8M
sockets for a
voltage not
exceeding
1,000 volts
854232 Storage $3M $7M $350K $900K $200K $2.3M
devices,
computer
memory
9014 Direction $400K $5.5M $1.6M $4.1M $100 $700K
finding
compasses;
other
navigational
instruments
and appliances

Source RFE/RL, Qazstat, UN Comtrade Database, Eurostat

parts, and rifle scopes (see Table 5.2). According to United Nations trade
data, Kyrgyzstan neither imported nor exported a single component for
aircraft, helicopters, or drones in 2021. However, in 2022, the Kyrgyz
companies imported $3.5 million worth of such components, mainly from
the United States, and exported $1.5 million worth to Russia (Schreck
et al., 2023). Overall, in 2022, the total volume of Kyrgyzstan’s exports
to Russia experienced a remarkable surge, increasing by 250% compared
to the previous year (Warrick, 2023). According to a senior US official,
Kyrgyzstan, despite its relatively small size compared to other countries,
exemplifies a situation where all the factors necessary for facilitating the
evasion of sanctions are present simultaneously, creating an environment
that is deemed unacceptable in terms of sanctions enforcement (Warrick,
2023).
98 A. BOROZNA AND L. V. KOCHTCHEEVA

Table 5.2 Kyrgyzstan: trade flows of dual-use goods, 2021–2022

Imports: global Imports: EU Exports: RU

Customs Description 2021 2022 2021 2022 2021 2022
code

880730 Aircraft, $0 $3.55M $0 $612K $0 $1.56M

helicopter,
and UAV
parts
853224 Fixed $1.53K $2.69M $0 $225K $0 $161
electrical
capacitors,
ceramic
dielectric,
multilayer
excluding
power
capacitors
853221 Fixed $2.28K $67.77K $0 $49.6K $0 $380
electrical
capacitors,
tantalum
excluding
power
capacitors
854239 Electronic $58.78K $1.68M $32 K $1.2M $5.86K $38.61K
integrated
circuits
854231 Electronic $373.95K $2.1M $22 K $431K $0 $84.51K
integrated
circuits as
processors
and
controllers
851761 Base stations $2.3M $7.7M $9.3 K $123K $0 $78K
of apparatus
for the
transmission
or reception
of voice,
images, or
other data

Note Global import data for 853221 is from 2019

Source RFE/RL, Kyrgyz National Statistics Committee, UN Comtrade Database, Eurostat
 5 SANCTIONS BUSTING: THE ROLE OF VARIOUS STATES … 99

Following criticism from the United States regarding its involvement

in assisting Russia during the conflict, Kyrgyzstan’s President, Japarov,
responded to US lawmakers by emphasizing that Russia did not depend
on Kyrgyzstan as an intermediary for Chinese trade. He pointed out that
China and Russia shared an extensive land border, allowing Russia to
import goods directly by rail or barge. While acknowledging Kyrgyzstan’s
role in attempting to supply Chinese drones to a Russian company,
Japarov maintained that these exports were intended for civilian use.
Nevertheless, he suggested his readiness to comply with the US’s request
for stricter oversight of exports to Russia. In his communication to the US
Congress, Japarov noted that Kyrgyzstan was “now prohibiting the export
of drones and unmanned aerial vehicles” and affirmed its commitment to
a neutral stance in the Russia-Ukraine conflict (Burke, 2023).

5.11 Armenia
As part of the Eurasian Economic Union (EAEU) led by Moscow,
Armenia, together with Russia, Kazakhstan, Belarus, and Kyrgyz
Republic, form a single market that aims to remove customs barriers
and increase trade. This makes it tricky to control the flow of potentially
dangerous goods, but it also puts these states in the spotlight as the EU
looks to tighten up on Russia when it comes out with its 11th round
of sanctions (Gavin, 2023). After the imposition of Western sanctions,
Armenian exports to Russia have skyrocketed, with customs data from
2022 to 2023 showing a 463% increase and worth over e328 million
as of June 2023. Armenian car exports to Russia increased significantly,
going from $800,000 worth of vehicles in January 2022 to slightly over
$ 180 million in the same month in 2023 (Ivanova & Cook, 2023). This
unusual increase in trade led to the US accusing Armenia of being a place
where people can illegally ship restricted goods to Russia or Belarus, and
several companies have been targeted by US sanctions as a result (Gavin,
2023).
The data for the first six months of 2023 shows that the trade turnover
between the two countries continues to increase. Russia and Armenia
saw an additional boost in trade between the two countries in the first
half of 2023, with 86% more trade than in 2022 and a record-breaking
3.3 billion dollars in exports. This is on top of the record-breaking $5
billion in mutual trade in 2022 (“Armenia’s exports,” 2023). Armenia,
100 A. BOROZNA AND L. V. KOCHTCHEEVA

as a member of the Eurasian Economic Union, has a free trade agree-

ment with the EAEU, which includes Russia. This agreement allows
for the easier movement of goods, including trucks, between member
states. Armenia, being geographically close to Russia and a member of
the EAEU, has played a role in facilitating the import of Western-made
trucks into Russia.
The use of medium-sized trucks in a war zone is essential for the trans-
portation of goods to the frontlines, and as a result, these vehicles were
placed on a sanctions list. Consequently, Germany’s export of diesel trucks
of this weight class to Russia decreased to zero by the end of May 2022.
On the other hand, these same trucks were sold at a significantly higher
rate to Armenia, reaching levels five times higher than those Germany had
previously exported to Russia by September (Lindeman & Dale, 2023).
Western-made trucks are often imported into Armenia and then trans-
ported to Russia due to trade agreements and geographic proximity. This
enables Russia to acquire Western-made trucks through a more accessible
route, utilizing Armenia as a conduit for these imports.

5.12 Lithuania
While Lithuania’s official position is to toughen sanctions’ implemen-
tation and punish third parties (Gavin & Aarup, 2023), Lithuanian
businesses have been sending restricted goods to Russia by utilizing
an alternate path, which involves Belarus. Even though Lithuania has
provided support to the Belarusian opposition and has been critical of
President Alexander Lukashenko’s government in Minsk, it seems that
they significantly boosted their vehicle exports to Belarus between May
and September of 2022, multiplying the volume by ten times. Consid-
ering that their exports to Russia had completely ceased, and it’s unlikely
that Belarus suddenly had such a massive surge in demand for cars, it
appears that these goods are ultimately finding their way into Russia
(Lindeman & Dale, 2023).

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 CHAPTER 6

Assessing Sanctions Effectiveness

Abstract In this chapter, Borozna and Kochtcheeva examine the effec-

tiveness of the sanctions imposed on Russia. The assessment of the
effectiveness of sanctions on Russia is based on three key parameters:
impact on the Russian economy, achievement of stated political goals, and
countermeasures and remedies used by Russia to withstand the impact of
sanctions. The sanctions that were imposed on Russia in 2022 onward
had a significantly broader scope than the sanctions imposed after 2014.
However, they failed to achieve their primary political objective, which
was to change Russia’s foreign policy direction. These sanctions did not
deter Moscow’s commitment to continue its involvement in the conflict,
and it appears unlikely that they will change this determination in the
foreseeable future. The economic impact of the sanctions imposed after
2022 is multifaceted. Although the Russian economy did not collapse,
there are indications that specific sectors, including aviation, automotive,
and information technology, within Russia have experienced substantial
declines. However, the support and cooperation of countries friendly to
Russia played a critical role in Russia’s ability to withstand the impact of
these sanctions.

Keywords Sanctions · Russia · Russian economy · Sanctions

(in)-effectiveness · Russian economy · Foreign trade · Trade partners ·
Import substitutions · Energy industry · Oil · Gas · Defense industry ·
Banking · Finance · Aviation · Automotive sector · IT · Retail · Travel ·

© The Author(s), under exclusive license to Springer Nature 107

Switzerland AG 2024
A. Borozna and L. V. Kochtcheeva, War by Other Means,
https://doi.org/10.1007/978-3-031-51370-1_6
108 A. BOROZNA AND L. V. KOCHTCHEEVA

Political course · Elites · Support for regime · Countermeasures ·

Political goals · Remedies

Assessing sanctions effectiveness is complicated by the lack of common

yardsticks for success. The report produced by the U.S. Government
Accountability Office (GAO) in 2019 demonstrates the vagueness of the
operational definition of sanctions success (U.S. Government Account-
ability Office, 2019). The report shows that the effectiveness of sanctions
success by the office responsible for initiating the sanctions in the United
States is measured in terms of economic impact on the target, with some
reference to achieving broader U.S. policy goals. Among the academic
studies on sanctions effectiveness, there are two main groups. The first
group of scholars focuses on the effect of sanctions on trade, invest-
ment, and GDP growth in the target and sanctioning countries (Hufbauer
& Oegg, 2003; Kohl & Reesink, 2019). The second group focuses
on analyzing if sanctions worked in reaching their stated goals, such as
forcing the targeted states to comply with the demands of the sanc-
tioning country (Hufbauer & Oegg, 2003). Additionally, the ability
of the targeted state to implement countermeasures undermines the
effectiveness of sanctions.
The effectiveness of sanctions can only be judged against a set of
well-defined goals. However, the United States and its allies have never
outlined such specific goals during the process of initiating sanctions on
Russia (Demarais, 2023). The objectives of sanctions were very vague
and broad, such as “to punish Russia,” “to make Russia a pariah,”
“make him [Putin] pay,” and “cause a collapse of the Russian econ-
omy” (White House, 2022; Smith, 2022; Wertheim, 2022). Due to a
lack of a concrete benchmark that would clearly determine the effective-
ness of sanctions, there are a plethora of opinions about their success.
Some analysts assert that sanctions had a tangible effect on the Russian
economy: “By cutting off Russia from foreign technology and invest-
ment and slashing the Kremlin’s energy revenues, Western sanctions have
fundamentally altered Russia’s national trajectory. They are destroying the
economic model Putin relies on to pursue his imperialist foreign policy”
(Fishman, 2023). Other observers argue that sanctions didn’t work—they
didn’t change Russia’s resolve to continue the war (Afontsev, 2022). Still,
other analysts argue that we cannot judge sanctions based on observed
 6 ASSESSING SANCTIONS EFFECTIVENESS 109

Russian behavior; rather, we should analyze the several actions that Russia
may have taken if sanctions had not been implemented (see Siegel, 2022).
In this chapter, the evaluation of the effectiveness of sanctions on
Russia will be based on three parameters: (1) impact on the Russian
economy, (2) achievement of stated political goals, and (3) countermea-
sures and remedies.

6.1 Impact on Russian Economy

In February 2023, U.S. Deputy Secretary of the Treasury Wally Adeyemo
declared that “Today, Russia can’t produce enough arms to meet their
basic needs.” According to Adeyemo, the Russian economy in 2023
was “nothing like the Russian economy you saw before the invasion”
(Hussein, 2023). However, the destructive costs of economic sanctions,
international isolation, and punishment anticipated in the West were exag-
gerated, at least in the short term. Moscow was able to avoid the collapse
of the economy: “Sanctions like a knockout didn’t work” (Lukyanov,
2023), and “the Russian economy has weathered the shock much better
than expected” (Mulder, 2023). The “Fortress Russia” strategy was aimed
at creating an economy in Russia that could withstand sanctions, although
very few economists believed it would be successful (Northam, 2022).
Many sources predicted that the decline in the Russian economy due
to sanctions would be measured in double digits (Blinov, 2022). For
example, the April 2022 forecast of the Central Bank of Russia allowed
for a fall in GDP by 8–10% in 2022 and by 12–16% in the fourth quarter
of the year. However, then the forecasts began to soften and looked not
so catastrophic. In September, the R.F. Ministry of Economic Develop-
ment released a new forecast: −2.9%. Despite the sanctions, by the end
of 2022, in terms of purchasing power parity (PPP), Russia’s GDP stood
at $5.51 trillion, positioning the country as the fifth-largest economy
globally and the largest in Europe (See Table 6.1) (World Bank, 2023).
By the beginning of 2023, the IMF stated the actual decline in Russia’s
GDP for 2022 is 2.2%, which is less than in the period of 2020. For 2023,
the IMF made several revisions to its forecasts, suggesting initially Russia’s
economic growth by 0.3% (IMF, 2023a). By July 2023, IMF (2023b)
calculations indicated that Russia’s GDP will experience 1.5% growth in
2023. But the IMF report released in January 2024 showed Russia’s GDP
growth at 3%, surpassing economic growth of all Western nations (IMF,
110 A. BOROZNA AND L. V. KOCHTCHEEVA

Table 6.1 List of 20 largest economies in terms of GDP (PPP), as of 2022

Ranking Country (millions of international dollars)

1 China 30,327,320
2 USA 25,462,700
3 India 11,874,583
4 Japan 5,702,287
5 Russia 5,326,855
6 Germany 5,309,606
7 Indonesia 4,036,901
8 Brazil 3,837,261
9 France 3,769,924
10 UK 3,656,809
11 Turky 3,180,984
12 Italy 3,052,609
13 Mexico 2,742,903
14 Korea, Rep 2,585,011
15 Canada 2,273,489
16 Spain 2,181,968
17 Saudi Arabia 2,150,487
18 Egypt, Arab Rep 1,674,951
19 Australia 1,626,940
20 Poland 1,625,236

Source World Development Indicators database, World Bank, 1 July 2023

2024). Figure 6.1 demonstrates the dynamics of Russia’s GDP growth

over the last two decades.
The Bank of Russia report also showed that the current account surplus
reached a record high of $227 billion in 2022, compared to $122 billion
in 2021 (See Fig. 6.2). While imports collapsed in March-June by over
one-third, they bounced back, registering $22.9 billion in December—a
return to pre-invasion numbers. Overall, the value of goods and services
exports rose 14% year-on-year ($78 billion) while imports decreased by
9% year-on-year ($34 billion) (Bank of Russia, 2022, p. 2). The general
decrease in manufacturing output has been relatively modest as well.
During January–February 2023, manufacturing saw only a 1.7% year-
on-year decline. Several sectors that supply products for the war effort,
such as metallurgy, textiles, and medical goods, have experienced signif-
icant production growth. Russia possesses abundant resources and the
capacity to sustain the production of relatively straightforward manu-
factured items, even with stringent trade limitations (Korhonen, 2023).
 6 ASSESSING SANCTIONS EFFECTIVENESS 111

2.50

2.00
Trillions, USD

1.50

1.00

0.50

0.00
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
1991-2022

Fig. 6.1 Russia’s GDP, 1991–2022 (Source World Bank [2022])

Sanctions have also given Russia a reason to implement “a strict policy of

trade protection, industrial policy, and capital controls” that would not
have been possible otherwise (Galbraith, 2023, p. 3).
The imposition of restrictions on companies and individuals,
conducting business with Russia, has been accompanied by a departure of

Fig. 6.2 Russia’s current account and trade balance, 2018–2023, Billions of
US dollars (Source Russia’s Ministry of Finance)
112 A. BOROZNA AND L. V. KOCHTCHEEVA

private companies from Russia. Shell, BP, Bosch, Apple, GE, McDonald’s,
Mastercard, and Visa, among others, have exited, suspended, or scaled
back operations in Russia. Some companies announced moral reasons for
their withdrawal; however, other actors may follow the “over-compliance”
principle with sanctions, as some companies reason that the cost of
handling legal risks associated with sanctions outweighs the advantages
of conducting business with Russia (Chachko & Heath, 2022).
Research by Arapova and Balakhonova (2023) shows that in the face
of sanctions, companies take steps to protect themselves from the possi-
bility of unintentional violations, which leads them to over-implement the
sanctions, subject their counterparties to rigorous due diligence checks,
distance themselves from them as much as possible, and restrict their
operations beyond what the regulatory authorities require. Companies
also employ this strategy to mitigate the risk of restrictive measures that
may be imposed quickly by regulatory authorities if geopolitical tensions
escalate. The study of the behavior of foreign companies by Sonnen-
feld et al. (2022) demonstrates that Russia has experienced a significant
loss of companies, which represent around 40% of the country’s GDP,
reversing almost all of the foreign investment from the past three decades
and contributing to a massive exodus of capital and people, which has
significantly weakened the country’s economic foundation (See Fig. 6.3).
Sonnenfeld and Tien (2023) even declared on the exodus of companies
that “the world economy no longer needs Russia.”
In terms of the cost for the target and the sender, Swiss bank UBS’
Global Wealth Report 2023 demonstrated that Russians became more
prosperous during the time of sanctions in 2022–2023, while the US and
Europe lost trillions of dollars in private wealth (Tan, 2023). According
to a UBS report, Russia’s total wealth grew by $600 billion in 2022,
adding 56,000 new Russian millionaires (Glover, 2023). From February
2022 till August 2023, the European Union launched 11 rounds of sanc-
tions against Russia to pressure the Kremlin into ending the war. The US
also has imposed sweeping sanctions against Russia. However, despite the
depth and extent of the sanctions, Russia’s economy proved to be resilient
and even booming as the Kremlin has boosted the production of military
equipment, raised salaries, pensions, and other benefits for people who
are not well-off, among other subsidies (Tan, 2023).
Sanctions affected various sectors of the Russian economy unevenly.
The Russian information technology (IT) sector, business services, and
financial sectors were more exposed than anticipated. Conversely, the
 6 ASSESSING SANCTIONS EFFECTIVENESS 113

Iraland 1.0%
1.0%
Australia 1.1%
1.4%
Norway 1.5%
1.5%
Spain 1.6%
1.8%
Countries

Denmark 2.7%
3.1%
Poland 3.2%
3.4%
Switzerland 3.4%
3.9%
Japan 4.7%
4.8%
Germany 7.8%
10.6%
U.S. 32.0%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%
Percent

Fig. 6.3 Companies leaving Russia by country, percent of total (Source Yale
Chief Executive Leadership Institute, As of July 2023; Note The Figure includes
only companies that are 1% or above of total)

natural resources (power and mining) sector was relatively stable, as the
likelihood of substituting companies from countries that are hostile to
Russia for those from partner countries is substantially higher.

