What are the sanctions on Russia and have they affected its economy? (2024)

What are the sanctions on Russia and have they affected its economy? (1)What are the sanctions on Russia and have they affected its economy? (2)Getty Images

The US, UK and EU have announced new sanctions on Russia, two years after its invasion of Ukraine.

The measures also marked a week since the death in custody of opposition leader Alexei Navalny.

What are sanctions?

Sanctions are penalties imposed by one country on another, to stop them acting aggressively or breaking international law.

They are among the toughest measures nations can take, short of going to war.

What are the latest sanctions on Russia?

Announcing 500 new sanctions against Russia, US President Joe Biden said they would target Russia's war machine. Export restrictions will be imposed on nearly 100 firms or individuals.

President Biden said the measures would also target people connected with the imprisonment of Mr Navalny, who died in an Arctic penal camp.

The UK has frozen the assets of six bosses at the prison and banned them from travelling to the UK.

What are the sanctions on Russia and have they affected its economy? (3)What are the sanctions on Russia and have they affected its economy? (4)Getty Images

The EU has announced sanctions on 200 organisations and people which it says are helping Russia acquire weapons, or taking Ukrainian children from their homes.

The sanctions include companies and individuals involved in shipping North Korean armaments to Russia.

What other sanctions have been imposed on Russia?

Since Russia's invasion of Ukraine in February 2022, the US, UK and EU, along with countries including Australia, Canada and Japan, have imposed more than 16,500 sanctions on Russia.

Their main target has been Russia's money.

Foreign currency reserves worth $350bn (£276bn) - about half its total reserves - were frozen.

About 70% of the assets of Russian banks were also frozen, the EU says, and some were excluded from Swift, a high-speed messaging service for financial institutions.

Western nations have also:

  • banned exports of technology Russia might use for making weapons
  • banned imports of gold and diamonds from Russia
  • banned flights from Russia
  • sanctioned oligarchs - the wealthy business people linked with the Kremlin - and impounded their yachts

What are the sanctions on Russia and have they affected its economy? (5)What are the sanctions on Russia and have they affected its economy? (6)Reuters

Russia's oil industry has been another major target.

The US and UK banned Russian oil and natural gas. The EU has banned seaborne crude imports.

The G7 - an organisation of the world's seven largest "advanced" economies - has imposed a maximum price of $60 (£47) a barrel on Russian crude oil, to try to reduce its earnings.

Which Western companies have left Russia?

Hundreds of major firms, including McDonald's, Coca-Cola, Starbucks and Heineken, have stopped selling and making goods in Russia.

However, some still do business in Russia.

PepsiCo, for example, has been accused of continuing to sell food products in Russia. And the BBC discovered that US cosmetics firm Avon was making goods in a factory near Moscow.

How has Russia evaded sanctions?

President Vladimir Putin has claimed European sanctions have done Russia no harm, saying: "We have growth, and they have decline."

Russia has managed to sell oil abroad for more than the G7's price cap, according to the Atlantic Council, a US think tank. It says a "shadow fleet" of about 1,000 tankers is used to ship it.

The International Energy Agency says Russia is still exporting 8.3 million barrels of oil a day - having increased supplies to India and China.

Russia is also able to import many sanctioned Western goods by buying them through countries such as Georgia, Belarus and Kazakhstan, according to researchers at King's College London.

China has been a vital supplier of alternative hi-tech products to those produced in the West, says Dr Maria Snegovaya from the US think tank, the Center for Strategic and International Studies.

"China sells it chips and other components it needs to for keep its military production going," she says. "Russia wouldn't be able to pull that off without China's help."

What impact have sanctions had on Russia's economy?

In 2022, the first year of the war, Russia's economy shrank by 2.1%, according to the International Monetary Fund.

However, it estimates that Russia's economy grew by 2.2% in 2023 and predicts growth of 1.1% in 2024.

Nevertheless, the US Treasury claims sanctions are damaging Russia, having cut 5% from the economic growth it might have had over the past two years.

But Dr Snegovaya suggests: "Sanctions have not made waging this war sufficiently costly for Russia, and that means it can continue with it for some time to come".

What are the sanctions on Russia and have they affected its economy? (7)What are the sanctions on Russia and have they affected its economy? (8)

The US Treasury also says that the war in Ukraine and sanctions have led more than a million people - many of them young and highly educated - to leave Russia.

Russia's government has also been slashing health spending to fund the war in Ukraine, according to the UK's Ministry of Defence.

"This mainly hits people in rural areas," says James Nixey of foreign affairs think tank Chatham House. "The government makes cuts there rather than in the major cities, where they might cause uprisings."

