They are more concerned with maintaining their own power and funding their lifestyle, whatever the cost to their people. But there are ways and means, direct and indirect, of raising the costs of such choices. Some of these new means have been developed following Russia’s full-scale invasion of Ukraine.  

Economic sanctions are a tool of coercion on the softer end of a spectrum that starts with diplomatic isolation and voluntary boycotts and ends with physical blockades. It can even include softer measures, such as a more careful calibration of aid. While many – usually those against whom they are applied – are quick to claim that sanctions do not work, history suggests that, at least in some instances, with the right amount of political will, they can. But an over-reliance on sanctions is likely to deliver little except a measure of self-satisfaction. A focus on this alone only obscures other non-violent possibilities for encouraging and, in fact, facilitating, changes in regime behaviour.   

With a little help from our friends 

The circumvention of sanctions is made easier by a lack of diplomatic support for the cause behind their imposition, reflecting self-interest. Russia’s war in Ukraine is a case in point. Governments representing about 60 per cent of the world’s population, including India, China, South Africa and much of the Middle East, did not at the outset of the conflict accept the Ukrainian or western narrative of the war in 2022 for various reasons. These included self-interest and perceptions of a western double standard. Such perceptions, legitimate or not, were actively seeded and promoted by Russia on social media, to reinforce the idea of NATO as the aggressor and Russia as the victim.  

In response to Russia’s 2014 and 2022 invasions of Ukraine, the West has imposed an unprecedented raft of economic measures against Moscow. The European Union has, by mid-2024, adopted 14 packages of sanctions, targeting over 2,200 individuals and entities, and covering a wide array of sectors, goods and services. In turn, the United States has imposed over 14,000 sanctions, more than those on Iran, Cuba and North Korea combined, targeting 10,173 individuals, 4,089 entities, 177 vessels and 100 aircraft. In total, Russia has been subjected to more than 14,000 sanctions. Such measures had the intent of weakening Moscow’s ability to wage war by depressing its income and limiting access to critical technologies for its war machine. Yet, even though this regime has undoubtedly made it more difficult for the Russians, and the full extent of the impacts are not known, despite a decade of conflict and the “most extensive sanctions regime in history”, little appears to have changed. 

The idea was, at the outset, that western sanctions would slowly but inexorably bite, making the conflict a “struggle between the refrigerator and the television”, as one Ukrainian colonel commented at the start of the 2022 phase of the war. Rhetoric may make a full heart, he said, but seldom fills the stomach.  

There have been some tangible results. According to a study published by the joint US–Ukrainian International Working Group on Russian Sanctions, such restrictions have shrunk Russia’s surplus of its current balance of payments. Overall, this was estimated to be down 60 per cent in 2022-23. The rouble also depreciated, driving up inflation and, in the process, creating social effects worsened by the diversion of funding to the war from Russia’s National Welfare Fund. Receipts from the oil and gas trade – responsible for nearly half (some 230 billion US dollars) of export income in 2021 – reportedly fell by around 50 per cent in 2023 as the loss of “stable and solvent markets, the technology gap, and the multiplier effect [affecting] the supply chain (tanker transportation, port services, pipeline transport)” all began to bite.  

Weathering the storm? 

Yet, for every indication of the success of sanctions, there appears to be contradicting evidence. Despite the range of sanctions, Russia’s economy has repeatedly defied the predictions of its imminent doom, including of financial collapse, recession, runaway inflation and a shortage of skills and technology. As The Economist noted in August 2024: “Despite sanctions and pariah status, Russia’s economy is growing strongly. It turns out that bacchanalian spending, at a time of war, really gets things going.” If anything, busting sanctions has also juiced the economy, with formerly western-owned businesses picked up cheaply by those in Russia. Supply chains have also been set up with friendly countries (for this read China, Iran, India and North Korea among others), initially to diversify Russian oil exports and ensure technology flows for high-tech arms inputs. However, this is increasingly being pursued for consumer goods as well. Thirty months after the invasion, The Economist reports that half of goods imports come from China, twice the share from before the invasion. Russia’s GDP is expected to grow by more than three per cent in 2024, its fastest growth spurt since the 2010s.  