6.1.1 Foreign Trade

Russia’s foreign trade in 2022 increased by 8.1% year-on-year and reached
$850.5 billion (Larina, 2023). The dynamics of Russia’s exports and
imports showed varying outcomes in 2022. According to the data
released in early March of 2023 by the Russian Federal Customs Service,
Russia’s commodity exports set a record in the country’s history by rising
19.9% and reaching $591.5 billion, and the trade surplus in goods also
turned out to be a record at $332.4 billion (Romanova, 2023). The main
factors for export growth in 2022 were goods that were not subject to
sanctions or came under restrictions at the end of 2022, like crude oil
(Tkachev et al., 2023). Russia’s exports increased by 14% in monetary
terms, making up 2.1% of global exports and ranking 15th on the list.
In 2022, due to sanctions, imports decreased by 23% and dropped to
the 31st position in the global ranking, reaching a level comparable to
114 A. BOROZNA AND L. V. KOCHTCHEEVA

2016 (Shkolyar, 2023). Restrictive measures primarily harmed the abso-

lute volumes of imports, while exports in monetary terms increased even
more compared to the previous year’s figures.
Russia’s nickel exports increased 2.9 times to $5.79 billion in 2022.
European Union countries imported nickel and products made from it
from Russia, amounting to e3.2 billion, compared to e2.1 billion the
previous year. In comparison, the United States imported $342 million
worth, compared to $159 million in 2021 (Tkachev et al., 2023). Food
products and fertilizers also avoided Western trade sanctions. According
to the Federal Customs Service, the export of food products and agricul-
tural raw materials from Russia increased by almost 15% in 2022, reaching
$41.3 billion (See Fig. 6.4). Fertilizer shipments grew by 54% to $19.3
billion. Notwithstanding the sanctions, Russia’s export of mineral fuels
increased by 43% in the previous year, reaching $383.7 billion, or 65% of
the total exports (See Fig. 6.5) (Romanova, 2023).
The fluctuation in oil and gas prices, Russia’s primary export commodi-
ties, significantly influences the trade balance results. While in 2022,
Russia experienced record oil and gas revenues, in 2023, export revenues
were decreasing as trading conditions for Russia worsen because oil prices
were falling. Western sanctions, gradually introduced in the previous year,
are starting to take effect (Shkolyar, 2023). Russian exports to the markets

200 190
180
160
140
120
Percent

100
80
54.3
60
42.8
40
16.7 15.2 14.8
20 8.8
0
Nickel and Fertilizer Mineral fuel Copper and Wood mass Food Products from
nickel copper black metals
products products

Fig. 6.4 Russian products that show largest export growth, compared to 2021,
% (Source RF Federal Customs Service and RBC)
 6 ASSESSING SANCTIONS EFFECTIVENESS 115

450
387.7
400

350

300
$ US, Billion

250

200

150

100
41.3
50 19.3
5.8 7.1 1.6 4.3
0
Nickel and Fertilizer Mineral Copper and Wood mass Food Products
nickel fuel copper from black
products products metals

Fig. 6.5 Russian products that show largest export growth in 2022, USD
billions (Source RF Federal Customs Service and RBC)

of “unfriendly” countries demonstrate a relatively synchronous decrease

throughout the year. In terms of individual countries during the end
of 2022, the leader in reduction was the United Kingdom, which has
practically ceased imports of goods from Russia (−98%), followed by
the United States (−72%), with a smaller decrease seen in South Korea
(−46%), the European Union (−41%), and Japan (−40%) (Knobel &
Firanchuk, 2023).
The import of goods into Russia in 2022 decreased by 11.7% to
$259 billion, while exports increased by almost 20%, reaching $592
billion. Thus, the overall trade account balance reached $332 billion (1.7
times higher than in 2021) (See Fig. 6.6). The import of nuclear reac-
tors, boilers, machinery, and mechanical devices decreased by 13.1% to
$47.3 billion (more than 18% of total imports), electrical machinery and
equipment decreased by 19.1% to $29.8 billion, and ground transporta-
tion, excluding railways and trams, decreased by 41.5% to $15.7 billion
(Romanova, 2023). There is a notable decline in Russian imports from
the European Union across all categories and directions, which could be
attributed not only to sanctions but also to the withdrawal of European
116 A. BOROZNA AND L. V. KOCHTCHEEVA

companies from the Russian market. Russia’s imports from the US also
drastically fell by 73% to $1.7 billion (Shkolyar, 2023).
Sanctions resulted in significant shifts among Russia’s leading foreign
trade partners in 2022, with China, Turkey, and Belarus becoming main
trading partners. Trade with China increased by 28% compared to the
previous year, with Turkey by 84% and Belarus by 10%. However, the
trade decreased 23% with Germany and 0.1% with the Netherlands
(Romanova, 2023). Moreover, in response to the reduction in Russia’s
trade with the United States and the European Union, China’s share
exceeded 50% in 30 product groups of Russian imports. The trade
between Russia and China in 2022 increased by $50 billion, surpassing
$190 billion. Russia redirected 9% of its exports from European markets
to China and increased its purchases of goods previously supplied by
Western suppliers by an additional 17%. China’s share in Russian exports
reached 22.8%, while in imports, it reached 41.7% (Prokopenko, 2023;
Shkolyar, 2023). The trade between Russia and China reached a new
record of $240 billion in 2023 (Reuters, 2024).

0
Ground Furniture Pearls, Leather Ores and Glass and Clothing Equipment
transport and bedding gems, products ash glass and
-5
(excluding precious products electronics
railway) metals
-10

-15

-20
Percent

-19
-21.5 -20.8
-25
-26
-27
-30 -28.8

-32.2
-35

-40

-41.5
-45

Fig. 6.6 Imported products that show the largest decline in 2022, compared
to 2021, % (Source RF Federal Customs Service and RBC)
 6 ASSESSING SANCTIONS EFFECTIVENESS 117

The decrease in the share of the Netherlands, which previously served

as a hub for Russian re-export operations, was largely offset by the growth
in trade with Turkey. In just one year, Turkey’s share of Russian exports
increased by 6.3%, and the export of goods from Turkey to Russia grew
by 62% compared to the previous year. By the end of 2022, the trade
between Russia and the CIS countries increased by 6.8% compared to the
same period in 2021 and reached 72.6 billion dollars (Shkolyar, 2023).
Trade with Latin America also experienced a 12.5% decline in 2022
due to the sanctions, especially the fear by some Latin American coun-
tries of the secondary sanctions and worsening logistics. The share of this
region in Russia’s exports was 2.3%, while in imports, it was 2.4%. The
countries in the region were divided into those who increased their trade
with Russia and those who reduced it. It is worth mentioning that trade
with Brazil increased by 38% in terms of exports and 24% in terms of
imports, and trade with Paraguay saw an even more significant increase,
with exports rising by 335% and imports by 133% (Shkolyar, 2023).
The impact of sanctions on Russia’s industries is uneven. While energy,
aviation, transportation, and retail industries are among the most affected,
some industries either did not suffer from sanctions or performed better
than before the sanctions regime. For example, Russia’s diamond trader,
Alrosa, has sustained consistent sales despite the U.S. sanctions, which
the European Union has not reciprocated. As a result, some G7 countries
have proposed more stringent sanctions on the Russian diamond trade
(Acharya, 2023).

6.1.2 Energy Industry

Sanctions achieved one main economic goal pursued by the United
States—the share of Russian pipeline gas in European imports fell from
40–45 percent to 7–8% (Grozovski, 2023). However, despite the decline
in the volume of exported gas, Russian government revenues from oil
and gas were at their peak (in January–October 2022); they were 34%
higher than in 2021, leading to a record net profit of 2.5 trillion rubles
for Gazprom in the first half of 2022, which is equivalent of the revenue
for two preceding years (Grozovski, 2023).
Implementing the price ceiling on Russian gas has achieved its goal
of weakening the Russian economy—Russia’s oil revenues have decreased
by approximately fifty percent in September 2023 compared to the same
period of the previous year (Malsin, 2023). However, due to Russia’s
118 A. BOROZNA AND L. V. KOCHTCHEEVA

increased use of a “ghost fleet” of unregistered vessels, the net result is

that, despite the lower prices, Russia has been able to increase its presence
in some of the largest oil markets in the world, thus altering the pattern
of global energy supply.
The primary strategy in the energy industry was redirecting the flow of
Russian oil and gas to the East. The R.F. Government has been pursuing
and strengthening cooperation with Russia’s allies and seeking new part-
ners. According to Alexander Novak (2023), the Deputy Chairman of
the Russian Federation Government, in 2023, a significant shift occurred
in Russia’s energy exports. He mentioned that in May 2022, the volume
of oil shipments from Russia to Asian countries exceeded, for the first
time, the quantities directed to Europe. By the end of 2022, there was a
substantial increase in oil exports to friendly nations, with a growth of 76%
year-on-year. Oil product exports also saw a 20% year-on-year increase,
and both pipeline gas and liquefied natural gas (LNG) exports grew by
8% year-on-year. In total, nearly 40 million tons of oil and oil prod-
ucts were redirected from Western markets to Eastern markets over the
previous year (Novak, 2023). Significant efforts of the Russian govern-
ment are directed towards further developing the energy infrastructure
in the Asia–Pacific region, increasing the “friendly” fleet, and establishing
financial infrastructure, including payment and insurance systems. At the
beginning of 2023, the Russian government also changed the principle of
calculating oil taxes, gradually reducing the allowable discount for Urals
relative to the price of the global benchmark Brent (Smirnov, 2023).
On December 5, 2022, G7 member states and the E.U. established
a price ceiling on the sale of Russian oil and petroleum products,
which took effect on February 5, 2023. Russia’s flagship brand of crude
oil—Urals—started selling at significant discounts to the international
benchmark. Nevertheless, the Russian economy has withstood the blow
to the oil and gas industry better than Western analysts had predicted
(Smith, 2023). The sanctions have affected but not stopped Russian sales
of oil and gas. Oil production remained at approximately 10 million
barrels daily in early 2023 (Trading Economics, 2023). By the end of
2022, many Western countries had significantly diminished or fully termi-
nated imports of Russian oil, gas, and coal (Smirnov, 2023). As a result,
Russia’s fiscal revenues from oil operations plunged 48% y-o-y in January
to $4.2 billion, while export revenues dropped 36% to $13 billion (IEA,
2023a, 2023b, 2023c, 2023d).
 6 ASSESSING SANCTIONS EFFECTIVENESS 119

A drop in energy revenues combined with military expenditures

produced a $25 billion budget deficit in Russia in January 2023 (Fishman,
2023). However, the G7 price cap on Russian oil is not fully enforced.
Russian oil exports to China through Pacific Ocean ports do not comply
with the G7 price cap, with an average price after embargo averaging $82
per barrel, and 50% of the oil shipped via Sovcomflot and shadow fleet are
not sanctionable (Babina et al., 2023, p. 2). Lack of transparency in the
shipping market allows evasion of the price cap and creates an opportunity
to channel a part of oil revenues to shadow accounts.
According to the July 2023 report by the International Energy Agency
(IEA, 2023a, 2023b, 2023c, 2023d), for the first half of 2023, Russia’s
oil exports have decreased by more than one and a half times compared
to the first half of 2022, from $120.4 billion to $77.4 billion (Shaban,
2023). However, domestic production in the country may remain at the
same level since there is a seasonal increase in domestic demand (Smirnov,
2023). In August of 2023, the IEA reported that in July, Russian oil
exports remained at about 7.3 million barrels a day, with China and India
being the primary buyers of crude oil and accounting for 80% of Russian
shipments. The Agency estimates that due to increasing oil prices and
narrowing discounts for Russian grades, Russia’s export revenues were up
by $2.5 billion to $15.3 billion, yet $4.1 billion below July 2022. Simi-
larly, according to the R.F. Ministry of Finance, oil and gas revenues for
January to June 2023 decreased by 47%, mainly due to a high comparison
base from the previous year, a decrease in Urals crude oil price quotes, a
decrease in prices, and a reduction in the volume of natural gas exports.
The Ministry added that the monthly dynamics of oil and gas revenues are
gradually stabilizing and returning to a “steady trajectory” corresponding
to their baseline level.
Even though sanctions on the Russian energy sector have decreased
profits for Russia, it has also made energy trade more costly for Europe.
Russia is finding ways to work around the oil price cap, which decreases
the sanctions’ effectiveness. Moreover, in late September 2023, Treasury
Secretary Janet Yellen noted that “recent market prices for Russian oil
suggest that the Group of Seven’s price cap is no longer working as
hoped” (Condon & Flatley, 2023).
Russia has signed a tender agreement to sell a significant portion of
its oil production to a consortium of previously unknown oil traders,
securing a steady flow of funds from its vital energy sector. Rosneft Oil,
a subsidiary of the Russian state-controlled oil company Rosneft, has
120 A. BOROZNA AND L. V. KOCHTCHEEVA

concluded in the summer of 2023 one of its most extensive procurement

contracts in recent years. The contracts are valid for up to twelve months
and relate to crude oil and refined products. The outcome confirms the
role of a group of emerging trading houses as intermediaries for Russian
oil to access new markets. These firms emerged as significant players in
the aftermath of Russia’s invasion of Ukraine, taking the place of the
world’s leading commodities merchants, such as Trafigura, Vitol, and
Glencore, who have all pulled out of Russia. Bellatrix Energy, incorpo-
rated in Hong Kong, emerged as the largest winner of the tender. Trading
group Amur and Tejarinaft, with registered offices in the UAE, were also
the major beneficiaries of the tender, taking in large volumes of Russian
oil. Since the implementation of sanctions on Russian oil in December, all
three trading houses have been actively exporting crude and refined prod-
ucts, according to Russia’s customs data and industry sources (Hirtenstein
et al., 2023).

