Putin’s war in Ukraine increases Russia’s revenues

New figures suggest that Russians are getting richer despite Western sanctions and a costly war in Ukraine.

Since the invasion of Ukraine in February 2022, the United States and its allies have imposed a comprehensive package of sanctions and embargoes on Russia, designed to hamper its military and exert the necessary economic pressure to force Putin to back down.

But instead of paralyzing the country, one expert told Newsweek that the war in Ukraine may have even strengthened the Russian economy.

On Monday, the World Bank released its updated report on global income levels for 2023.

Russia was upgraded by the economists – along with Palau and Bulgaria – from the “upper middle income” category to the “high income” category.

Meanwhile, Ukraine moved from the lower middle income level to the upper middle income level.

According to the authors, economic activity in Russia was “influenced by a sharp increase in military-related activities.” They said the economy was also boosted “by a recovery in trade” as well as growth in the financial and construction sectors.

Overall, this led to an increase in real and nominal GDP and an increase in gross national income per capita of 11 percent.

Its new classification would put Russia on a par with the United States and other G7 countries, which have been trying to hamper the Russian economy since 2022.

However, the World Bank’s data are based on statistics from member countries, and Russia has been accused in the past of falsifying figures as part of its ongoing “information war” against the West.

Philip Cuncliffe is Professor of International Relations at University College London and has written extensively on the subject of sanctions against Russia.

Cuncliffe spoke to Newsweek about the World Bank report and the possible dubiousness of Moscow’s figures, saying: “Even though economic data is always subject to revision, almost all the evidence now points to the Western sanctions being a dismal failure.”

Cuncliffe believes that the sanctions have even benefited the country in some ways. He told Newsweek that Western efforts to restrict the country’s global trade “may have actually helped boost Russian industry and forced the Russian state to become more independent, to open up new markets and create new supply chains.”

Nevertheless, sanctions and export controls against Russia’s financial infrastructure, energy sector and military procurement networks have been further tightened.

In June, the United States announced it would take action against 300 more individuals and companies accused of helping the country evade sanctions.

During the G7 summit, member states agreed to release $300 billion worth of frozen Russian assets to provide additional capital for Ukraine’s resistance efforts.

Last week, the European Union adopted its 14th^th A package of sanctions against the country, specifically targeting Russian gas exports.

Although Russian politicians have condemned these measures, they have failed to prevent Russian rearmament or place a burden on the economy sufficiently severe to force Putin to change course.

Last week, a report by a British think tank said the country had been more than capable of replenishing its arsenal and that sanctions had proven “manifestly ineffective” in containing the Russian war machine.

One of the study’s authors, Gary Somerville, told Newsweek that defense contractors had managed to circumvent embargoes by using “front companies” and backroom channels to secretly smuggle military components into Russia.

If the new World Bank data is correct, it would be further proof that Putin can endure Western sanctions and that his war in Ukraine is only strengthening the country’s economic power.

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