What impact do the sanctions against Russia have on the war in Ukraine?

In May 2024, Brookings’ Economic Studies and Foreign Policy programs hosted an event to discuss Western nations’ actions against Russia. Daleep Singh, deputy national security adviser for international economics, delivered a keynote and Q&A session, followed by a panel discussion with experts. Read highlights from the Q&A with Singh and the panel discussion below.

Read Singh’s keynote

Watch the full video of the panel

Are the sanctions against Russia having an effect?

In his keynote address, Singh pointed out that one of the myths about the current sanctions against Russia is that they “failed” because they did not reverse Russia’s actions, when in reality that was never a stated goal of the sanctions. He expanded on this point at length during the Q&A, saying that the sanctions are just one tool of the current strategy and that they were designed with global impact in mind. “It would feel good to have maximum economic shock and awe all the time, regardless of the spillover effects and secondary consequences,” Singh said, “but that would not be the best long-term, risk-adjusted strategy for unity and it would not be sustainable.” Asked whether he believed the impact of the sanctions would change Putin’s calculus to continue the war, Singh said that sanctions were “probably a distant second consideration” for Putin compared to seizing territory. However, given the stated goals of increasing the cost of the war for Russia and giving Ukraine strategic influence, Singh believed the sanctions served their purpose.

Singh’s statement about Putin’s goals was echoed by the panel. Fiona Hill, a senior fellow in the foreign policy program at Brookings, said that “Putin’s primary goal is to acquire territory.” This is a marked departure from his priorities early in his tenure as Russian leader, when they were more focused on improving his country’s overall prosperity. Yuriy Gorodnichenko of Berkeley noted that the overarching goal of ending Russian aggression in Ukraine would require significant economic damage to the Russian economy, on the scale of the energy price collapse of the 1980s that led to the collapse of the Soviet Union.

But Agathe Demarais of the European Council on Foreign Relations echoed Singh’s comments on the political economy of such extreme measures, saying that a collapse of the Russian economy, the world’s ninth-largest and a major commodity producer and exporter, would have ripple effects. Demarais agreed with Singh that the sanctions are having the intended effect, highlighting several concrete aspects: They have demonstrated and strengthened transatlantic unity; there have been limited ripple effects on emerging economies; and they have reduced Russian oil revenues.

Will the US expand its sanctions regime?

Russia has adapted to the sanctions and circumvented Western measures such as the oil price cap. “We have to counter any circumvention with a countermeasure,” Singh said. Responding to a question from the audience, Singh noted that Russia is “completely turning its economy into a factory for the war machine,” and so tariffs, export controls or an embargo on Russian goods are the only direction in which increased measures could go. These steps would also require American companies to adapt, Singh said: “It took decades to build the financial sanctions architecture after 9/11 – we need to do that at top speed for technology and goods companies.”

The panel stressed the importance of messaging in current and future actions, an area where Demarais has identified a weakness in the current sanctions regime, as demonstrated by the high poll ratings of pro-Russian parties in the European elections. Hill agreed that one goal of Russian propaganda is to convince the Western world that sanctions are not working and that the West’s goal should be to remain united and adaptable. “He basically wants to beat Ukrainians, Europeans and Americans into submission, either literally on the battlefield or in the realm of political propaganda,” Hill said. “So we need to continue to up our game.”

Gorodnichenko cited recent and historical examples suggesting that additional sanctions on Russia may not have the devastating impact that Singh and Demarais have cited: The embargo on Iranian oil in the early 2010s did not cause a dramatic increase in energy prices, he explained, and the disruption of Russian energy supplies to Europe in 2022 did not lead to mass unemployment, as many had predicted. Based on comments from Singh, Gorodnichenko said he expects secondary sanctions, whether in the financial or technology sectors, or both. “If you make threats and nothing happens, then nobody responds to the threats. You have to make those threats come true,” he said.

What are the broader implications of sanctions against Russia in the United States and globally?

During the event, participants also addressed the wider implications of sanctions against Russia. “This war has become a proxy war against the United States,” Hill said. “Putin is emboldened by the fact that he thinks everyone else can vent their frustration with the United States through the war in Ukraine.”

Demarais stressed that countries led by China would introduce “sanction-proof mechanisms” in response to the West’s actions. These include alternatives to Western financial instruments through digitalization and the creation of an alternative to the SWIFT interbank transaction system. The developments are a “terrifying prospect,” Demarais said: Ineffective sanctions would be a lost foreign policy tool and a national security risk because, for example, the financial transactions of terrorist groups could no longer be traced, she said.

This followed on from an earlier thread of discussion, when Singh discussed the long-term prospect of establishing a doctrine of economic statecraft that favors instruments “that offer the prospect of mutual economic benefit,” such as debt relief or infrastructure financing. “I would say these instruments have the potential to forge a more lasting alliance with countries that are skeptical of our use of economic statecraft.” However, he noted, this administration’s ability to define such a doctrine may be time-limited, depending on the November election.