6.1.3 Defense Industry

Despite the severity of economic sanctions levied by Western nations on
Russia, the country managed to increase the production of certain mili-
tary equipment by more than tenfold to provide its army in Ukraine
with a significant boost in the supply of missiles, drones, combat vehi-
cles, and artillery (“Russia ramps up,” 2023). President Vladimir Putin
issued directives to escalate production to guarantee the realization of
Moscow’s objectives in Ukraine (Trevelyan & Cordell, 2022). To circum-
vent the Western sanctions and export controls on sensitive technologies
that can be used in the defense industry, Russia has employed various
subversive tactics by utilizing its intelligence services and the Ministry
of Defense to operate covert networks. In less than a year since the
commencement of the conflict, Russia has managed to reestablish trade
in crucial components by channeling them through nations like Armenia
and Turkey. Efforts by U.S. and European regulators to collaborate to
restrict the export of these components to Russia have faced challenges, as
they have struggled to effectively prevent the flow of these goods passing
through countries with connections to Moscow. Russia has demonstrated
a swift and adaptive response in securing the necessary supplies and
components for its defense production needs. Presently, Russian author-
ities have shifted their economic focus toward defense manufacturing.
Thanks to revenues generated from high energy prices, Russia’s security
 6 ASSESSING SANCTIONS EFFECTIVENESS 121

services and Ministry of Defense have clandestinely acquired microelec-

tronics and other Western materials essential for producing cruise missiles
and precision-guided weaponry (Barnes et al., 2023). As a result, the
military production sector has not only rebounded but has experienced
significant growth (Luzin & Prokopenko, 2023; Rosstat, 2023).
Although Moscow has successfully acquired processors and circuit
boards, American officials have highlighted that Russia is encountering a
shortage of rocket propellant and basic explosives, which will likely limit
Moscow’s ability to ramp up the production of ammunition, missiles,
or bombs. The intensified military production in Russia has resulted in
significant repercussions for the economy, especially as interest rates have
surged. Russia has redirected almost a third of its commercial economy
toward arms production (Barnes et al., 2023). Despite these obsta-
cles, Russia’s production volumes for various types of weaponry have
experienced remarkable growth, ranging from two to tenfold increases.
In some specific categories of military hardware, the output has seen
extraordinary increase, surging “by multiple tens of times,” according
to Bekhan Ozdoev, the head of the armaments division within Rostec,
the state-owned Russian corporation overseeing a substantial portion
of the weapons industry (“Russia ramps up,” 2023). This notable
surge in production has been observed in the manufacturing of tanks,
armored vehicles, rocket launchers, artillery pieces, the Iskander short-
range ballistic missile system, the Pantsir medium-range surface-to-air
missile system, and the hypersonic Kinzhal missile. Rostec, subject to
Western sanctions, is under the leadership of Sergei Chemezov, a close
associate of President Putin. It exercises control over 800 Russian enti-
ties involved in both civilian and defense sectors, solidifying its position
as Russia’s largest arms producer (“Russia ramps up,” 2023). The U.S.
Treasury identifies Rostec as “the cornerstone of Russia’s defense, indus-
trial, technology, and manufacturing sectors” (U.S. Treasury, 2022, June
28).

6.1.4 Banking and Finance

The sanctions had an immediate impact on the Russian financial markets,
causing suspension of financial sanctions, including the suspension of
Central and commercial bank accounts and assets, as well as limitations
on capital market access and payment options. By March 2022, the impo-
sition of sanctions triggered significant market uncertainty, resulting in a
122 A. BOROZNA AND L. V. KOCHTCHEEVA

depreciation of the ruble’s value. This depreciation was accompanied by

a surge in inflation within Russia, and the dollar’s value increased by 60%
against the ruble. In order to stabilize the exchange rate and mitigate
inflation, Russian financial authorities took measures, including restricting
current and capital transactions and abstaining from converting the ruble
(Aleksashenko, 2023).
According to Rosstat (2023), the average annual inflation in Russia
in 2022 was 13.75%, with the main peaks occurring in February and
March. In February, the increase in prices was 9.15% on an annual basis,
but in March, it sharply accelerated to 16.69% (Boyko, 2023). The offi-
cial forecast of Russia’s Ministry of Economic Development assumed
inflation of 12.4% by the end of the year. However, in December, the
Economic Minister, Reshetnikov, noted that it could be even lower, in
the range of 12.0–12.4%. Reshetnikov attributed the lower-than-expected
price increase to the effort at stabilizing prices in the agricultural sector,
an excellent harvest, the development of new distribution avenues, the
strong ruble, combined with a rapid recovery of imports bypassing sanc-
tions and logistic issues (Migunov, 2023). Such dynamics were facilitated
by measures taken by the Bank of Russia, especially the timely raising of
the key interest rate up to 20% and lowering it in response to panic, as well
as the strengthening of the ruble exchange rate, which led to a decrease in
import prices, especially for non-food products such as household appli-
ances and cars. Overall, the price dynamics at the end of the year turned
out to be better than most experts had predicted in the first half of the
year (Boyko, 2023). The average inflation for 2023, was recorded at 7.4%
(Garver, 2024).
In 2023, however, sanctions were not the only factor in the change
in the ruble exchange rate. Russia has been in gradual ruble depreciation
since the end of December last year, but there has been no overall infla-
tion acceleration. Until June 2023, inflation averaged around 4%, taking
into account seasonal and calendar factors (Migunov, 2023). By August,
inflation increased to 4.3%, and the prices, especially of imported food
and non-food products, started rising. The Director of the Institute of
Economic Forecasting at the Russian Academy of Sciences, Alexander
Shirov, noted that the weakening exchange rate of the ruble is influencing
price growth (Vinogradova & Galcheva, 2023). Sanctions, however, are
just one of the factors influencing this dynamic. Other factors include
 6 ASSESSING SANCTIONS EFFECTIVENESS 123

energy prices, the policies of the Bank of Russia, and the general macroe-
conomic situation, which put pressure on the currency in the long
term.
The ruble has depreciated significantly since the beginning of the year,
currently trading at a value of ₱90 per dollar and ₱100 per euro. This
depreciation is largely attributed to macroeconomic fundamentals, with
significantly lower foreign currency inflows due to decreased exports.
This weaker ruble increases the risk of inflationary pressures as the cost
of imported goods increases. Russia’s collection of oil and gas revenues
remained low in the first six months of 2023 (a decline of 47% compared
to the first half of 2022). However, other revenues have increased, and the
authorities have been able to reduce spending (Kyiv School of Economics
2023, July 17). The Bank of Russia (2023) forecasts inflation for the year
to be 5–6.5%. Against rising prices, the regulator has already begun tight-
ening monetary policy by raising the key interest rate in July from 7.5%
to 8.5% (The Bank of Russia, 2023).
It has always been important for Russian banks to understand sanctions
risks to avoid problems with foreign correspondent banks. Currently, even
medium-sized businesses have to take into account new risks. Exporters
and importers have to calculate in advance with which jurisdictions, part-
ners, and currency it is better to conduct business, how to maintain
relationships with foreign banks and avoid the risks of blocked payments,
and how to minimize the risk of losses during foreign trade operations.
Russian business has been adapting to restrictions since 2014 and some-
what mastered methods of countering sanctions by proactively changing
the structure of ownership in the companies, reducing the share of owners
at risk below the threshold of 50%, bringing corporate chains into Russian
jurisdiction, and reducing direct international presence (Gerasimov et al.,
2023). The swirl of 2022 sanctions meant the departure from Russia of
foreign compliance solutions providers, which large Russian banks and
firms have used in past years for risk assessment. While the departure of
foreign compliance consultants turned out to be painful because their
systems were often integrated into the information systems of Russian
banks and companies, Russian suppliers were able to replace foreigners
quickly. For instance, the use of the popular Russian analog of interna-
tional systems, the X-Compliance, has increased tremendously (Gerasimov
et al., 2023).
Additionally, since 2014, Russia has been actively exploring alternatives
to the euro and the dollar. Given its status as the world’s second-largest
124 A. BOROZNA AND L. V. KOCHTCHEEVA

gold producer, boosting the country’s gold reserves has emerged as

an effective strategy for mitigating the consequences of sanctions and
addressing related risks. In 2022, Russia significantly increased its gold
reserves, nearly tripling their size. Additionally, gold transfers from Russia
to China are estimated to have risen by 67%, with a 30% reduction in
price, during the same year (Ibadoghlu, 2023).
Capital flight remains a persistent challenge in Russia’s financial sector
that authorities have struggled to manage effectively. From the begin-
ning of its full-scale invasion of Ukraine in 2022 until June 2023, a
record-breaking $253 billion has been withdrawn from Russia (Center for
macroeconomic analysis and forecasting, 2023). The rate of capital flight
relative to GDP reached 13% in 2022, surpassing the previous record
of 11% observed during both the 2008 global financial crisis and after
Russia’s 2014 annexation of Crimea from Ukraine (“Russia loses record,”
2023). Over the preceding 13 years, the average rate of capital outflow
stood at 5% (“Ottok Kapitala is,” 2023).

6.1.5 Aviation and Automotive Sector

Among the many sectors targeted by the sanctions, the aviation sector is
one of the most affected by the allied export measures. After the inva-
sion, the major American and French aircraft manufacturers, Boeing and
Airbus, stopped providing Russia with new foreign aircraft and spare
parts (“Sanctioned Russian Aviation,” 2023). Russian airlines, including
Aeroflot, were compelled to dismantle aircraft to salvage spare parts. In
2021, approximately half of the components and technologies used in
Russia’s aircraft industry were sourced from foreign countries. More-
over, 95% of Russia’s air passengers were previously transported on planes
manufactured abroad. The inability to access imported parts may result in
a reduction in the size of the aircraft fleet as older planes are retired from
service. Russia has also been compelled to seek alternative suppliers for
critical components (U.S. Department of the Treasury, 2023).
Sanctions have harmed Russia’s capacity to maintain its existing aircraft
and to expand and mass-produce its advanced combat vehicles, such as
the Sukhoi Su-57, which rely on imported machinery and engines. In
the summer of 2022, it was reported that Russia had begun to remove
spare parts from passenger aircraft, which has caused several mechanical
issues in the domestic civil aircraft industry, which is already in a state of
disarray due to the presence of some overlap between components used
 6 ASSESSING SANCTIONS EFFECTIVENESS 125

for military aircraft and civilian aircraft (Martuscelli, 2022). Furthermore,

the Federal Aviation Administration (Rosaviatsia) has recently approved
the practice of aircraft cannibalization, which involves the reinstitution
of spare parts from aircraft that have been grounded from their orig-
inal airframe (Field, 2023). Furthermore, the implementation of sanctions
is likely to impede Russia’s ability to produce Next-Generation (NG)
combat vehicles, which will harm the military image of the Russian Air
Force, as well as Moscow’s ability to attract customers for domesti-
cally produced combat aircraft (Aronova, 2023; Bergmann et al., 2023;
“Sanctions-Hit Russia,” 2023).
The Russian aviation industry experienced several incidents at the
beginning of 2023. Concerns were previously expressed by experts and
professionals regarding flight safety in 2022, a year marked by over 130
incidents, including 28 airplane crashes (“Sanctioned Russian aviation,”
2023). After the imposition of sanctions, nine aviation firms suspended
their flight operations due to safety concerns due to the shortage of
spare parts. However, within a year and a half following the initia-
tion of sanctions (from May 2022 to August 2023), Russian air carriers
procured components exceeding a value of $1.2 billion to maintain their
predominantly Western aircraft fleet. Their operations have almost fully
recovered to pre-war levels, except for seventy-five aircraft repossessed by
lessors (Derber, 2023). Overall, nine airlines halted flights in Russia in
2022, with Rosaviatsiya suspending their main document—the operator
certificate–for four of them (“Minus devyat’ za bortom,” 2023).
Another most impacted by the Western sanctions sector of the Russian
economy is the automotive sector. Some of the most well-known foreign
car and parts manufacturers have announced partial or complete cessation
of their activities in Russia, which led to a significant increase in prices for
foreign-made cars already in the country, as well as disruptions in new
deliveries or their complete cancellation. It has also led to higher costs
for car maintenance and the search for alternative ways to obtain spare
parts. The automotive sector employs at least four million Russians, and
the situation has affected the labor market in the automotive industry, as
the departure of foreign companies and the closure of their facilities have
resulted in a significant number of employees in the automotive industry
becoming unemployed. The income level of those who have retained their
jobs has also significantly decreased (Belov & Karpova, 2022; Dzhuraev
et al., 2022). Production in the automotive sector slumped by nearly 70%
in 2022, partly due to the effect of export controls and financial sanctions,
126 A. BOROZNA AND L. V. KOCHTCHEEVA

which cut off Russia’s access to critical technology products needed in

automotive manufacturing (Fishman, 2023; Milov, 2023).
Foreign car manufacturers, except Chinese and Iranian ones, have
left Russia. A good example is the situation with the French Renault,
which has been receiving preferential treatment from the Russian author-
ities, making the same profits as in France, and whose cars have been
highly liked by many in Russia. Renault left Russia among the very first
exiting companies leaving behind their factories and hardware, but taking
with them all the software and technological know-how. Renault aban-
doned numerous Renault owners without warranty and service support,
disrupting parts supplies to Russia and shifting all the problems onto
the shoulders of Avto VAZ. Volkswagen, Mercedes-Benz, and Skoda
behaved similarly by closing production, suspending service, and stopping
parts supplies. Toyota halted production and, till the end of 2022, has
been announcing that it was to be searching for ways to address serious
disruptions in logistics chains and finally closed facilities in Russia and
is considering relocating them to Kazakhstan (Rozkin, 2023; Belov &
Karpova, 2022).
To mitigate the sanctions in automobile sector, in May of 2022, a
number of parallel imports took effect, which included, among others,
Chevrolet, Nissan, and Land Rover. If by the end of 2022, the share of
cars imported through parallel imports barely exceeded 5% of the sales
of all new cars in Russia, it is estimated that in 2023, this number is at
20% (Morzharetto, 2023). Many companies are trying to undermine the
restrictions imposed on their business, evading them, at least partially.
For instance, although BMW and Mazda closed their production, it has
retained warranty service and spare parts supply. The activities of the
Korean brands Kia, Hyundai, and Genesis are surrounded by uncertainty.
Production seems to have stopped, but the factories in St. Petersburg and
Kaliningrad continue to operate, and service has not been interrupted
(Rozkin, 2023; Belov & Karpova, 2022).
The 11th package of sanctions by the EU makes the situation even
more concerning for the Russian automotive industry by banning exports
to Russia of certain categories of vehicles and specific types of spare parts,
as well as affecting the rights to use intellectual property, including by
third countries friendly to Russia (European Commission, 2023). As the
difficulties in the auto market are growing and the number of offerings
from foreign manufacturers continues to decrease, there is an increasing
demand for Chinese and domestic cars, whose market share in August
 6 ASSESSING SANCTIONS EFFECTIVENESS 127

2022 rose to 25.9%. The vacant market niche is being filled by import
substitution. However, a growing concern is to what extent domestic
and Chinese automobiles can meet the growing needs of Russian citizens.
The production of passenger cars by AvtoVAZ in July of 2022 amounted
to 19.4 thousand units, which is 80.6% less than in the same month in
2021 but 44.5% more than in June of 2022 (Belov & Karpova, 2022). In
the first five months of 2023, 155,000 passenger cars were produced in
Russia, which is 42% lower than the figure for last year. However, in May,
42,000 cars were produced, which is 11 times more than the previous
year. This result is attributed to the low base of the previous year when
an all-time low in the history of the Russian automotive industry was
recorded, caused by the shutdown of the vast majority of car factories
due to a shortage of components resulting from disruptions in the logis-
tics chains (Autostat, 2023). In general, the restructuring of the Russian
automotive market will continue in 2023 with government support. The
state is trying to support domestic manufacturers while also saturating the
market with affordable models (Morzharetto, 2023). An important ques-
tion is how well the offered models will align with the purchasing power,
needs, and wishes of Russians.