Among the strategies Russia has reportedly deployed with success is the use of third-party trading firms out of Dubai, which distribute its petroleum products in West Africa. Russian oil is dumped at below market prices in countries such as Burkina Faso and Mali, where it has helped keep malignant military rulers in power, as well as states keen to benefit from cut price oil such as Ghana, Ivory Coast and Benin.  

Given the closed accounting and secrecy of Putin’s state, it may be difficult to determine the real, longer-term effects of the sanctions regime. Certainly, it is likely to have made military production and rearmament costlier and complicated, given the supply of componentry at a premium especially from North Korea, China and Iran. Officially, Russia has increased military spending from 2.7 per cent of GDP in 2022, to 3.9 per cent in 2023 and six per cent in 2024, or just under one-third of its government budget. By the start of 2024, however, it was estimated that Russian defence expenditure may account for as much as 40 per cent of its budget because the war in Ukraine is costing more than its combined spending on health and education. By comparison, the US spent 11 per cent, while the NATO average was 4.3 per cent. 

The pressures imposed by external sanctions, however, have not been intense enough, certainly from a Ukrainian perspective, and were not imposed quickly or harshly enough to ensure that the refrigerator trumped the television. Russia has been adept at both accelerating its own military production, after a slow start, perhaps in anticipation of a rapid victory, and acquiring materiel from its allies. By activating its own axis, Moscow has obtained at least three million rounds of heavy artillery from North Korea since August 2023 (and perhaps as much as six million), and 300,000 from Iran in 2023. Russia itself is producing about 250,000 artillery shells per month, or three million annually. The US and Europe together have a capacity to produce about 1.2 million shells annually, while the US has set itself a goal to produce 100,000 rounds of artillery a month by the end of 2025. Russia is reported to be running artillery factories 24/7 on rotating 12-hour shifts, with an estimated 3.5 million Russians now working in the sector. This is up from around two to 2.5 million before the war. Moreover, critical western goods and components continue to find their way to Russia’s war machine. 

Sanctions remain intrinsically limited because they seldom target foreign actors. Instead, they target domestic actors, such as US firms or those operating under US jurisdiction. Even so, the workarounds are usually one step ahead of the sanctions regimes. As one illustration, the largest source of supply of high-priority battlefield items necessary for Russian weapon systems is reportedly the American firm Intel. The market also quickly finds a new equilibrium, factoring in the upset to pricing. A rise in interest rates has driven up the value of the rouble. Sanctions also do not work when there is a lack of ties. The United States is, for instance, not a significant trade partner with Russia. 

Tightening the screws 

In response to these weaknesses, two big changes have occurred to sanctions regimes in this century: the willingness to go after select individuals and to sanction the financial systems that prop up rulers. Named after the tax lawyer Sergei Magnitsky, who was allegedly murdered in a Moscow prison in 2009 for exposing corruption by Russian officials, the US government’s Global Magnitsky Act is a far-reaching, targeted, human rights and anti-corruption sanctions programme aimed at government officials as well as private citizens. The 2012 Act authorizes the US government to sanction foreign government officials worldwide who are human rights offenders, freeze their assets, and ban them from entering the United States. In the first ten years of its history, Magnitsky cited 450 individuals. The great strength of the programme lies in its deliberate attempt to cut off corrupt and tainted individuals from the global financial system. 

Additionally, while targeted sanctions against Russia started feebly in 2022 (there were exemptions for luxury goods, for instance, in the EU sanctions package, to placate Italy), they soon extended to the Russian banking system. Despite fears of the impact on western banks, Russia was prevented from using the SWIFT international payment system. By cutting off seven Russian banks from the system, the West significantly raised the cost of banking, despite resistance from European banks. In addition to the weaponization of the dollar in this manner, the freezing of Russia’s currency reserves was an unprecedented use of extraterritorial jurisdiction. The call to seize more than 300 billion US dollars held by western banks and employ it for Ukraine’s relief was similarly met with alarm by commercial banks. As Bill Winters, the head of Standard Chartered bank, said in response to this suggestion, the financial community’s response to seizing the profits of Russian frozen assets would be “mixed” amid fears of “weaponizing” central banks and currencies. 

