Sanctions on Russia

Publication Category: Military

Russia’s military production is dependent on Western components and technology. Halting the inflow is supposed to limit the capacity for production and, therefore, the military capacity.

  • Dodging Trade Sanctions? Evidence from Military Goods

    Dodging Trade Sanctions? Evidence from Military Goods

    Granular trade data from UN Comtrade show that, after the February 2022 escalation of the war, Russia-friendly countries were 20 percentage points more likely to export military goods to Russia compared to neutral countries. Western sanctioning countries were 4 percentage points more likely to export military goods to Russia-friendly countries than to other neutral destinations. When it comes to re-exports, defined as goods imported and then directly exported without substantial transformation, those increased by 8 percentage points more from Georgia, Moldova, and Uzbekistan than from neutral countries. There is also suggestive evidence that sanction evasion for military goods was more prevalent in 2022 than in 2023, indicating that policy measures to curb evasion may have had some effect.

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  • On the design of effective sanctions: the case of bans on exports to Russia

    On the design of effective sanctions: the case of bans on exports to Russia

    The article investigates how specifically targeted export bans can significantly undermine Russia’s economic performance and defense capacity, serving as a powerful complement to conventional sanctions like asset freezes or energy embargoes. Using an economic model, the authors analyze over 5,000 product lines at the six-digit HS level, assessing each item’s strategic importance by combining data on Russia’s import volumes with the degree to which a coalition of sanctioning countries dominates the relevant markets. In many categories, such as precision machinery and advanced industrial inputs, countries like those in the European Union or the United States control the majority of Russia’s supply.

    According to the article’s detailed assessment, blocking Russia from acquiring high-tech goods, specialized machinery, and complex industrial components places a pronounced strain on its arms production and broader industrial base. These items, particularly advanced electronics and capital goods used in the fabrication of modern military hardware, are difficult to substitute, and their absence can severely disrupt the functioning and modernization of production lines. Russia may temporarily rely on existing stockpiles or installed equipment, but without continued access to new machines and spare parts, future upgrades or expansions become increasingly difficult, leading to bottlenecks and diminished output.

    A key insight is that certain export bans impose economic costs on Russia that far outweigh any losses to the sanctioning states, sometimes by a factor of 100. The impact grows more powerful when countries act in coordination. A broad coalition spanning the EU, the US, and other partners can increase pressure on Russia by up to 80 percent compared to uncoordinated efforts, without significantly raising costs to themselves. Even modest overlaps in market share across sanctioning countries can cause severe shortfalls in essential imports, forcing Russia to delay or abandon procurement, rely on slower workarounds, or accept lower-quality substitutes.

    While some current measures already affect about 20 percent of Russia’s imports, the authors argue that many strategically important product lines remain unsanctioned. They stress that targeting items in which sanctioning countries hold dominant positions, especially advanced technologies and capital goods, can create lasting disarray across manufacturing, infrastructure, and the high-tech sectors of Russia’s economy.

    Although the paper’s framework is primarily economic, it recognizes that export controls are also used to curb Russia’s defense modernization and restrict energy-sector capabilities. It also notes enforcement challenges, including smuggling, parallel imports, and retaliation. Still, the central message is clear: sanctions are most effective when they target chokepoints where Russia depends on a narrow set of foreign suppliers, and when likeminded countries coordinate their restrictions. This strategy, if implemented precisely, can simultaneously maintain coalition unity and aggravate Russia’s long-term economic and technological vulnerabilities.

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  • Economic Sanctions: Evolution, Consequences, and Challenges

    Economic Sanctions: Evolution, Consequences, and Challenges

    The authors describe the 2022 sanctions against Russia, triggered by the invasion of Ukraine, as notably broad and powerful – the largest such measures ever targeted at a substantial economic power. From their perspective, this coordinated response stands apart from previous sanction episodes in both scale and international reach. They point out that, for the first time, a large cluster of World Trade Organization members revoked privileges such as Russia’s most favored nation status, relying on WTO rules that permit trade barriers in cases of essential security threats.

    These punitive steps extend beyond traditional restrictions on trade. They include cutting off Russia’s access to global credit, freezing important assets, and limiting the travel of prominent individuals and business figures. There is also a concerted effort to halt the flow of goods with potential military uses, all in an attempt to weaken Russia’s capacity to continue its campaign in Ukraine.

    The authors stress that even the most vigorous sanctions often face challenges in practice. Some countries may not strictly enforce the measures, while others could see chances to make up for lost trade or investment. With Russia’s economy being large enough to matter to global markets, concerns arise that major third parties, such as China or India, might fill the gaps, undercutting the intended effects. Because of this, sanctioning nations, especially the United States, have threatened additional penalties on outside actors if they help Russia bypass the restrictions.

    Whether these measures will definitely change Russia’s actions remains an open question. In the authors’ view, the sanctions are likely to impose lasting economic costs, both on Russia and on the nations applying or complying with the restrictions. Despite these burdens, there is no guarantee that they will directly persuade Russia to halt its military activities. However, constraining Russia’s ability to finance and replenish its armed forces could indirectly influence the conflict’s course, potentially affecting developments on the battlefield.