6.1.6 Information Technology (IT) Sector

Russia’s access to advanced information technologies has been restricted
by the sanctions and export controls imposed by the United States,
the European Union, and their allies (Treasury Targets, 2022). Addi-
tionally, the sanctions target a number of Russia’s major producers
and research centers, effectively halting the nation’s development and
preventing it from working with the global scientific community on
emerging technology (Epifanova, 2023). Russia’s IT industry was one of
the contributors to the country’s GDP growth between 2015 and 2021,
helping it to reach 3.7 trillion rubles ($47.8 billion) in 2021, even though
it only represented 3.2 percent of the GDP overall (Borak, 2023).
Following the imposition of sanctions, imports of many crucial goods
for Russia’s information technology industry quickly decreased, including
deliveries by all of the major Western IT companies and other interna-
tional businesses. While client computer processors and other component
parts are still widely accessible on the Russian market, locating server
hardware has gotten much more challenging (TAdviser, 2023). In the
period 2017–2022, Russia purchased an average of US$163 million
128 A. BOROZNA AND L. V. KOCHTCHEEVA

worth of Advanced Chips and Integrated Circuits from the European

Union, the United States, Japan, and the United Kingdom. However,
this number decreased to approximately US$60 million in 2022. This
decrease was largely attributed to shipments of these high-tech compo-
nents from Eastern Europe, Central Asia, Turkey, the United Arab
Emirates, and a few other economies. The same patterns can be observed
across a wide range of product categories. However, they are particu-
larly pronounced when it comes to Advanced Chip and Integrated Circuit
products that can be used in military operations (Nardelli, 2023). Some
analysts doubt that the Russian government’s parallel import program,
which permits Russian retailers to import goods from overseas without
the consent of trademark owners, would be able to address the nation’s
mounting computer power shortage (Urusov, 2023).
In the long run, Russian manufacturers might be faced with a serious
challenge. There are only two processor companies in Russia that produce
chips for both client devices and servers. The first is MCST, which utilizes
its own Elbrus processor architecture as well as the international SPARC
architecture developed by Sun Microsystems in the 1980s. The second
Russian company is Baikal Electronics, which manufactures processors
based on the ARM architecture. Baikal-M series is specifically designed
for client devices, while the Baikal-S series is intended for servers. The
imposition of Western sanctions has significantly impacted these Russian
processor manufacturers, as both MCST and Baikal Electronics heavily
relied on Taiwan Semiconductor Manufacturing Company (TSMC) and
its factory located in Hsinchu, Taiwan, where they produced the majority
of their chips using 28-nanometer technology (Urusov, 2023). Even
though some enterprises from the Soviet era still exist, such as Mikron
Group, their capabilities are restricted. To put it briefly, Russia currently
lacks the production capacity necessary to produce high-performance,
modern desktop processors that can rival AMD and Intel’s server proces-
sors. Only microcontrollers, specialized processors for the military and
industry, and a few other items can be produced by Russian semicon-
ductor factories (Epifanova, 2023). The fact that chips were produced
using machinery manufactured in other countries is one of the key issues.
The sanctions imposed by the West have targeted this weakness.
Numerous international IT companies have declared that they will no
longer be doing business with Russia after openly denouncing Russia’s
aggression against Ukraine. However, it’s unclear exactly how many busi-
nesses have given up on conducting business in Russia. As of October
 6 ASSESSING SANCTIONS EFFECTIVENESS 129

2023, only 13 out of 196 foreign IT companies have completely left

Russia, meaning they have sold at least a portion of their business to a
local partner and left the market, according to “Leave Russia,” a project
associated with the Kyiv School of Economics (“Leave-Russia,” 2023).
This represents only about 7% of all foreign IT companies. Of these
businesses, 55% have stopped doing business in Russia or have curtailed
operations there. Fifteen percent of businesses are still operating but have
scaled back new projects or put investments on hold, while another 22%
have carried on as usual. However, the biggest threat to the IT industry
in Russia is not sanctions but rather a significant exodus of IT personnel
from Russia in order to evade military mobilization after the start of
the war in Ukraine. According to Russian government statistics, about
100,000 IT professionals, or about 10% of the country’s tech workforce,
left in 2022 (Chebakova et al., 2022).

6.1.7 Retail
The impact of sanctions was also observed in the annual contraction of
retail sales by 10% in September 2022 compared to 2021 and annu-
alized inflation averaging 13.7% (Milov, 2022). The decline in retail
trade in Russia in 2022 was the most significant since 2015. According
to Rosstat data (2023), retail decreased by 10.5% in December 2022
compared to December 2021. For the entire year of 2022, the decline
was 6.7%. Russian consumers cut back on unnecessary expenses and focus
on building up savings for the future. The economic indicators at the
beginning of 2023 show an effect of the 2022 sanctions. January retail
sales were down 6.6% year on year (“Table-Russia retail,” 2023). Retail
turnover experienced a continuous decrease over 12 consecutive months
until March 2023, at which point it began to recover in April (“Russian
retail trade,” 2023).
Retail trade in Russia during the summer of 2023 has exceeded levels
not seen since the Western nations’ major expansion of Ukraine-related
sanctions in early 2022. Consumption of goods by the population in
the summer of 2023 has surpassed the pre-crisis levels of 2021. In
July 2023, the turnover of retail trade reached 4 trillion rubles ($41.6
billion), marking a 10.5% increase compared to July 2022 and a 1.2%
rise compared to July 2021, when adjusted for inflation (“Russian retail
trade,” 2023).
130 A. BOROZNA AND L. V. KOCHTCHEEVA

Fig. 6.7 Russia’s Retail Sales Growth, September 2022–August 2023 (Source
Rosstat and CEIC Data. www.ceicdata.com)

The September 2023 Rosstat data shows that retail and wholesale trade
indicators are growing at an accelerated pace. The recovery of the trade
sector was not hindered by sanctions or the departure of foreign compa-
nies from the market. In the second quarter of this year, Russia’s GDP
increased by 4.9%, the growth rate of the trade sector was 11%, with retail
trade increasing by 9% and wholesale trade increasing by 12.5% (Rosstat,
2023). The prerequisites for their recovery were an increase in consumer
activity, a result of Russians moving away from a savings-oriented behavior
model, and an increase in their incomes (“Torgovlya v Rossii,” 2023).
The retail trade for the first seven months of 2023 amounted to 25.7
trillion rubles. However, in July, the growth rate was already 10.5%, indi-
cating an acceleration in the recovery of the industry (See Fig. 6.7).
As for the structure of retail trade, 47% is attributed to food products,
including beverages and tobacco products, while non-food items account
for the remaining 53% (Torgovlya v Rossii, 2023). Another important
trend in retail trade is the rapid development of online sales. In July 2023,
online sales in annual terms increased by 1.5 times. As a result, their share
accounted for 10.2% of the total retail trade (“Torgolya v Rossii,” 2023).

6.1.8 Travel
In 2022, traveling abroad has turned into a real challenge for Russians
due to numerous sanctions, which caused closed airspace, high prices for
plane tickets, numerous canceled flights, difficulties with cash withdrawals,
 6 ASSESSING SANCTIONS EFFECTIVENESS 131

blocked bank cards, and many other problems that those who want to
vacation abroad had to deal with. Europe was the first to announce
the closure of airspace for Russian planes with the United States and
Canada following suit. In response, Rosaviatsia (the Federal Air Transport
Agency of Russia) (2022) closed the skies to airlines from 36 countries.
In accordance with Rostourism’s recommendation from March 2022,
Russians are advised to refrain from traveling to the countries that have
imposed sanctions against Russia (Pashkova, 2022). Additionally, foreign
lessors started recalling Russian airliners, and foreign insurance companies
began terminating contracts prematurely. To avoid losing their aircraft
completely, several major carriers, including Aeroflot, Pobeda, S7, and
Smartavia, had to cancel all international flights.
The restrictions on Russian bank cards abroad and the prohibition on
carrying more than $10,000 in cash out of Russia complicated travel
even further, especially in the early spring of 2022. The list of avail-
able destinations for Russians has been reduced to a minimum, and
tourists abroad were having many challenges paying for the services or
getting back home. The most favorable destinations became those where
Russian payment system “Mir” cards were accepted, such as Armenia,
Tajikistan, Belarus, Kazakhstan, Kyrgyzstan, Uzbekistan, South Ossetia,
and Abkhazia, as well as Vietnam and Turkey. Or the very expensive all-
inclusive packages to Turkey, Egypt, Tunisia, and the Maldives could be
purchased. According to experts from the Association of Tour Operators
of Russia (ATOR), the restrictions will hit Russians who are used to trav-
eling independently the hardest. In the words of Arthur Muradyan, the
head of the tour operator Space Travel, people who can afford to travel
are now traveling abroad primarily not for leisure but to “wait out uncer-
tain times for a month or two” or even to emigrate. He added: “People
will have nothing to travel for. No way to fly. And no means. Cards don’t
work, and the sale of foreign currency is prohibited” (ATOR, 2022). A
similar problem has been reported in the federal network of travel agen-
cies “1001 Tour,” where, according to their calculations, due to the new
restrictions, sales of tours abroad have decreased by 70 percent (“Iz-za
Sanktsiy Rossiyanam,” 2022).
Nevertheless, travel never stopped for the Russians, even in 2022 and
especially in 2023. Russian tourists made about 22.5 million trips abroad
compared to 19.2 million in 2021 (Koroleva, 2023). Turkey, Thailand,
the UAE, the Maldives, and Egypt saw the largest numbers of tourists.
For some countries, stimulating Russian tourism has become a way to
132 A. BOROZNA AND L. V. KOCHTCHEEVA

balance their economic ties with Russia. Other countries are easing travel
for Russians as well, including Sri Lanka, Morocco, India, Myanmar, and
Oman.
The year of 2022 also saw the stimulation of domestic tourism and the
service sector, as well as the growth of investments in the construction
sector. According to Rosstat (2023), construction had a growth of 5% in
2022. There was also an increase of 4.3% in the hotel activity and catering
establishments and an increase of 0.6% in the activity of information and
communication services. On September 8, 2023, the E.U. decided to
outdo its own sanctions regarding the travel for Russians. In a state-
ment accompanying its guidelines, the European Commission indicated
that Russians were temporarily prohibited from traveling to E.U. coun-
tries in personal cars and bringing certain personal belongings, including
smartphones and cosmetics (Jones, 2023a, 2023b). Within a few days of
the announcement, the entry for vehicles with Russian license plates has
been closed by all five E.U. countries that share borders with the Russian
territory, except for transit cases to the Kaliningrad Oblast. Countries
in Southern Europe, Bulgaria, and Greece, which are part of the E.U.,
and Norway, which is not an E.U. member, have not yet implemented
such restrictions and have not clarified their interpretation of E.U. sanc-
tions. For the time being, Russians can still travel through Georgia and
Turkey or from Georgia to Bulgaria by ferry without the risk of vehicle
and personal belongings confiscation (Lakstygal & Romanov, 2023).

6.2 Achievement of Stated Political Goals

Sanctions represent an economic method employed to achieve a polit-
ical objective, and their assessment should primarily consider the political
outcomes rather than the economic consequences (Siegel, 2022). The
combined Western sanctions against Russia can be viewed as the pinnacle
of the history of sanctions policy. However, sanctions on Russia proved
to be ineffective in terms of achieving their main political goal. They have
not changed the Russian political course, have not affected Moscow’s
determination to continue the war in Ukraine, and are unlikely to change
it in the foreseeable future. While the G7 countries have shown unity in
their backing of sanctions and in providing military aid to Ukraine, most
G20 nations, which are generally more reflective of global opinion, have
not supported the sanctions, thus subverting the efforts to isolate Russia.
 6 ASSESSING SANCTIONS EFFECTIVENESS 133

Considering that one of the political-military goals of sanctions is

to “undermine Russian military-industrial capacities and to ‘defund the
war’” (Galbraith, 2023, p. 2), they remain ineffective. The economic
sanctions imposed by Western nations did not significantly weaken
Russia’s economic capacity to the point where the Kremlin would be
unable to fund its military actions in Ukraine (Aleksashenko, 2023). Thus,
according to U.S. officials, the sanctions forced Russia to slow down
its missile and other weapons production for at least half a year at the
beginning of the war, in February 2022, by the end of 2022. However,
Moscow’s military-industrial manufacturing started to revive. The Russian
intelligence services and the Ministry of Defense operated sophisticated
networks to circumvent U.S. export controls by shipping key compo-
nents from the United States to other countries where they could be easily
shipped to Russia (Barnes et al., 2023).
Sanctions against Russia did not persuade the Kremlin to change its
political course and did not result in regime change. On the contrary,
2022 marked an increase in the consolidation of Russian society around
President Putin. According to the All-Russian Center for the Study of
Public Opinion (VCIOM, 2023), there is a rise in trust in the head of the
state compared to 2021 (78%, +13 percentage points) and approval of his
activities (75%, +15 percentage points). Another significant indicator is
the assessment of the legitimacy of the president’s work: the proportion of
those who believe that Vladimir Putin acts in the interests of the majority
grew to 73% in 2022 (an increase of 20 percentage points). The data from
the public opinion polls conducted by the Levada Center–an independent
think tank that is known to be associated with Russia’s opposition, has
similar data on how Russians view their President as demonstrated by
Fig. 6.8 (Levada Center, 2023),
There appears to be a mounting conviction within the Russian elite,
even among those who were deeply troubled by the invasion, that the
crucial interests, and possibly even the very existence, of the Russian
state are at risk in Ukraine (Lieven, 2022). The belief that a negative
economic impact on Russian oligarchs can influence the political direc-
tion of the Kremlin is rooted in outdated notions from the 1990s and
is not aligned with the current reality (Afontsev, 2022). Even during the
rebellion of the private military company “Wagner,” the political system
remained stable, the front was successfully defended, and both society and
key political players rallied around the president. This is the assessment
134 A. BOROZNA AND L. V. KOCHTCHEEVA

Fig. 6.8 President Putin’s Approval Rating, January 2010–September 2023

(Source Levada Center. https://www.levada.ru/en/ratings/)

made within the president’s administration at the end of the uprising by

Yevgeny Prigozhin (Vinokurov, 2023).
Individual sanctions have not caused significant rifts within the Russian
elite. Since the imposition of these sanctions, there have been few notable
efforts by elite figures connected to Putin’s Russia to distance them-
selves from the existing system. In the aftermath of the invasion, some of
Russia’s wealthiest individuals made efforts to express their opposition to
the war publicly. For instance, Oleg Tinkov, a billionaire banker, criticized
the SMO as a “reckless conflict” on Instagram, and another oligarch,
Mikhail Fridman, described the invasion of Ukraine as a “tragedy.” Some
of the sanctioned oligarchs, including Aven and Fridman, have chosen to
remain outside of Russia since the commencement of the war.
In contrast, others have renounced their Russian citizenship, including
Tinkov, Yuri Milner, and Nikolai Storonsky. Several oligarchs, including
the former owner of Chelsea Football Club, Roman Abramovich, have
offered their assistance, whether publicly or in private, in facilitating nego-
tiations between Ukraine and Western nations to avoid sanctions. Anatoly
Chubais resigned from his role as Russian climate envoy and left Russia.
 6 ASSESSING SANCTIONS EFFECTIVENESS 135

Alexey Kudrin, a long-time Putin ally, stepped down as head of the coun-
try’s Audit Chamber to take the helm at the Russian tech giant Yandex.
Both Chubais and Kudrin are considered softliners within the Kremlin,
and their influence waned as hardliners gained prominence within the
official hierarchy.
Consequently, their departure from the system may be motivated by
factors other than sanctions. Additionally, billionaire Alisher Usmanov
expressed his desire to step down from his membership in the bureau
of the board of the Russian Union of Industrialists and Entrepreneurs,
citing his retirement from active work (Snegovaya et al., 2023). Thus, the
individual sanctions have not visibly fractured the Kremlin system. While
Putin does not seem overly concerned about the possibility of disgrun-
tled oligarchs undermining his regime, he did issue a public warning in
March 2022, directed at those who own “villas in Miami or the French
Riviera” (Grove, 2022) following some public criticisms of the war by
certain oligarchs.
The continuing sanction pressure on Russia is likely destined to result
in further confrontation between the West and Russia. In the words of
the member of Russia’s Foreign and Defence Policy Council and the
former director of the Carnegie Moscow Center, Dmitry Trenin (2023):
“For the foreseeable future, the universe of Russia’s foreign policy will
remain divided into two large parts: the house of foes including Europe,
North America, and the rest of the Anglosphere, and the house of friends
elsewhere. The dividing line between the two is a country’s position in
relation to the sanction’s regime against Russia.” In the face of the current
challenges, the primary domestic objectives, especially on the external
economic front, are being addressed one way or another. Simultaneously,
strategic frameworks for cooperation are being established with those
partners who genuinely value their reputation and do not sacrifice the
economy for political ambitions (Lavrov, 2023c). According to Sergey
Afontsev (2022, p. 1227), Professor of MGIMO University and Head of
the Department of IMEMO RAS, continuing sanctions exhibit “the para-
doxes of backlash and build-up of inefficient pressure.” The imposition of
sanctions, which are intended to pressure the target country to alter its
political direction, often results in a reinforcement of the target country’s
determination not to change its course. Additionally, the realization of
the ineffectiveness of sanctions by the sender country does not result in
the abandonment of sanctions but rather an escalation in their severity.
136 A. BOROZNA AND L. V. KOCHTCHEEVA