Such fears of a politicized and weaponized US dollar are partly responsible for the dollar’s share among global reserves falling from 70 per cent to just under 60 this century, as countries seek to sanction-proof their reserves. Coupled with trade friction with China, the weaponization of the US’s control of the international financial system will most likely change the conduct of non-western powers and lead to rival architectures, which may gain significant support. This explains why Beijing has developed its own international payment platform – the Cross-Border Interbank Payment System (CIPS). This is independent of SWIFT and is accepted in Russia and by banks in Brazil and elsewhere. But changes to this system may take a long time, given the dollar’s continued primacy as a reserve currency. 

Sanctions are always a kind of double-edged sword. In order to be effective and prevent bypassing they have to be comprehensive and include as many countries as possible. Yet this is difficult to achieve when there are different depths of dependence on Russia in the economic and trade spheres; a limited willingness to suffer too much; strong vested interests; “sacred cow” sectors like nuclear fuel or plants; the ⁠availability of strategic spoilers who have benefitted most from the western sanctions on Russia; as well as the tactical spoilers who did not join sanctions and were instrumental in re-exporting goods. This is compounded by the existence of many loopholes and the insufficient enforcement of secondary sanctions. All this has granted Russia a long time to adjust and make alternative arrangements. 

In the face of the economic united front from the West, Russia has fought back using parallel markets, dual-use technology, and third-country conduits. But there are limits. There is a premium, as South Africa learnt under apartheid, to buying smuggled technology. Suppliers are expensive and wary about losing access to richer markets. And technology cannot make up for the loss of skilled workers from the “brain drain” that usually accompanies sanctions. The longer war drags on and sanctions remain in place, the tougher things will get, not least because war is an expensive business. 

Work smarter for regime behaviour change 

Several notable individuals have called for the distribution of frozen Russian funds, including Bill Browder, a long-time foe of Vladimir Putin. But, as is highlighted above, there are grave concerns with this approach, some driven by a concern for profits, others by the impact on the global financial system, and some by both. This suggests a need for fresh tactical thinking on how to employ frozen Russian funds. Given Ukrainian needs, international authorities could be requested to use seized Russian assets as collateral for the issuance of new Ukrainian bonds. The interest on seized assets could be used as of now to reinforce the message on collateral and, at the same time, bring the interest bill down for Ukraine, particularly to pay for the ongoing penalties on IMF loans.  

The funding would be useful. The danger of creating great fanfare about sanctions is that there is an opportunity to cast the sanctioning party as the bad guys in a sort of perverse moral equivalence. This is worsened by the inevitable leakage of the very items supposedly under sanctions, just as the findings of the Kyiv Scientific Research Institute of Forensic Expertise remind us. There is another approach, less founded in the moralism that accompanies sanctions than on engaging with the problem in a manner aligned with a more careful calibration of the benefits of external engagement regimes.  

For example, in North Africa and the Sahel, for those seeking to undo Russian-led destabilization, given that the most effective enemies of the Russians are likely to be Islamists, any assistance or intelligence that western states (including Ukraine) give them is best kept under cover. There may be some more useful long-term outcomes, not least through rebuilding connections and mending relationships in the region that have been badly strained by western over-engagement. 

These new forms of assistance should involve far more than kinetic action or even military equipment and training. Given that Russia-aligned regional regimes are by definition undemocratic and thus highly factional, unstable and vulnerable, these cracks can be widened by limiting their income streams; supporting internal opposition forces through financing along with media and civil society; and helping regional states to limit their influence. 

The same menu of choices exists in Russia itself, including the following measures: providing information on the financial transactions of leaders direct to the public; the training of journalists, accountants and engineers; support for civil society organizations; support for opposition politicians and academics, in the second instance by commissioning work to ensure a basic income free from state controls; fostering networks of opposition politicians; publishing online resources in local languages, especially on how to mount a political campaign and win an election; the training and equipping of cyber-activists; and supporting local investigative journalism. The means to undermine Russia’s war machine – and constrain those allies which, wittingly or otherwise, support it – goes beyond attempts to impose embargoes and sanctions.  