    In the bigger picture, the Russia-Ukraine case highlights how sanctions have evolved into a tool employed by a wide network of countries for urgent security concerns, rather than strictly economic disputes. It also illustrates how modern sanctions can ripple well beyond the immediate target, creating dilemmas for allies, partners, and global institutions. The authors emphasize that this situation may further encourage major powers to reduce their vulnerability to foreign pressure, possibly spurring new financial and commercial alignments and challenging longstanding global trade rules.

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  • Economic sanctions against Russia: How effective? How durable?

    Economic sanctions against Russia: How effective? How durable?

    The author observes that sanctions on Russia have multiple aims: to deter aggression, punish military offenses, and impede Russia’s economic ability to wage war. While they did not stop the invasion outright, they have sharply constrained Russia’s finances, trade links, and military-industrial capacity. Russian import volumes dropped significantly in 2022, reflecting both self-imposed export reductions and Western restrictions. Though Russia continues to earn revenue from oil and gas, European embargoes and the G7 price cap are beginning to reduce these earnings. Formerly the EU was Russia’s main energy buyer, but sales have shifted to China and India, often at a discount and with elevated transport costs. In January 2023, tax receipts from oil exports declined noticeably, indicating growing fiscal strain.

    According to Schott, these pressures have significantly restricted Russia’s access to key military components and advanced technologies. Russian manufacturers, including defense suppliers, have been forced to seek alternatives beyond traditional Western sources, turning to China and other non-Western markets. However, substitute goods are often costlier and of lower quality, complicating arms production, maintenance, and modernization. Replacing lost or worn-out military systems requires a steady flow of both standardized parts and high-grade technology, the flows that are now impaired. As a result, Russia’s ability to sustain large-scale conventional warfare will erode over time.

    The paper highlights that Russia’s trade has pivoted rapidly toward Asia, especially China, but with important constraints. Beijing has increased trade but has not fully replaced Western ties and remains cautious about triggering secondary sanctions. Some re-exports through Turkey and Central Asian states have grown, and Russia attempts to reroute military-linked imports through smaller regional hubs. Yet these channels offset only a fraction of the lost flows. Smuggling and indirect sourcing are limited, and Russian firms now face higher costs and complexity when rerouting or obscuring transactions. The defense sector remains vulnerable to persistent supply bottlenecks, particularly for sophisticated components.

    Western countries, especially in Europe, absorbed substantial economic costs in 2022, including spikes in energy prices. Yet Schott argues that political resolve has largely endured, supported by widespread outrage over Russian atrocities. Still, he warns that weakening coalition unity would undercut the sanctions’ long-term impact. He also notes that confiscating frozen Russian central bank assets could yield significant funding for Ukraine’s reconstruction, though legal debates continue.

    In the broader picture, sanctions have accelerated Russia’s economic drift toward autarky, weakened investor confidence, and exposed China and India to the risks of over-reliance on Russian commodities. Over time, Russia is likely to become more isolated, with diminished access to foreign capital, constrained technological imports, and an industrial brain drain. Schott stresses that continuing Western resolve, including support for Ukraine’s defense, is essential to ensuring that sanctions remain a durable constraint on Russia’s military and economic capabilities.

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  • Russia’s War Economy: How Sanctions Reduce Military Capacity

    Russia’s War Economy: How Sanctions Reduce Military Capacity

    The authors argue that Russia’s economy has shifted into “war mode,” with the government prioritizing defense spending and adjusting industrial output to sustain the invasion of Ukraine. Despite Russia’s financial resilience in 2022, Western sanctions and export restrictions have significantly disrupted its ability to produce and replenish vital military equipment, particularly advanced or high-tech systems. While Russia can still fund its war effort in the short term, sanctions are forcing both organizational and technological compromises in military production.

    Even as oil and gas revenues decline following the EU’s import bans and price caps, the Russian government has substantially increased its defense budget. Estimates suggest that over 5 percent of Russia’s GDP was allocated to defense in 2022, the highest share since the Soviet era. This reallocation comes at the expense of other spending areas, such as regional programs and social services, but also underscores the Kremlin’s determination to continue the war. Russia’s reliance on domestic borrowing and indirect money-printing through state-owned banks may sustain these expenditures for now, yet long-term risks mount as the conflict persists.

    A major focus of the paper is the impact of technology export bans on Russia’s defense-industrial capabilities. Even before 2022, Russian military modernization depended heavily on Western-produced components, including thermal cameras, optical systems, and advanced microelectronics. Sanctions have disrupted these supply channels, particularly for dual-use items, forcing Moscow to turn to convoluted “grey import” networks through countries like Turkey, Kazakhstan, and China. While these routes allow Russia to obtain some restricted technologies, they are slower, costlier, and fail to fully replace pre-sanctions imports.