Sanctions also served as a stimulus for deepening sovereignty, especially

amidst the global shifts in the existing world order, the intensification of
external threats, and the tightening of Western restrictions. The move
towards the sovereign development of the country despite external pres-
sures has been repeatedly emphasized by Putin, including during the first
meeting with members of the Russian government in 2023, where he
noted that sovereignty should not be equated with isolation. Russian
leadership considers the strengthening of sovereignty, which forms the
foundation of modern development, as one of the main achievements of
sanctions.
Economic difficulties are also unlikely to lead to social or political
unrest, especially because public opinion polls have shown that most
Russian citizens do not feel that sanctions have affected their daily lives.
According to the Levada Center survey, “a strong majority of Russians
(70%) are not concerned by the sanctions imposed on Russia, while 29
percent of Russians remain concerned,” and the absolute majority of
Russians (84%) note that “the sanctions have not created serious prob-
lems for themselves or their families” (Levada Baz et al., 2023; Center,
2023).
Drezner’s (1999) “sanctions paradox,” which suggests that sanctions
imposed on allies tend to be more politically effective than sanctions
against adversaries, may not appear as paradoxical as originally thought.
Mostly, this is because an ally’s determination to resist or adapt to sanc-
tions is much easier to predict since it is highly likely that allies have a
political disposition similar to the sender. The situation with Russia and
the West is almost the opposite. They have historically different polit-
ical frameworks and, on many occasions, dissimilar political values and,
therefore, political reactions that more often conflict than coincide. As
a result, the Western sanctions policy is unlikely to achieve its political
goals due to a poor understanding of the Russian “political mentality”
and the inability to determine the pain threshold and assess Russia’s deter-
mination to counteract the sanctions (Papazian, 2023). Without a clear
understanding of how countries are prepared to deal with the suffering
from sanctions, sanctions policy is deprived of its political potential.
 6 ASSESSING SANCTIONS EFFECTIVENESS 137

6.3 Countermeasures and Remedies

The sanctions’ bounded effectiveness is due to Russia’s prompt political
and economic reaction, the size of the country, and the strengthening of
its economic relations, especially with the third countries in the global
economy (Mulder, 2023). Within the strict framework of restrictions,
Russian businesses are moving to alternative markets for export and
import. The reorientation of Russian businesses to new markets signifies
not a mere adjustment in Russia’s foreign economic policy but a massive
change of the geoeconomic system to expand existing and build new trade
and economic ties with friendly countries.
There are several reasons for Russia’s resilience to sanctions imposed in
2022. First, due to the importance of Russian gas to Europe, there were
no international sanctions on Russia’s pipeline gas or liquefied natural gas
(LNG) exports, and only the US and Australia have banned Russian LNG
supplies. The other countries applied limited pressure by imposing export
controls on technologies and services for existing and new gas operations
(Mitrova, 2022). Additionally, some European energy companies seem to
have acquiesced to Putin’s demand to buy natural gas using a complex
new payment system, which involves the creation of two accounts at
Gazprombank and enables Europe to claim it is paying for gas in euros,
while Russia can claim it is receiving payment in rubles.
Second, the first round of Western financial sanctions did not impact
the transactions of the third largest Russian bank—Gazprombank, the
leading bank serving Russia’s energy sector. The reason for this was to
keep energy prices stable. The sanctions were not imposed on Rosneft,
the state-owned oil giant; Sovcomflot, the state-owned shipping firm; and
other key companies in Russia’s oil sector (Fishman, 2023). As a result,
for several months in 2022, Russia could continue collecting revenues
from its energy sector.
Third, due to high global energy prices at the beginning of the year and
the continuing sale of Russian energy resources, Russia recorded substan-
tial oil and gas revenues in 2022. Exports of oil and gas reached $333
billion in 2022 (63% of total goods exports), in which the share of crude
oil accounts for $142 billion, oil products for $83 billion, and natural gas
for $108 billion (Babina et al., 2023, p. 4).
Fourth, there are multiple loopholes in the design of sanctions, espe-
cially concerning the main source of Russia’s state revenue–the export of
oil and gas (Fubini & Prokopenko, 2023). Russia was able to redirect the
138 A. BOROZNA AND L. V. KOCHTCHEEVA

flow of its energy to non-Western markets, with China and India replacing
the EU as Russia’s most important export markets for Russia’s crude oil.
In the fourth quarter of 2022, China, India, and Turkey accounted for
two-thirds of total Russian crude oil exports, compared to about 30% in
the first quarter of 2021 (Babina et al., 2023, p. 9). Even in the import of
military-related electronic components, there are some loopholes that can
be exploited. It is important to note that not all components are subject to
sanctions; in fact, the research by Byrne et al. (2022) at the Royal United
Services Institute (RUSI) shows that the Russian military utilizes more
than 450 distinct foreign-manufactured components, of which only 80
are subject to US sanction controls. Russia’s dual-use commodity imports
in 2022 were significantly higher than those prior to the outbreak of the
war, as evidenced by data from various sources. For example, semicon-
ductor imports increased from $1.82 billion to $2.45 billion, according
to Free Russia Foundation estimates. However, in order to reach Russia,
these shipments must now traverse a variety of suppliers and land corri-
dors, which can be highly unpredictable and expensive (Bergmann et al.,
2023; Bienkowski et al., 2023; Ivanova & Seddon, 2022). One legal
loophole permits Russia to purchase these items under the pretense of
dual-purpose use, meaning that the foreign components are used in the
allegedly “peaceful” Roscosmos space exploration project (Sonnenfeld &
Wyrebkowski, 2023).
Fifth, by implementing the import substitution policy and finding ways
to access technology from non-Western sources, Russia can provide neces-
sities in most sectors of the national economy. The sectors that have
been most successful in import substitution are agriculture, the military-
industrial complex, extractive industries, the pharmaceutical industry, and
tourism. Despite the warnings from the US, several months after SMO,
trade data shows that Russia continued to have access to crucial dual-
use technologies such as semiconductors, reaching the country mostly
from China and Hong Kong, according to Silverado Policy Accelerator, a
Washington, DC think tank (Cole, 2023). While the direct sales of critical
components plummeted from 45% in 2021 to 2% in 2022 (Bush, 2023,
p. 14), Russia was able to import these components from third parties.
Between March and December of 2022, Russia imported $20.3 billion in
critical technology components used in military technology, 72 percent
of which came from China, an increase from 22% during the same period
in 2021. Besides China, eighteen other countries from Asia, Europe, and
the Middle East supplied Russia with dual-use components (Bush, 2023).
 6 ASSESSING SANCTIONS EFFECTIVENESS 139

As an example, Russian airlines were able to acquire needed equipment

through intermediates in countries that have not signed up to sanctions,
such as China, the United Arab Emirates, Turkey, and the Central Asian
states (Derber, 2023).
Sixth, the degree of integration and, accordingly, the dependence of
Russia on the global financial system is much lower than that of the West,
given that, since 2005, the Russian Federation has been a net donor of
financial resources, annually sending tens of billions of dollars to the West
(Kuznetsov, 2022).
Seventh, the role of friendly to Russia countries proved to be crucial to
Russia’s resilience to sanctions. Under current sanctions, these third-party
states are in no hurry to actively advertise their role. They are guided more
by pragmatic rather than ideological interests. However, countries such as
Turkey, India, China, and Iran have, to varying degrees, allowed Russia to
diversify its external ties despite sanctions. Trade with them has increased
significantly. For two consecutive years, China-Russia bilateral trade has
increased by a third annually. According to preliminary data from the
Federal Customs Service of Russia, in 2022, it amounted to $183.9
billion. Mutual trade with India reached almost 30 billion US dollars
(Rudenko, 2023). The sanctions have spurred trade with India, expe-
diting the shift towards using domestic currencies for transactions and
encouraging collaborative efforts to build self-reliant transportation and
financial infrastructure. As US-Chinese contradictions deepen, Beijing’s
role as a “sanctions buster” may increase.
By implementing secondary sanctions, the senders will increasingly
force companies from third countries to choose between developing
economic ties with Russia or continuing relations with the Western world.
Large companies, even from friendly countries, will be forced to comply
with restrictions. However, here are many examples of third countries
adapting to Western pressure, such as using the Russian bank cards “Mir”.
Sanctions that keep coming no longer serve as a significant surprise to
Russian companies and companies from friendly states, as they learned to
function within the same framework as previously blocked firms, using
national currencies in their transactions and independent supply chains
and logistics schemes, not reliant on the US and its allies. If the 2022
restructuring often caused shock, doing business in 2023 is seen as a
period of accumulating adaptational experience. Sanctions did cause harm
and continue to distort normal market relations. However, companies
continue to find alternative paths.
140 A. BOROZNA AND L. V. KOCHTCHEEVA

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 CHAPTER 7

Implications of Sanctions to the Rest

of the World

Abstract This chapter delves into the repercussions of sanctions on

both the sender states and third parties. The impact of sanctions on
sender states has not been extensively explored in the existing research.
Borozna and Kochtcheeva argue that due to the deep integration of
Russia’s economy into the global trade system, the effects of sanctions
against Russia are reverberating worldwide. The initial signs of these
consequences are already evident, with rising energy prices, the closure
of businesses in Europe, and increased food shortages in various parts of
the world. This demonstrates that the impact of sanctions is not confined
to Russia alone but extends to the sender states and even to nations
that were not directly involved in imposing the sanctions. These sanc-
tions contribute to shifts in global politics and alliances, particularly in
the context of Russia’s strategic partnerships with non-Western actors.

Keywords Sanctions · Russia · Russian economy · Sanctions impacts ·

Sender states · Target states · Sanctions regime · Trade disruption ·
Secondary sanctions · Blowback effect of sanctions · Energy crisis · Food
shortages · United States · Europe · EU · Asia · Post-soviet states ·
Belarus · China · Central Asia · Financial transfers · Currency

© The Author(s), under exclusive license to Springer Nature 151

Switzerland AG 2024
A. Borozna and L. V. Kochtcheeva, War by Other Means,
https://doi.org/10.1007/978-3-031-51370-1_7
152 A. BOROZNA AND L. V. KOCHTCHEEVA

From the outset, the senders of sanctions, including the United States,
have proclaimed that they “designed these sanctions to maximize the
long-term impact on Russia and to minimize the impact on [themselves
and their] allies” (Garcia, 2022, p. 1). However, as this chapter demon-
strates, in a globalized economy sanctions impose costs on both the target
and the sender, as well as the third parties. Sanctions tend to have unantic-
ipated consequences, frequently leading to instability in global economic
growth (Cafruny & Kirkham, 2020; Harrell, 2018; Lew & Nephew,
2018). Even the fear of sanctions does not go unnoticed by the senders
and other actors since domestic enterprises doing business with the target
countries may suffer economic losses (Crozet & Hinz, 2020). Disrup-
tion in trade could negatively impact both the sender and the target state,
and that is not limited to states with strong trade relations. The cost of
trade disruption is difficult to estimate in advance. While the senders of
the sanctions can attempt to protect themselves from the harmful effect
of sanctions on their economy, they cannot completely ensure that trade
disruptions will be limited to those goods on their sanction list. One of
the common responses of the targeted states is by disrupting trade in
commodities that are important to the sender of sanctions. An influential
target can pose challenges for those imposing sanctions, diminishing the
chances of those sanctions achieving their intended goals.
Whether a state can endure the economic burdens of sanctions hinges
on its capacity to discover alternative purchasers for its goods and alter-
native sources for its imports (Kavaklı et al., 2020). The damage incurred
will be considerably less if the target’s exports are in high demand glob-
ally, either because of their affordability or superior quality. When the
state holds a substantial comparative edge in producing that particular
commodity, it becomes simpler to identify new buyers. Similarly, if other
global suppliers offer cost-effective or high-quality alternatives for the
relevant goods, the process of import substitution becomes more feasible
(Kavaklı et al., 2020). Reflecting on the impact of sanctions at the St.
Petersburg Economic Forum, Putin noted that: “All attempts to intro-
duce artificial restrictions lead to the fact that they begin to affect those
who introduce them” (“Sanctions backfire,” 2023).
Comprehensive and massive sanctions against Russia’s “highly inte-
grated econom[y]” means the “risks and costs of sanctions... affect more
people around the world” (Mulder, 2022). Sanctions on Russia have
already become a source of deepening divisions among the Group of
20 Countries, where even “greater international trade restrictions could
 7 IMPLICATIONS OF SANCTIONS TO THE REST OF THE WORLD 153

reduce global economic output by as much as 7% over the long term,

or roughly $7.4 trillion” (Hussein, 2023a, 2023b, p. 4), causing risks for
global economic development. Countries that rely on Russia for minerals,
energy, food, or weapons worry about the effects of shortages and price
increases on their domestic economic trajectories. Many countries in the
global South are cautious about aligning themselves with the senders of
sanctions in opposition to Russia mainly because they prioritize their own
national concerns, such as their need for improved infrastructure, health-
care, and education systems, as well as response to climate change and
access to technology (Rao, 2023). They view increasing global instability,
both politically and financially, as a threat to addressing these pressing
challenges and perceive that the geopolitical agendas of powerful nations
frequently overlook the opinions of developing countries.
The forceful economic sanctions imposed by the West on Russia have
already led to many consequences, such as increased food prices, affecting
people distant from the Ukrainian conflict (Rao, 2023). Russia’s role as
a leading exporter of fertilizer, agricultural commodities, and oil renders
developing states particularly vulnerable (Sacko & Mayaki, 2022). For
instance, sanctions have contributed to shortages in food commodi-
ties and energy, as well as an increase in the price of commodities in
Africa. Many African states have not imposed sanctions on Russia despite
Western pressures. Importing and exporting with Russia has affected
Africa’s international relations since the West condemns such trading
with Russia (Niyitunga & Adunimay, 2023). The escalation of sanc-
tions against Russia, given its crucial role in the interconnected global
economy, and the subsequent unintended repercussions, especially for
developing nations, bring to the forefront significant foreign and fiscal
policy considerations.

7.1 The United States

The United States has a negligent economic relationship with Russia,
representing less than 3% of the annual U.S. exports and imports.
Nonetheless, sanctions could have notable impacts on specific U.S.
companies and industries engaged in business with Russia. For instance,
there might be worries about the vulnerability of particular U.S. finan-
cial institutions to Russia, the accessibility of raw materials from sources
outside of Russia, and the competitiveness of U.S. firms. There are also
154 A. BOROZNA AND L. V. KOCHTCHEEVA

worries regarding the potential for reduced Russian energy supplies to

increase gas prices, which could further worsen inflation (Nelson, 2022).
One of the main unintended effects of sanctions is the undermining of
the U.S. dollar as a trusted reserve currency. The freezing of Russia’s
reserves in the wake of the war in Ukraine prompted some countries
to reconsider holding their reserves in the United States and Europe,
leading to a trend of repatriating gold (Jones, 2023). China and Russia
are progressively conducting their trade using the Chinese yuan, which
supplanted the U.S. dollar as Russia’s primary traded currency in 2023.
Nearly 42% of all foreign exchange traded in the Moscow Exchange was
in yuan, with a volume that more than tippled since 2022, accounting
for 35.15 trillion rubles ($391.5) (Fabrichnaya & Marrow, 2024). The
BRICS nations have agreed to increase the use of their respective local
currencies in trade, aiming to decrease their dependence on the U.S.
dollar. Critics in the developing world are growing concerned about the
United States’ capacity to wield the global influence of the dollar to
impose sanctions on its adversaries (Hussein, 2023a). As the U.S. imposes
more and more sanctions, the U.S. dollar is being weaponized, which can
easily lead other countries to move away from using the U.S. dollar and
could risk the international role of the dollar and SWIFT (Chorzempa,
2023). If de-dollarization initiatives gain momentum on a larger scale, it
could lead to higher U.S. borrowing expenses and potentially diminish
the effectiveness of sanctions as a policy tool (Nelson, 2022).
Currently, approximately 60% of foreign exchange reserves held by
the world’s central banks are denominated in U.S. dollars–a decrease
from approximately 70% in 2000 and indicates a gradual change in the
global financial system. Although the euro has seen a slight increase in its
share since its introduction—from 18% to just under 20%—the Chinese
currency, the renminbi (also known as the yuan), has seen the most signif-
icant growth since 2016, despite accounting for less than 3% of global
reserves (Jha, 2023).
The application of secondary sanctions, as well as fines and criminal
prosecution for violating American standards, made it possible to disci-
pline a business, regardless of its country of origin. The West managed to
achieve a large-scale psychological effect. However, the secondary sanc-
tions are not being massively enforced so far, likely for fear of increased
distrust in the American financial system and the U.S. dollar. The U.S.
also continues its policy of enforcement measures in order to ensure
compliance with existing sanctions modes. This brings about risks to
 7 IMPLICATIONS OF SANCTIONS TO THE REST OF THE WORLD 155

persons and companies not only from third countries but also American
citizens and companies (Sokolshchik, 2022).
According to the Quantitative Enforcement Database (OQED),
managed by the Russian International Affairs Council, from January 1,
2009, to October 20, 2022, 262 individuals and legal entities were fined
for sanction regime noncompliance. About 30% are represented by orga-
nizations operating in the financial sector, which, due to the specifics of
their activities, face increased risk enforcement. Notably, 76% of those
who have encountered this type of enforcement measures for the period
mentioned above were American companies or their joint ventures, who
paid less than 5% of the total amount of fines, that is, about $260 million,
while their European allies bear the brunt (Sokolshchik, 2022).
The U.S. Congress Research Service notes: “The sanctions could
create (or deepen) fractures in the global economy, resulting in disparate
economic blocs and schisms that could undermine the international
rules-based economic order that the United States has prioritized since
World War II” (Nelson, 2022). While the U.S. may view sanctions as a
cost-effective strategy, it is essential to acknowledge that these measures
can have significant unintended consequences, sometimes even to the
detriment of American interests.

