Russia Sanctions at Three Years: What Worked, What Did Not

When the EU and G7 rolled out their sanctions packages in early 2022, the ambition was clear: cripple Russia's war machine by cutting off its access to Western technology, freezing its central bank reserves, and strangling its energy revenues. Three years later, the picture is more nuanced than the architects hoped.

Russia's GDP contracted by just 2.1% in 2022, then grew modestly in 2023 and 2024, fuelled by wartime fiscal spending and redirected trade flows. The ruble, after an initial crash, stabilised. Unemployment fell to record lows as military mobilisation absorbed surplus labour.

The most significant unintended consequence has been the emergence of sophisticated sanctions-evasion networks. Kazakhstan's imports of dual-use goods from the EU surged by 300% in 2023. Turkish intermediaries have become essential links in the supply chain. Chinese firms now provide components that were once exclusively Western.

The EU's 14th sanctions package attempted to close these gaps by targeting third-country entities that facilitate evasion. But enforcement remains patchy, and the political will to confront friendly intermediary nations is limited.

The debate has shifted from whether sanctions work to what comes after them. Using the €260 billion in frozen Russian central bank assets to fund Ukraine's reconstruction remains legally contentious but politically inevitable. The G7's decision to use the interest income was a first step. Full confiscation would set a precedent that makes every central bank on earth nervous.