Unless such measures are applied with consummate regulatory precision, they can provide a fig-leaf of respectability to a failing policy, and will always be mitigated by the role of business in seeking profit, or by fears of over compromising the integrity of the global financial system. Rather, sanctions should be seen as part of a continuum of state action, at one end of which is a more careful calibration of benefits to undo authoritarianism and, at the other, a stricter application of measures, specifically targeting individuals. This is a capacity that exists today in unprecedented forensic detail.  

Strengthen forensics 

War usually visits poor places, making them even poorer. The cost of turning a blind eye to Russia’s wanton destruction of communities across Ukraine lies not only in the costs to property. After all, it puts the interests of the state above – and seemingly beyond – those of the individual, the opposite of the very premise of the human rights regime that followed the Second World War where, in the esteemed Nuremburg  jurist Hersch Lauterpacht’s words, “the well-being of an individual is the ultimate object of all law.” 

Lauterpacht was born close to Habsburg Lemberg, now Lviv in modern-day Ukraine. Other Ukrainians have taken up the same struggle, not least the Nobel laureate Oleksandra Matviichuk, whose Center for Civil Liberties has documented more than 78,000 war crimes so far. Digital technologies offer huge advances in tracking perpetrators, from soldiers to commanders and even the chips and production lines responsible for the missiles and drones raining down on Ukrainian cities.  

The Achilles heel of sanctions remains their (lack of) implementation, driven by political differences or financial advantage, and enabled by a lack of consequences. The efficient implementation of sanctions could and should be strengthened through both legislative and non-legislative means at the national level. There is a need to increase the analytical capacity of institutions to ensure that they are properly staffed. For instance, the variance in sanctions monitoring capacity ranges across Europe in departments made up of five to 150 people. Similarly, limiting money laundering via flow-through (transit) accounts is important to cut corrupt practices. One means of enabling this is to implement without further delay the EU Confiscation Directive by all EU member states and to incorporate it into the national legal framework of all member states. Also on a legislative level, more countries should amend their respective criminal codes to introduce or strengthen the punishment for violations of international sanctions. 

But sanctions should not be a pretext for presenting options as ratcheting up isolation and nothing else or more. On a spectrum of coercion, there has to be a carrot with the stick. For example, the binary choice of sanctions should not obscure the much more difficult and complex business of engaging with oppositions forces, parliamentary and non-governmental, including business, to build constituencies for change. That is probably the lesson from apartheid South Africa, which is most often overlooked, despite the power and impact of this role. This is because it was not a dramatic action from outside that brought change, but rather the support of those fighting for change from outside. South Africa did not change because it was cut off. It changed because the regime did not want to be cut off and those that remained connected had gained all the advantages and strengths of so doing.  

Sanctions remain critical in reducing government capacity in part by increasing cost and complexity for regime survival, and ensuring that elites in particular are not immune to the implications of their actions. Changing elite behaviour depends on increasing the pressure that can push parties off the battlefield and to the negotiating table. Sanctions can help to tip the balance, not least in changing perceptions of elite impunity.  

Whatever the workarounds developed by the apartheid regime in South Africa and the businesses operating there, ultimately the military, economic and social costs outweighed the benefits, and the regime changed. But this demanded a coherent approach, including a wide range of sanctions with (almost) global support as well as various carrots, not least the prospect of global inclusion. At its core, it required a rational regime, which was prepared to concede political power if the costs of hanging on outweighed the benefits of letting go. Contrary, then, to the enthusiasm for sanctions as a measure short of war, they do not promise instant change, nor are they effective without a comprehensive approach. They can, if so devised, help to change the direction of travel. 

This article draws, in part, on Greg Mills and David Kilcullen’s book title The Art of War and Peace (Johannesburg: Penguin Random House, 2024). 

Greg Mills is the director of the Brenthurst Foundation. Ray Hartley is the research director of the Brenthurst Foundation. Hryhoriy Nemyria is a member of Ukraine’s Verkhovna Rada and deputy chair of the parliamentary committee on foreign affairs. Luis Ravina is a professor at the University of Navarra.

Russia, sanctions, Ukraine, War