7.2 Europe
Sanctions have unquestionably inflicted substantial damage on Europe.
Europe’s most prominent companies lost at least 100 billion euros in
direct losses from their operations in Russia since Russia’s invasion of
Ukraine (Hollinger et al., 2023). In May 2022, Germany registered its
initial monthly trade deficit since 1991, and the U.K. reported its most
substantial trade deficit since 1950s. Before the conflict, Europe was
already contending with energy shortages and elevated prices, and the
sanctions notably intensified these challenges (Partington, 2022). The
E.U.’s urgent effort to reduce its reliance on Russian energy sources,
including natural gas transported through pipelines critical for electricity
generation and home heating during the winter, has plunged the region
into a severe energy crisis (Pachymuthu, 2022). The E.U. has been
compelled to adopt measures such as power conservation, demand reduc-
tion, financial assistance to manage energy prices, diversification of supply
sources, and reevaluating its entire green energy transition strategy.
156 A. BOROZNA AND L. V. KOCHTCHEEVA

The survey of annual reports of 176 European companies conducted

by The Financial Times showed various degrees of losses from their oper-
ations in Russia due to sanctions, among which the most significant
losses were among oil and gas companies. BP, Shell, and TotalEner-
gies together had written down 40.6 billion euros. However, higher oil
and gas prices allowed these companies to still show profits for 2022
(Hollinger et al., 2023). In the European auto sector, eleven carmakers
collectively incurred charges amounting to 6.4 billion euros. Renault
wrote off 2.3 billion euros following the sale of its Moscow plant and
stake in Russia’s Avto Vaz in May 2022. Volkswagen reported a write-
down of 2 billion euros, and in May, Moscow approved the sale of V.W.’s
local assets, including a plant employing 4,000 people. These assets were
still valued at 111.3 billion rubles (1.5 billion euros) in 2022 (Hollinger
et al., 2023).
The economic repercussions of the sanctions on Russia have been
“devastating” for the German economy, with economic prospects for
2023 being “disappointing” and the automotive industry continuing to
suffer from decreased manufacturing output. AfD co-leader Tino Chru-
palla accused Germany’s Economic Minister Robert Habeck of declaring
“economic war” on Moscow but waging war instead on the German
population (“Germany: Far-right demo,” 2022). German Member of
the European Parliament, Uwe Schulz, has warned that the European
Union’s sanctions policy against Russia is having a detrimental effect on
the E.U.’s largest economy, leading to a further decrease in economic
activity and a shift towards de-industrialization. Schulz, a member of the
AfD, a right-wing political party, has stated that the punitive measures
have not had a significant impact on Russia but have had a devastating
effect on the German economy. The economic sanctions supported by
the governing coalition of the Social Democratic Party, Greens, and Free
Democratic Party are leading Germany and its economy in the direction
of de-industrialization, which is the reason that the Russian Federation
has overtaken Germany’s $5 trillion economy in the ranking of world’s
leading economies in 2022 (World Bank, 2022; Leiroz, 2023).
The German chemical and automotive industries experienced signifi-
cant losses due to Russia’s reaction to sanctions, which included expro-
priating German assets in the country. In total, eleven car manufacturers
incurred losses of 6.4 billion euros due to the sanctions and Russia’s
countermeasures (Hollinger et al., 2023). Stefan Wolf, the leader of the
Federation of German Employers’ associations in the metal and electrical
 7 IMPLICATIONS OF SANCTIONS TO THE REST OF THE WORLD 157

engineering industries, has declared that Germany’s economy has become

uncompetitive and has been made the “sick man” of Europe. Wolf has
predicted that the country could enter a recession in the latter half of
2023. In response to the E.U.’s largest economy being subject to multiple
rounds of sanctions imposed by Brussels, Russia has responded by dras-
tically reducing fuel deliveries and introducing a new system of payments
based on the ruble. Prior to this, Germany had relied on Russia to meet
40% of gas demand and around a third of oil needs (“Anti-Russia Sanc-
tions,” 2023). Germany’s industrial sector consumes almost double the
amount of energy compared to the next-largest sector in Europe, and
its consumers have a significantly larger carbon footprint than those in
France or Italy. However, with the imposition of sanctions on Russia
and Europe’s shift towards cleaner energy sources, cheap Russian gas
is no longer a viable option. This situation poses a significant threat to
the competitiveness of German manufacturers (“Is Germany once again,”
2023).
Besides the devastating blowback effect of sanctions on Russia on
Germany’s economy, the policies of the German government that made
the sanctions regime possible resulted in the rise of far-right ideology in
Germany. In a district council election held in the eastern German city
of Sonneberg last month, the far-right Alternative for Deutschland (AfD)
emerged victorious. The party has traditionally been associated with anti-
EU and anti-immigration policies. It has traditionally been strongest in
East Germany, a region that has been characterized by economic hardship
and a sense of inferiority since the end of the Cold War. Nevertheless, the
AfD has seen its approval ratings rise significantly since September 2021,
when it received 10 percent of the vote in national polls. Currently, the
party has a 19 percent approval rating, placing it second only to Chan-
cellor Olaf Schollz’s Social Democrats, who have a 20 percent approval
rating (Loftus, 2023).
European utilities experienced a significant financial loss of EUR
14.7 billion, while industrial firms, including automotive manufacturers,
incurred a loss of EUR 13.6 billion. Financial firms, including banks,
insurers, and investment firms, incurred an additional EUR 17.5 billion
in write-offs and other charges (Hollinger et al., 2023).
B.P. reported a charge of US$25.5 billion, while TotalEnergies took
longer to report a US$14.8 billion total cost. The French group has yet
to report a write-down of its 20 percent shareholding in Yamal LNG.
Three days after the invasion, B.P. announced that it would divest its
158 A. BOROZNA AND L. V. KOCHTCHEEVA

19.7 percent stake in Russian oil giant Rosneft (Hollinger et al., 2023).
In January, Germany’s Wintershall dea reported that the expropriation of
their Russia business by the Kremlins had resulted in a write-off of EUR
2 billion from its accounts. In 2022, Uniper, which received a financial
rescue from the German state, reported impairments of EUR 5.7 billion,
with Finland’s Fortum taking a hit of EUR 5.3 billion (Hollinger et al.,
2023).
London, despite its outspoken stance against Russia, has not imposed
a ban on its manufacturers for exporting mining and fossil fuel extrac-
tion equipment to Russia, which includes companies like Hill & Smith,
which asserted that it had no direct ties to Russian customers. Nonethe-
less, one of its subsidiaries, Bergen Pipe Supports (India) Private Limited,
continues to provide pipe support for securing gas pipelines to Russia’s
Arctic LNG-2 project. However, these transactions are reflected in the
export statistics from India rather than the U.K., effectively concealing
the origin of these trade decisions to avoid direct British involvement
(Saunders & Greenwood, 2023).
The E.U. countries are having difficulty offsetting the economic losses
caused by sanctions against Russia. This primarily affects the energy and
raw materials sectors, with the substantial rise in prices for these resources
significantly harming the industrial sector. Some European countries have
national interests that have hindered the E.U. from imposing a ban on
importing critical Russian products, including diamonds and steel. The
European industry is increasingly falling behind its competitors. High
state subsidies in the E.U. began during the pandemic and continued
during the sanctions period. These subsidies contribute to the growth of
national debt and further exacerbate inflation. The combination of infla-
tion and recession leads to an economic crisis in Europe, which can persist
for many years.

7.3 Asia
Across Asia, reactions to the war in Ukraine differ, but it is predomi-
nantly perceived as a European regional conflict. According to Frederick
Kliem (quoted in Ratcliffe, 2022), a researcher at the Rajaratnam School
of International Studies in Singapore: “Countries in south-east Asia, and
actually many countries around the world, are not buying into the notion
that this is a sea change in international relations and that Russia is the
enemy. They say, look, if there is cheap oil and cheap gas and good trade
 7 IMPLICATIONS OF SANCTIONS TO THE REST OF THE WORLD 159

deals to be made with Russia at this point in time, then of course we’re
going to do it, and who are you to tell us not to?” Many Asian countries
that remained officially neutral and did not join the sanctions coalition
stand to benefit from the increased trade with Russia or enjoy indirect
spillover effects. Leaders in the region may be inclined to welcome trade
agreements with Russia, recognizing that Moscow is unlikely to impose
sanctions in response to concerns related to authoritarianism (Ratcliffe,
2022).
China emerged as one of the primary beneficiaries of the international
sanctions imposed against Russia starting in 2014. In the aftermath of the
Ukraine crisis and the implementation of Western sanctions, the Russian
government enabled Chinese investors to acquire majority shareholdings
in major energy projects, thus further consolidating its strategic relation-
ship with China (Borozna, 2022, p. 44). In the wake of the war in
Ukraine, Chinese exports to Russia have grown, with most growth related
to technology products and vehicles. China, India, Malaysia, and Singa-
pore have significantly increased purchases of Russian oil, and companies
in the West have increased their imports of oil products that these
economies derive from Urals crude (Fubini & Prokopenko, 2023). India
has become the single largest buyer of Russian crude oil transported by
ses, buying more than 1.4 million barrels daily since the beginning of
2023 (Mulder, 2023). Within the Western price cap coalition, the E.U.
emerged as the largest importer of oil products from these Asian coun-
tries, with imports totaling EUR 17.7 billion. The PetroChina Dalian
refinery in China is one of the world’s largest receivers of Russian crude
oil, facilitated by its pipeline connection to Russia (CREA, 2023). Asian
demand has effectively made up for the decline in European oil exports.
In May of 2022, Thailand stated that it intends to enhance bilateral
trade with Russia, to achieve an annual trade volume of $10 billion. Thai-
land also relies heavily on tourism as the primary driver of its economy,
and it anticipates welcoming around one million tourists from Russia.
Moscow is also interested in increasing its imports of Thai rice, fruit,
cars, and car parts and is also considering investments in technology in
Thailand (Wancharoen, 2022). Vietnam, Indonesia, and Malaysia did not
support the anti-Russian sanctions and agreed to remain neutral towards
the crisis in Ukraine. Malaysian Prime Minister Ismail Sabri Yaakob (2022,
quoted by China Daily) noted: “We recognize restrictions that could be
imposed only by the U.N. Security Council.” Russia is an exporter of
160 A. BOROZNA AND L. V. KOCHTCHEEVA

weapons, defense armaments, and fertilizer, which is crucial in oil palm

farming and is one of Malaysia’s most significant sectors of the economy.
Asian countries are concerned about rising inflation, particularly in
increasing energy and food prices. While Russia might offer some assis-
tance in these areas, governments in the region are still exercising a lot of
caution due to concerns about secondary sanctions. Moreover, the restric-
tion of Russian financial institutions from using the Swift system could
pose complications for transactions with Russia. Vietnam has attempted to
maintain a neutral stance in the war. However, Vietnam heavily depends
on Russia for the supply of crude oil, natural gas, and military equipment,
and the ongoing conflict has also affected its exports to Russia, leading to
disruptions in logistics and payment processes (Ratcliffe, 2022). However,
some Vietnamese companies have reduced or completely stopped buying
Russian goods, as they fear secondary sanctions from Western countries
and do not want to risk losing trade opportunities with Western partners.
Additionally, Russian-Vietnamese relations were damaged when the
Vietnamese government postponed the construction of many large indus-
trial facilities, which had contracts with Russian companies (Mazyrin &
Burova, 2022). In another example, the assets of the two Indian compa-
nies were frozen in response to their trade with Russia’s diamond trader
Alrosa. This was the first instance of any Indian businesses being subject to
sanctions since the Russian invasion of Ukraine in 2022 (Acharya, 2023).
The Asian countries that imposed sanctions on Russia, including Japan,
South Korea, Taiwan, and Singapore, demonstrate mixed outcomes.
Tokyo’s unwavering stance against Russia’s military operation in Ukraine
led to Moscow’s withdrawal from negotiations aimed at establishing an
official peace treaty on March 22, 2022. Japan was among the earliest
countries to be classified as “unfriendly” by Russia, as well as receiving
counter-sanctions, including a significant decision in May 2022 to indef-
initely prohibit 63 Japanese citizens from entering Russia, which notably
included the Prime Minister among those affected. Many Japanese busi-
nesses had financial losses due to sanctions and many companies that
had a strong dependence on the Russian market stopped investments and
advertising (Khoma & Nikolaieva, 2023).
South Korea has a material interest in continuing positive ties with
Russia. However, recent actions signal a willingness to align with the West
in opposition to the war in Ukraine at the expense of ties with Russia.
Under pressure from the U.S., South Korea has joined in international
 7 IMPLICATIONS OF SANCTIONS TO THE REST OF THE WORLD 161

economic sanctions. However, it stays relatively neutral regarding sanc-

tions due to security concerns. It also provides minimal aid to Ukraine
due to the worries that this may provoke Russia to align with and provide
armaments to North Korea (Rinna, 2023).
Singapore is the only ASEAN member to directly impose sanctions
on Russia; however, the weakening cooperation on sanctions with main
senders plays well with Russia’s narrative of sanctions as Western-led
efforts, which are lacking broad participation and support. Additionally,
Singapore’s lax oversight of noncompliance with sanctions also hampers
the effectiveness of these measures in constraining Russia’s ability to
benefit from seaborn oil sales. Singaporean ports received more than
twice the volume of Russian light crude and fuel oil in December 2022
compared to December 2021 (Lin, 2023). Reportedly, domestic oil
traders can achieve a significant profit margin of nearly 20 percent by
mixing Russian fuel components purchased under a price cap with other
sourced fuel and selling a blended fuel oil product at market prices (Lin,
2023).
Overall, Asian economies have served as alternate export destina-
tions for Russian goods and fresh avenues for imports. However, Asian
countries demonstrate mixed results and experiences as they are either
benefitting or being affected by the sanction regime.