War in Ukraine

International sanctions

Russia

Economic sanctions

Russia economy

What are the sanctions on Russia and have they affected its economy? (2024)

FAQs

How have Russian sanctions affect Russia's economy? ›

Russia's revenues from fossil fuels are diminishing

While in the first half of 2022 Russia benefited from growing prices of fossil fuels on global markets, sanctions targeting oil imports that came into force in December 2022 have resulted in limiting Russia's revenues.

What are the sanctions that have been imposed on Russia? ›

Overall, three types of sanctions were imposed: ban on provision of technology for oil and gas exploration, ban on provision of credits to Russian oil companies and state banks, travel restrictions on the influential Russian citizens close to President Putin and involved in the annexation of Crimea.

How do sanctions affect the economy? ›

Economic sanctions are penalties levied against a country, its officials, or private citizens to provide disincentives for the targeted policies and actions. Economic sanctions include travel bans, export restrictions, trade embargoes, and asset seizures.

What are the economic sanctions on Russia for invading Ukraine? ›

The sanctions included cutting off major Russian banks from SWIFT, the global messaging network for international payments, although there would still be limited accessibility to ensure the continued ability to pay for gas shipments.

What is the current state of the Russian economy? ›

Economy of Russia
Statistics
GDP growth−1.2% (2022) 3.6% (2023) 3.2% (2024)
GDP per capita$13,648 (nominal; 2023 est.) $35,401 (PPP; 2023 est.)
GDP per capita rank72nd (nominal; 2023) 60th (PPP; 2023)
GDP by sectorAgriculture: 5.6% Industry: 26.6% Services: 67.8% (2022 est.)
36 more rows

What was the impact on Russian economy? ›

The Russian economy ultimately shrank by 2.1% in 2022, far less than had been earlier predicted by the Russian economic ministry, World Bank, and Institute of International Finance.

Why did the US put sanctions on Russia? ›

Since Russia's invasion of Ukraine in February 2022, the US, UK and EU, along with countries including Australia, Canada and Japan, have imposed more than 16,500 sanctions on Russia. Their main target has been Russia's money. Foreign currency reserves worth $350bn (£276bn) - about half its total reserves - were frozen.

Can I still buy goods from Russia? ›

Making available or acquiring goods and technology

Some of the prohibitions also prohibit directly or indirectly acquiring certain goods or technology which originate in Russia or which are located in Russia or from a person connected with Russia.

Which goods are banned from Russia? ›

On 21 July 2022, the Russia (Sanctions) (EU Exit) (Amendment) (No. 14) Regulations 2022 amended the Russia Sanctions Regulations. This amendment prohibits the import of oil and oil products, coal and coal products and gold as well as the acquisition, supply and delivery, directly or indirectly of these goods.

What are the pros and cons of economic sanctions? ›

Furthermore, targeted sanctions such as asset freezes or travel bans can be a way to pressure governments without harming the broader population. However, sanctions also have some significant drawbacks. One of the main challenges is that they can be difficult to enforce and can sometimes have unintended consequences.

How do sanctions cause inflation? ›

Heavy sanctions create instability in the market exchange rates and widening the gap between the market and the official exchange rates. Furthermore, economic sanctions increase expected inflation among the people and drive higher inflation.

What is the goal of a sanction? ›

Sanctions are based in the traditional purposes of punishment: just deserts (or retribution), deterrence, rehabilitation, and incapacitation.

How are sanctions affecting Russia? ›

Putin is feeling the impacts of his war in Ukraine. Sanctions and export controls are damaging Russia's economy and limiting its access to the financing and material goods needed to wage its illegitimate war of choice.

Can US citizens do business with Russia? ›

Summary. The United States assesses that doing business in the Russia Federation and in Russia-occupied territories of Ukraine poses serious legal, financial, and reputational risks.

Has the US ever been sanctioned? ›

The United States of America had multiple sanctions imposed on them throughout history.

What are the economic consequences of the Russian Ukraine war? ›

For the people of Ukraine, incomes have plummeted. Poverty in the country soared from 5.5% of the population to 24.2% in 2022, according to the World Bank. The war has thus pushed 7.1 million more people into poverty, undoing 15 years of progress.

Why is Russia struggling? ›

"Sanctions are hitting the Russian military industrial complex hard, causing severe delays and increasing costs. An inability to access Western components is severely undermining Russia's production of new systems and repairs of old systems, with long-term consequences for the quality of weapons produced," they said.

Why did western sanctions on Russia prove ineffective? ›

Western sanctions failed to dent Russia's economy.

Thanks to India and China's ability to dodge these sanctions, Russian exports have remained buoyant, and a global commodity price spiral has been averted.

What is a major problem facing natural resources in Russia? ›

Russia's environmental problems include water and air pollution, radioactive contamination, pollution from its space program, industrial pollution, leaks from oil and gas pipelines, and declining biodiversity, Yablokov said.

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