APRIL 2025
Down But Not Out
The Russian Economy Under Western Sanctions
By Nicholas Fenton and Alexander Kolyandr
Introduction
No matter the outcome of ongoing ceasere negotiations over the war in Ukraine, Russia will remain
an acute security threat to Ukraine, Europe, and the United States. The sanctions tool kit will remain
among the most potent weapons to contain Russian power, and specically the ability of the Russian
state to marshal its resources for conventional military confrontation. The Western sanctions regime
imposed on Russia in the wake of its full-scale invasion of Ukraine in 2022 had clear successes, even if
the threat of these sanctions failed to stop the invasion itself. However, its eectiveness has also had
undeniable limits, and often unintended consequences. Through technocratic skill, its wealth of natural
resources, and the slow-moving and inconsistent implementation of Western sanctions, Russia has had
the time and capacity to adapt to the sanctions challenge over the last three years. This reality means
that some of the sanctions imposed on Russia will oer diminishing returns over time.
This piece will provide an overview of Western sanctions policy toward Russia as it currently stands,
outlining its largest successes and clearest shortcomings, as well as articulating new ways to apply acute
pressure on Russia, should the Kremlin choose to open some sort of new front in its eort to undermine
Western commitment to limiting Russian aggression.
Part I of the paper covers the initial impacts of the sanctions regime on the Russian economy. Next,
Part II runs through the lessons Russia learned from the sanctions imposed in 2014, and how these
lessons were applied in 2022. Part III of the paper addresses the question of how Vladimir Putin may
have ultimately decided to move forward with his full-scale invasion of Ukraine, despite the economic
risks. Part IV then turns to the ways the Kremlin has taken advantage of Russia’s wartime economy, the
unique impacts of international sanctions, and its domestic political dominance to further strengthen
its position at home. The paper concludes with recommendations for those tasked with implementing
future sanctions policies.