7.4 Post-soviet States

Many post-Soviet states have been seriously impacted by the economic
sanctions imposed on Russia, but none suffered more than Belarus,
which has become the biggest receiver of Western sanctions due to its
close ties to Russia. Sanctions on Belarus are similar to the restrictions
imposed on Russia and involve a whole range of measures, including an
embargo on a considerable portion of Belarusian exports and imports,
restrictions on the transportation of goods of Belarusian origin, limita-
tions and prohibitions on financial operations, and settlements, freezing
parts of Belarus’s international reserves, and various actions to restrict
and block banks, companies, and individuals. These sanctions, along with
continuing changes in the regional and international situation, have had
significant indirect effects as well. Foreign companies also exited the
Belarusian market and refrained from conducting business with Belaru-
sian counterparts (Kruk & Lvovskiy, 2022). According to the Belarus First
Deputy Prime Minister, Nikolai Snopkov, 2022 proved to be “a test of
162 A. BOROZNA AND L. V. KOCHTCHEEVA

resilience” when sanctions directly impacted a quarter of the economy

and indirectly affected all other sectors (Snopkov cited in Belarus Council
of Ministers). However, despite the initial estimates of the impact of the
sanctions on the economy being around minus 20%, the actual GDP
contracted by 4.7% in 2022. In 2023, GDP growth rates are recovering.
In the first four months, it reached 99.4% of the previous year’s level
(Belarus Council of Ministers, 2023).
Several post-soviet states saw a significant increase in capital inflow
from Russia, primarily driven by the desire to find a safe haven amidst
the sanctions affecting the Russian banking sector. This influx was partly
associated with the migration of individuals and businesses. In 2022,
net financial transfers from Russia to Armenia, Georgia, and Azerbaijan
surged more than fivefold, while Tajikistan and Uzbekistan experienced
a twofold increase. As a result, the foreign exchange markets of these
countries came under pressure, leading to the strengthening of their
national currencies (Karapetyan, 2023). There were various predictions
by economists and observers that sanctions on Russia would result in
an economic decline in Central Asian and South Caucasian countries.
However, despite the dire predictions, some countries recorded economic
growth rates. Their economies grew on average by 4.8 percent in 2022,
with growth rates ranging from 12.6% percent in Armenia to 3.2 percent
in Kazakhstan, which reflects oil production disruptions, and 1.8 percent
in Turkmenistan (IMF, 2023c). A major error was assuming that the path-
ways through which the Russian economy affects other nations would
remain unaffected. Russian imports were shifted to non-sanction import
sources, such as Central Asian countries, and consumer goods were
imported to Russia at a premium price from export countries (Fubini &
Prokopenko, 2023). The adjustments made to accommodate shifts in
trading routes and overcome various logistical obstacles since the begin-
ning of the conflict in Ukraine have led to a rise in Central Asian trade
with Russia (IMF, 2023c). For instance, the exports from Armenia to
Russia increased by $1.6 billion, which ensured an increase of more than
50% in Armenia’s exports (Karapetyan, 2023).
Sanctions against Russia produced a massive outflow from Russia of
various professionals to the neighboring countries, which has boosted the
housing market and prices of the services sector in hosting countries.
Account balances notably improved across most Central Asian coun-
tries, signifying a higher surplus in services, especially in Armenia and
Georgia, as tourism rebounded, as well as higher income transfers in most
 7 IMPLICATIONS OF SANCTIONS TO THE REST OF THE WORLD 163

oil importers and higher oil prices in oil exporters such as Azerbaijan
and Kazakhstan (IMF, 2023c). In 2022, a less severe than anticipated
economic downturn in Russia, along with significant income, capital, and
migrant inflows from Russia to neighboring nations, as well as increased
transit trade, had a positive impact on growth. However, because of the
small relative size of Central Asian economies, a reversal of inflows, supply
chain disruptions, or lower remittances could mean a negative outlook for
their economies in the near future (IMF, 2023c; Souleimanov & Fedorov,
2023).

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 CHAPTER 8

Conclusion

Abstract This chapter serves as the concluding chapter, summarizing the

book’s key findings regarding the objectives and outcomes of sanctions
and discussing the implications of these arguments for Russia’s future
interactions with the international community. Borozna and Kochtcheeva
underscore that Russia has developed adaptive strategies, which allowed
Moscow to endure the sanctions and make Russia less vulnerable to
their impact. This does not mean that sanctions have absolutely no
effect; they undeniably cause economic hardships in the Russian economy.
However, the primary political objectives of sanctions, which were aimed
at changing Russia’s foreign policy direction, have not been achieved.
These sanctions are anticipated to have long-lasting consequences, not
only for Russia but also for broader international trade and international
relations. One of the main achievements of Western sanctions on Russia
was making Russia acknowledge its overreliance on the West. This pres-
sure led Russia to recalibrate its development trajectory, emphasizing
policies like import substitution and fostering domestic economic growth.
The imposition of sanctions on Russia and the global response to these
sanctions also made evident the increasing division of global geopolitics
between the Western alliance, the Chinese-led block, and a third group
of emerging countries that has yet to decide on a course of action.

Keywords Sanctions · Russia · Western sanctions · Anti-Russian

sanctions · Strategic goals · Conflict · Sanctions effectiveness · Foreign

© The Author(s), under exclusive license to Springer Nature 167

Switzerland AG 2024
A. Borozna and L. V. Kochtcheeva, War by Other Means,
https://doi.org/10.1007/978-3-031-51370-1_8
168 A. BOROZNA AND L. V. KOCHTCHEEVA

policy · Political course · National development strategy · Response to

sanctions · Resistance to sanctions · Securitization · Sanction busting

Sanctions, a preferred method of exerting pressure without resorting to

military force, have become an integral part of political conflicts on the
international stage. The primary actors in this context are states that
use sanctions to achieve their goals in a conflict situation, which include
compelling the target country to alter its foreign or domestic policies,
limiting the capabilities of the target country, and isolating it from specific
financial and material resources. While the use of economic sanctions to
achieve political goals has been a component of international politics for
a considerable time, with the methods of their application continually
evolving, it was the post-Cold War era that witnessed a significant surge
in their application, particularly by the United States, which commonly
puts pressure on its allies and other states into serving the U.S. sanctions
strategy, even if it goes against their interests.
Extensive analyses have been conducted to evaluate whether sanctions
have succeeded or failed in attaining their intended political objectives.
Proponents of sanctions contend that these measures should be consid-
ered as a unique policy option. Evaluating their success or failure without
comparing them to alternative approaches might not fully capture their
purpose. However, numerous arguments have been made against the
effectiveness of sanctions, especially unilateral ones, asserting that they
seldom yield positive results, can be ethically questionable in various
cases, and may lead to unintended repercussions. Decisions made amid
sanctions confrontations frequently result in outcomes that deviate signif-
icantly from the originally intended goals, and in most instances, they
only intensify the conflicts that prompted the initiation of the sanctions
confrontation and impose costs on entities that are unrelated to these
conflicts. Moreover, it has been proposed that economic sanctions have
limited utility in the present era, as modern states are typically less fragile
and susceptible to their impact.
This book demonstrated that Russia had not been discouraged by
sanctions in its pursuit of political goals. The preexisting (2014–2021)
and new (2022–onward) sanctions did not compel Russia to change its
foreign policy course concerning Ukraine. Notwithstanding the costs to
economic and financial activity, Russia has continued its political course
 8 CONCLUSION 169

while sustaining domestic elite and popular support. While many policy-
makers in the West did not anticipate the protracted nature of the war
in Ukraine, sanction pressure on Russia to change its political course
is destined to result in further confrontation. Moreover, the question
of the connection between the stated goals for imposing sanctions and
their actual effects on economic and political developments in both the
targeted nation and the sender states, as well as in third countries inadver-
tently affected by the external consequences of the sanctions, has never
been so pressing.
The tightening of anti-Russian sanctions following the annexation of
Crimea and the rebellion in Donbas proved once again that the results
of sanctions are difficult to forecast. Instead of the desired suffoca-
tion of the Russian economy, substantial public unrest, and subsequent
regime change, sanctions have aided in enhanced operation and strength-
ening of Russia’s ideologically fortified response to economic distress. In
2014–2021, Russia adapted to Western sanctions while trying to avoid
additional and secondary sanctions. The successful, mostly state-led anti-
sanction actions lessened the decline of the economy, focused on domestic
resources, exercised control over macroeconomic measures, and adjusted
economic policy to closer relations with non-Western countries. At the
same time, some businesses, especially in the banking sector, managed to
avoid risks by refusing to work in Crimea. While the Russian economy
experienced some weakening during this period, the impact was not
exceedingly substantial. Russia also implemented measures to mitigate this
impact and prepared itself during this period for the expected imposition
of a more comprehensive set of sanctions in the future. On the political
front, the sanctions did not compel Russia to alter its goals. The Minsk
Agreements and subsequent negotiations did not yield a resolution, and
while a full-scale war was postponed, it was not averted. The global reper-
cussions of the sanctions between 2014 and 2021 were also limited, as
an incremental strategy with a restricted scope allowed the international
financial, trade, and geopolitical framework to adjust to the circumstances.
The start of military operation in Ukraine in February of 2022
and the subsequent avalanche of sanctions directed against Russia radi-
cally changed the sanctions paradigm. Western scholars and policymakers
continue to emphasize not simply the need for more sanctions but also
more enforceable and more decisive measures. The coalition of sanc-
tioning states demonstrated a high level of coordination and consolidation
of the restrictive policies of Washington, London, and Brussels. In the
170 A. BOROZNA AND L. V. KOCHTCHEEVA

West, such close-knit and coordinated action has not been observed over
the past few decades. Even during the Soviet times, there were notice-
able differences between the approaches of the United States and Western
Europe. Now, Europe even overtakes America in the intensity of restric-
tive measures. More than 35 states participated in imposing sanctions
on Russia, which, on the one hand, demonstrates the unity of the West
against Russia but, on the other hand, reveals that the rest of the world
is not on board with Western sanctions, allowing Russia to diversify
its customers and suppliers, and thus surviving the heavy blow of the
sanctions.
The United States and the European Union were the most active
in expanding the scope and severity of sanctions and restrictions. The
initiators of sanctions employed similar methods in implementing sanc-
tions. They all utilized sanctions that targeted particular individuals,
applied comparable sanctions on logistics and transportation, imposed
similar blocking sanctions, and compiled analogous lists of sanctioned
legal entities. While sanctions in the previous years targeted mostly
Russian oligarchs, specific sectors of the economy, and the authorities,
the sanctions in 2022 were more comprehensive in scope. A broad range
of entities and activities faced scrutiny and restrictions, extending even to
Russian culture. This included canceling opera performances with Russian
singers, altering the national identity of renowned Russian painters, and
even prohibiting participation in seemingly unrelated events like cat and
oak tree competitions. For the first time in history, Russian culture
became subject to prohibitions and the threat of its “cancellation” in the
West.
There was also a commonality of strategic goals among the senders,
including the displacement of Russian raw materials from their market.
While there are some discrepancies regarding the lists of blocked persons
or specific prohibitions, they are insignificant. The politics of sanctions
against Russia after its war in Ukraine showcased the deployment of
almost all possible restrictive instruments. However, how sanctions were
applied might point to a reason for their ineffectiveness. Instead of gradu-
ally accumulating the severity and quantity of measures, the West desired
to inflict the maximum possible damage to force Russia’s economic
collapse. Many strong sanctions were imposed in the first few days after
the invasion, including the freezing of Russian foreign reserves, the
ban on SWIFT, and the closure of airspace to Russian aircraft. This
almost total blockade from the West left no room for negotiation and
 8 CONCLUSION 171

forced Russia to completely reorient itself towards non-West, build new

partnerships, and strengthen the existing ones.
After the start of the wave of sanctions, the Russian state financial
authorities reacted effectively, especially in terms of interest rate control
and the availability of liquidity in the economy. Panic was avoided,
and speculative sentiments were contained. Unprecedented sanctions,
while bringing noticeable pain, failed to break and isolate the Russian
economy. In early 2022, the Russian economy successfully averted a
worst-case scenario that could have resulted in a more severe recession.
Increased energy prices and the failure of the U.S. and E.U. to ban
Russia’s imports immediately, spreading the introduction of restrictions
over several months, gave Russia an advantage to adapt. The combined
Western sanctions imposed on Russia and Western companies voluntarily
suspending or limiting trade have resulted in a significant overhaul of
domestic and international trade. Changing energy export routes from
Europe to China and India was necessary and not without losses. Russia
has effectively broadened its parallel import activities from new markets
to respond to these changes.
Moreover, the existing international system of international settlements
is changing. The dominance of the dollar and the euro, which is the main
factor that gives the U.S., and now the E.U., the possibility of massive
sanction pressure is questioned. Nonetheless, overall, Russia’s economy
survived, and despite the negative impact of sanctions, certain opportu-
nities have emerged for specific sectors and individual entrepreneurs. The
primary outcome is that due to the sanctions, major European competi-
tors are leaving high-tech and narrowly specialized industries where they
previously dominated due to established brands.
Russia views its confrontation with the West as existential–the fate of
Russia, its borders, its position in the world, and the very question of its
further existence will be determined by the outcome of this confronta-
tion, and that is why Russia’s ability to adapt to sanctions and reorient
itself toward the non-West is crucial to Russia’s future. In this vein,
Asian economies have played a significant role in mitigating the impact
of Western sanctions on the Russian economy. They have acted as substi-
tute suppliers to Russia, becoming substantial new customers for Russian
commodity exports and influencing global oil prices. This has helped
Russia maintain its economic stability despite the sanctions reducing its
growth potential. The involvement of countries like Japan, South Korea,
Taiwan, and Singapore in financial and technology sanctions has had
172 A. BOROZNA AND L. V. KOCHTCHEEVA

limited effects due to Russia’ ties with non-Western economies, especially

in manufacturing and energy trade. China and India, along with some
Middle Eastern and Central Asian economies, have been the primary
forces in blunting the impact of these sanctions. The extent of Russia’s
alignment with China is of particular significance, as Beijing is entering
into a strategic confrontation with the United States. As a result, these
geoeconomic realities are likely to complicate the future use of sanctions
by Western nations.
In addition, along with purely economic consequences, there are polit-
ical and reputational costs. From the point of view of domestic politics,
sanctions often lead to the consolidation of the political system, even
increasing centralization of power, in the face of external challenges.
Contrary to the ideological attitudes of the senders, sanctions, as a rule,
do not lead to regime and massive societal change or democratiza-
tion (Grauvogel & Soest, 2014). Sanctions-induced rally-around-the-flag
further produce the sanctions paradox (Drezner, 1999) when the esca-
lation of sanctions does not lead to political concessions. The economic
harm from sanctions affects the people in the target country; however,
ultimately, development issues run into issues of national security and
sovereignty. Russia has impressive resources, including human, natural,
industrial, scientific, and so on. The question is in their management and
the remaining ties to the global economy. While The government has
been focusing on socio-economic policy, it pursued pragmatic policy in
Russia’s relations with the West. Western sanctions on Russia made it
clear that this policy turned out to be flawed. Russia’s final break with
modern Western liberalism raises the question of the necessity of the
Russian national idea. There are serious efforts among Russian intellec-
tuals to comprehend Russian history and to compile a set of the most
important values.
Sanctions also challenge the prospect of international cooperation,
even in areas where the interests of the senders and targets objectively
coincide. Indeed, one of the significant features of modern sanctions, as
manifested in the example of anti-Russian sanctions, is their ability to
influence national development strategies and foreign policy ambitions,
revealing the long-term reduction of cooperation ties. In the case of
anti-Russian restrictions of the U.S., E.U., and other countries, sanctions
and responses to them contribute to the restructuring of production and
supply chains, import substitution, and diversification of external partners.
One of the main achievements of Western sanctions on Russia was making
 8 CONCLUSION 173

Russia acknowledge its overreliance on the West. This pressure led Russia
to recalibrate its development trajectory, emphasizing policies like import
substitution and fostering domestic economic growth. While economic
sanctions impose constraints on the Russian economy, the main problem
for Russia is the exhaustion of the current economic model, based mainly
on the exploitation of natural resources.
In contrast to the period from 2014 to 2021, the sanctions imposed
after 2022 revealed a clear priority of political goals over economic ratio-
nality and have had notable effects on the countries imposing them, which
were not entirely foreseen. Over the last thirty years, Russia has been
trying to be closely integrated into the world economy. Now, it is evident
that the West will take a long-term course of squeezing Russia from the
world markets for raw materials, weapons, and food. The rupture of ties
inflicted by sanctions will bring losses and economic pain to the initiators
of sanctions as well. While the U.S. economy has been affected, primarily
due to increased energy prices, high inflation, and escalating interest rates,
the impact on the E.U. economies has been most pronounced, given their
closer trade and financial connections with Russia. An economic recession
is now a significant concern, and a substantial reconfiguration of political,
economic, and security structures is already in progress. These sanctions
and counter-sanctions have additionally produced a global effect and have
posed severe economic challenges for many developing nations.
As countries across the globe anticipated an economic recovery
following the COVID-19 pandemic, the sanctions worsened the
prevailing global economic difficulties. These challenges included height-
ened inflation in areas including energy, food, and fertilizers, increased
input costs, a combination of supply-side and demand-side shocks, tight-
ening global financial conditions, a slowdown in trade growth, and
ongoing disruptions in supply chains. Many countries in Asia, Africa,
and Latin America, motivated by their national economic interests, have
refrained from endorsing Western sanctions while still enduring the
unwanted side effects of sanctions.
The imposition of sanctions on Russia and the global response to these
sanctions also made evident the increasing division of global geopoli-
tics between the Western alliance, the Chinese-led block, and a third
group of emerging countries that has yet to decide on a course of
action. Russia, alongside Iran and China, as well as other nations experi-
encing strained relations with the United States, is increasing its efforts
to enhance economic resilience against sanctions. The objective of these
174 A. BOROZNA AND L. V. KOCHTCHEEVA

measures is not to evade sanctions but rather to proactively reduce their

impact to the point where financial sanctions are nearly ineffective. Exam-
ples of such measures include efforts to de-dollarize the economy, the
creation of alternative banking systems to SWIFT, and the development of
digital currencies for central banks. In addition to diminishing the efficacy
of sanctions, such measures could create financial channels that remain
outside of the control of the West. The emergence of a non-Western
financial system is a matter of time, considering the emergence of new
centers of global power that would eventually seek to establish their own
financial networks.
The comprehensive consequences of sanctions and counter-sanctions
are still developing, and assessing their role in attaining economic and
political goals will require a prolonged period to draw appropriate lessons.
Nonetheless, it is certain that the likelihood of increased and more
frequent deployment of such a sanction weapon will shape the evolving
global geopolitical, military-strategic, economic, and policy environment.

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 Index

A Bank(s), 23, 43, 46, 49, 61–63, 65,

Abramovich, Roman, 134 67, 71, 73, 74, 84, 89, 92, 110,
Africa, 8, 82, 153, 173 121, 123, 131, 139, 157, 161
Allies Central, 47, 62, 65, 89, 109, 154,
Russia’s, 2, 3, 7, 63, 118 174
U.S., 20, 62, 64 Belarus, 65, 94, 99, 100, 116, 131,
Western, 20 161, 162
Annexation, 2, 3, 6, 42, 124, 169 Biden, Joe, 60, 61, 63, 64, 66, 67
of Crimea, 2, 3, 6, 42, 124, 169 Blockade, 2, 14, 24, 72, 170
Armenia, 68, 83, 96, 99, 100, 120, Boycott, 22
162 Brazil, 8, 82, 117
Asia, 73, 90, 92, 94, 138, 158, 173 BRICS, 9, 90, 154
Asset, 17, 30, 42, 49, 62, 63, 65, 74, Business(es)
75, 121, 156, 160 American, 154
Automotive, 94, 125–127, 156, 157 Asian, 8, 82, 96
industry, 125, 126 Chinese, 8
Aven, Petr, 67, 134 European, 8, 82
Russian, 28, 45, 67, 69, 75, 87, 89,
Aviation, 69, 117, 124, 125
123, 137
industry, 125
Turkish, 87, 89
Azerbaijan, 83, 162, 163

C
B Capital
Baltic States, 52, 53, 94 flight, 124

© The Editor(s) (if applicable) and The Author(s), under exclusive 211
license to Springer Nature Switzerland AG 2024
A. Borozna and L. V. Kochtcheeva, War by Other Means,
https://doi.org/10.1007/978-3-031-51370-1
212 INDEX

human, 3 D
investment, 50 Defense
Caucasus, 8, 82 industry, 29, 50, 51, 120
Central Asia, 8, 82, 96, 128 production, 50, 120
Central Bank, 47, 62, 65, 88, 89, sector, 6, 43, 60
109, 154, 174 Democratization, 21, 172
China, 9, 18, 49, 68, 82–86, 88, 90, Deripaska, Oleg, 92
93, 99, 116, 119, 138, 139, 154, Diplomacy, 6, 15, 16
159, 171, 173 Donbas, 42, 43, 169
Chinese Drezner, Daniel W., 17, 18, 24, 25,
banks, 84 136, 172
companies, 99 Dubai, 93
currency, 84
Chubais, Anatoly, 134, 135
Coalition, 2, 16, 25, 63, 66, 83, 159, E
169 Eastern Ukraine, 2, 42, 45
Coercion, 2, 3, 15, 18, 20, 21, 31 Economy
Conflict, 2, 3, 8, 14, 21, 29, 45, 60, European Union (EU), 68, 156
84, 99, 120, 134, 153, 158, 162, of the West, 51
168 post-soviet states, 162
Confrontation, 5, 9, 29, 71, 135, Russian, 2, 5–9, 31, 43, 45, 46, 48,
168, 169, 171, 172 51, 52, 64, 65, 69, 72, 88,
Constraint, 21, 173 108, 109, 117, 125, 162, 171,
173
Containment, 31, 66
United States (US), 3, 20, 60, 173
Cooperation, 17, 43, 48, 82, 83, 86,
Elite, 4, 28, 29, 45, 67, 70–72, 74,
91, 118, 161, 172
82, 93, 133, 134, 169
Cost
political, 4, 29, 45, 90
economic, 19, 24, 62
Russian, 67, 70, 72, 133, 134
of sanctions to sender states, 3
Eurasian Union, 9, 49, 52
of sanctions to target states, 19 Europe, 7, 20, 60, 62, 63, 74, 92,
of sanctions to third parties, 152 112, 131, 137, 155, 170, 171
Countermeasure(s), 24, 26, 108, 109 European Commission, 61, 69, 126,
Counter-sanctions, 7, 47, 48, 51, 132
160, 173, 174 European Union (EU), 20, 48, 51,
Crimea, 6, 42, 49, 169 61, 67, 68, 75, 82, 87, 96, 99,
Crisis, 6, 7, 26, 46–49, 52, 61, 63, 112, 114–117, 127, 138, 156,
64, 92, 124, 158, 159 157, 170
Cuba, 18 Exchange rate, 46, 47, 50, 72, 122
Currency, 30, 62, 63, 72, 75, 84, 89, Export, 5, 7, 29, 43, 48, 50–52, 62,
91, 123, 139, 154, 162, 174 63, 65, 67, 69, 74, 82–85,
Cyprus, 92, 93 87–89, 91, 93–97, 99, 100,
 INDEX 213

113–115, 119, 124, 127, 137, Hegemony, 30

138, 153, 159, 161, 162, 171 History, 3, 14, 66, 72, 92, 113, 127,
132, 170, 172
Hufbauer, Gary, 3, 4, 16–18, 20–22,
F 24–26, 108
Finance, 5, 20, 46, 64, 67, 72, 119 Human rights, 20, 21, 30, 31, 42,
capital, 5 44, 65
Financial
industry, 50
sanctions, 8, 23, 43, 62, 63, 65,
121, 137, 174
I
stability, 5, 72
Finland, 68, 158 IMF, 46, 47, 109, 162, 163
Foreign Impact, 2, 3, 5, 8, 9, 22, 27, 28, 31,
Direct Investment (FDI), 53 50, 62, 71, 82, 108, 109, 117,
policy, 3–6, 9, 19, 21, 43, 45, 50, 121, 129, 137, 152, 156, 162,
168, 172 168, 171, 173, 174
trade, 15, 75, 84, 89, 113, 116, of sanctions, 82, 117, 129, 171
123 Imperialism, 108
France, 14, 61, 83, 126, 157 Import, 5, 6, 27, 45, 47, 49–51, 66,
72, 74, 75, 87, 94, 99, 100, 115,
122, 127, 128, 138, 152, 162,
G 171–173
G7 countries, 65, 117, 132 substitution, 5, 6, 27, 47, 50, 51,
Gazprom, 61, 91, 117 72, 74, 94, 127, 138, 152,
GDP, 22, 46, 69, 109, 111, 124, 172, 173
127, 162 Incentive, 19, 24, 27
Georgia, 83, 95, 96, 162 India, 8, 68, 82, 89, 90, 119, 139,
Germany, 14, 23, 24, 61, 68, 88, 158, 172
100, 116, 156–158 Individual sanctions, 64, 134, 135
Government, 4, 5, 7, 14, 16, 18, 19, Inflation, 46, 51, 62, 122, 123, 129,
25, 27, 30, 46–48, 50, 60, 62, 154, 158, 160, 173
63, 65, 67, 70, 72, 75, 83, 94,
Information Technology (IT), 112,
96, 100, 118, 127, 136, 160,
127, 129
172
International financial institutions, 5
Russian, 4, 5, 7, 42, 43, 50, 60,
62, 65, 70, 117, 118, 129, Investment, 21, 22, 24, 26, 42,
136, 159 44–46, 50, 62, 85, 89, 91, 92,
Unites States (US), 61, 67, 92, 108 108, 112, 129, 132, 157, 159,
160
Iran, 18, 23, 66, 90–92, 139, 173
H Iraq, 14, 16, 18, 23
Hegemon, 25 Isolation, 6, 14, 31, 44, 50, 109, 136
214 INDEX

J export, 47, 50, 73, 94, 113, 114,

Japan, 24, 42, 61, 75, 82, 115, 128, 118, 119, 137, 138
160, 171 import, 46, 66, 88, 113, 118, 159
price, 46–48, 69, 114, 119, 161,
163, 171
K trade, 66, 89, 158
Kazakhstan, 82, 96, 99, 131, 163 Oligarchs, 64, 89, 92, 133–135, 170
Korea, North/North Korea, 161 OPEC, 48, 50
Korea, South, 115, 160, 171
Kremlin, 2, 7, 44, 45, 63, 86, 108,
112, 133, 135, 158 P
Kudrin, Alexey, 135 Peace, 15, 21, 66, 160
Kyrgyzstan, 68, 82, 83, 96, 97, 99, Perceptions, 29
131 Pipelines, 8, 87, 117, 118, 137, 155,
158, 159
Policy, 2, 7, 14–16, 18, 21, 22, 26,
L
29, 31, 44, 45, 47, 49, 51, 52,
Lavrov, Sergey, 70, 90, 135
64, 111, 123, 136, 137, 154,
Leadership, 6, 20, 28, 29, 43–45, 64,
157, 168, 169, 173, 174
121, 136
instrument, 4, 5
Legitimacy, 2, 28, 133
Political
Liquefied natural gas (LNG), 118,
course, 6, 25, 26, 71, 132, 133,
137, 157
168, 169
Lithuania, 82, 100
economy, 27, 30, 50, 135
goal(s), 3, 4, 6, 8, 9, 28, 49, 71,
M 109, 132, 136, 168, 173, 174
Malaysia, 159, 160 position, 21
Modernization, 50, 51 system, 6, 19, 44, 50, 133, 172
Price(s), 9, 29, 48, 66, 72, 74, 87,
89, 114, 117–120, 122, 123,
N 130, 137, 153–155, 160–162,
NATO, 60, 61, 87 171, 173
Natural gas, 87, 88, 119, 155, 160 of gas, 73, 114, 154
Nord Stream, 43, 74, 87 of oil, 46, 69, 73
Norway, 48, 82, 132 Prigozhin, Yevgeny, 134
Nuclear, 3, 44, 69, 115 Public, 2, 18, 19, 26, 45, 50, 71,
133, 135, 136, 169
unrest, 169
O Punishment, 21, 27, 109
Office of Foreign Asset Control Putin, Vladimir, 47, 61, 62, 64, 66,
(OFAC), 67 69–71, 86, 92, 108, 120, 121,
Oil, 93 133, 135, 137, 152
 INDEX 215

R secondary, 17, 27, 73, 74, 83, 84,

Recovery, 47, 48, 122, 130, 173 117, 139, 154, 160, 169
Regime, 2, 3, 7, 8, 18–21, 24, 27, smart, 2, 17, 18
43, 45, 52, 64, 66, 67, 70, 73, success, 24, 26, 27, 108
87, 90, 117, 135, 155, 161, 172 targets of, 65
change, 2, 7, 19, 45, 67, 69, 133, threat of, 84, 170
169 trade-based, 27
of sanctions, 24, 27, 172 types, 2, 17
Renminbi (RMB), 84, 154 unilateral, 16, 17, 20, 168
Reserves, 7, 30, 49, 51, 62, 63, 69, Saudi Arabia, 8, 82
75, 89, 124, 154, 161, 170 Securitization, 4, 28, 29, 71
freezing, 7, 170 Security, 4, 6, 28, 29, 61, 71, 120,
Retail, 117, 129, 130 161, 172, 173
Revenue, 5, 46, 48, 66, 88, 114, Semiconductors, 63, 64, 82, 83, 85,
117–119, 123, 137 88, 96, 128, 138
Risk, 7, 27, 70, 74, 82, 83, 112, 123, Sender state, 5, 9, 17, 169
124, 152, 155, 169 Singapore, 158–161, 171
Ruble, 7, 46, 61, 63, 64, 88, 91, 117, Smart sanctions, 17, 18
122, 123, 127, 137, 156, 157 South Africa, 8, 23, 24, 82
exchange rate, 46, 122 Sovereignty, 49, 64, 72, 136, 172
Special Military Operation (SMO), 2,
60, 61, 64, 65, 73, 138
S Strategic partner(ship), 50, 86
Sanctions Success of sanctions, 27
as a hegemonic tool, 19 Supply, 21, 25, 63, 67, 68, 73, 89,
busting, 8, 27 99, 110, 118, 120, 126, 139,
comprehensive, 2, 9, 15, 61, 152, 155, 160, 163, 172, 173
169, 174 SWIFT, 61, 62, 66, 74, 89, 154, 170,
definition, 16, 108 174
economic, 3, 6, 14–16, 18, 20, 22,
26, 30, 90, 133, 168, 173
effectiveness, 4, 5, 22–24, 108, T
154, 168 Target state, 3, 6, 16–18, 20, 24, 27,
financial, 6, 8, 43, 63, 65, 68, 121, 28, 71, 152
137, 174 Technology, 2, 6, 7, 21, 46, 51, 68,
goals, 7, 30, 69, 133 74, 96, 120, 126, 128, 138, 159,
individual, 6, 14, 65, 135, 171 171
objectives, 4, 5, 16, 24, 31, 108 Third parties, 4, 9, 17, 100, 138
package, 61, 126 Threat
resistance to, 27, 28 existential, 4, 28, 29, 71
Russia’s countermeasures to, 156 external, 4, 29, 136
Russia’s perception of, 6, 7, 69 of sanctions, 4
216 INDEX

perceived by Russia, 60 V
Tinkov, Oleg, 134 Vietnam, 131, 159, 160
Trade, 8, 9, 14, 15, 20, 23, 27, 52,
67, 83, 84, 87, 91, 95, 96, 99,
110, 113, 116, 117, 129, 130,
139, 152, 154, 155, 159, 173 W
Trenin, Dmitry, 50, 72, 73, 135 War, 2, 3, 7, 14, 20, 30, 61, 64, 66,
Turkey, 68, 82, 87–89, 117, 131, 139 67, 70, 82, 85, 87, 93, 95, 100,
108, 110, 129, 132, 134, 135,
154, 156, 158, 169, 170
U sanctions as, 30
Ukraine, 2, 5, 7, 44, 60–62, 64, 67, in Ukraine, 3, 95, 159, 160
70, 74, 75, 87, 99, 124, 129, Weapon(s), 2, 3, 19, 67, 87, 90, 121,
133, 158, 169, 170 133, 153, 160, 173, 174
United Arab Emirates (UAE), 8, 68,
White House, 42, 60–64
82, 93, 94, 128, 131, 139
World Bank, 46, 47, 109, 156
United Nations (UN), 16, 17, 31, 97
Security Council, 3, 16, 17, 25, 70,
159
United States (US), 2, 3, 8, 15, 19, X
20, 27, 30, 42, 45, 60–63, 68, X-compliance, 123
75, 83, 88, 89, 97, 99, 108, 112, Xi Jinping, 86
115, 117, 128, 133, 139,
152–155, 170, 173
United States Congress, 65, 99, 155
U.S. Department of Treasury, 2, 67, Y
68 Yuan, 49, 154