    The authors cite multiple examples of production slowdowns due to missing components. Advanced armor and military trucks require German-made Bosch fuel injectors and other Western-designed parts, leading to delays and stoppages. High-precision missiles such as the Kh-101 rely on microchips and sensors from Dutch, Swiss, Taiwanese, and American manufacturers. Though newly produced missiles continue to appear on the battlefield, Russia’s inability to replenish these inventories at the previous pace suggests a growing strain. Meanwhile, with limited capacity to build modern replacements, Russia is refurbishing older Soviet-era stockpiles, such as T-62 tanks and BRDM-2 vehicles. While these outdated systems are far less capable than modern weaponry, they allow Russia to maintain its military presence on the front lines.

    Despite these setbacks, Russia’s defense sector continues to function, though at reduced capacity. Factories have extended working hours, substituted domestic or lower-quality foreign parts, and sought alternative procurement methods. This workaround strategy, including the acquisition of Iranian drones, some of which contain Western-made components, mitigates, but does not eliminate, the impact of sanctions. Over time, Russia’s increasing expertise in sanctions evasion may reduce the pressure further, yet the long-term strain on its military-industrial complex remains evident.

    The authors highlight several key policy implications. While sanctions alone will not end the conflict, they are gradually degrading Russia’s ability to produce high-tech military equipment. Strengthened enforcement is necessary to monitor supply networks and close loopholes in third-country re-exports of sensitive technologies. Given that energy revenues remain Russia’s primary funding source for the war, additional price caps and financial restrictions could further strain its budget. Better coordination between the EU, the US, and allied nations would also help standardize enforcement and prevent exporters from exploiting regulatory differences across jurisdictions.

    The paper concludes that although Russia’s military production capacity remains intact, it is being forced to downgrade its weapons systems and rely on aging Soviet-era stockpiles. This erosion of its ability to manufacture cutting-edge armaments at scale provides Ukraine and its allies with a strategic advantage that can be reinforced through sustained military aid and continued sanctions enforcement.

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  • Russo – Ukrainian war: Limits of Western economic sanctions

    Russo – Ukrainian war: Limits of Western economic sanctions

    The authors analyze how Western sanctions intended to deter Russia’s war efforts in Ukraine have fallen short of achieving their maximal intended impact. They argue that while sanctions certainly disrupt trade and impose economic pain, they have not forced Russia to abandon its territorial ambitions. The authors attribute this outcome to Russia’s relatively flexible market mechanisms and its ability to reroute its trade flows, rather than solely depending on traditional Western partnerships. As a result, Russia’s economy has shrunk less than many analysts initially predicted.

    A key point is the authors’ focus on “universal substitution,” where the target country’s producers, consumers, and financial institutions adapt to sanctions by finding alternative suppliers, buyers, or production methods. According to the authors, Russia’s system displays moderate capability in this regard. Firms and households, faced with blocked imports from the West, often turn to goods from non-Western nations or expand domestic production. Likewise, Russia’s oil sales, once oriented to Europe, are increasingly redirected to countries such as China, India, and Turkey. This rerouting, combined with a global willingness, at least among certain states, to purchase discounted Russian commodities, helps stabilize Russia’s export earnings.

    The authors note that policymakers in the United States and the European Union originally expected these sanctions to generate substantial pressure on Russia’s government finances and broader economy. Yet because Russia had prepared to withstand certain forms of financial cutoffs and because its home market could switch to local or non-Western alternatives, the pain has proved more manageable than Western leaders anticipated. Even bans on advanced technology and SWIFT access, while disruptive, have not triggered a large-scale collapse of Russia’s gross domestic product.

    On the global stage, the authors assert that sanctions have had unintended knock-on effects. They mention the spike in energy prices when Europe attempted to curtail Russian energy imports, contributing to inflation and hurting lower-income countries reliant on stable commodity supplies. Companies from the West that withdrew in haste from Russia may also have incurred substantial losses or seen their local assets repurposed by Russian counterparts. As a result, while the sanctions are partly successful in signaling political disapproval, the authors caution that they have inflicted collateral damage beyond Russia’s borders.

    Ultimately, the authors conclude that though sanctions do impede certain aspects of Russia’s economy, particularly in areas like technology and finance, they have not undermined the Kremlin’s ability to continue waging war. Looking ahead, they suggest that tighter controls on strategic imports like weaponry or high-end components might be effective, but broad trade bans will not necessarily produce a swift end to the conflict. They also raise the possibility of “smart sanctions,” designed to inflict less harm on outside parties while still restricting Russia’s critical military inputs. In their view, policymakers would achieve more balanced outcomes by focusing on blocking those materials most essential to the war effort, rather than pursuing sanctions so extensive that they harm the wider global economy without decisively altering Russia’s objectives.

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  • Assessing Russian State Capacity to Develop and Deploy Advanced Military Technology

    Assessing Russian State Capacity to Develop and Deploy Advanced Military Technology

    In this report, the authors analyze Russia’s capacity to preserve and improve its strategic deterrent systems under conditions of heightened isolation. They begin by stressing that Moscow, despite a contracting economy and diminished international standing, has placed strategic forces at the core of its defense priorities. They note that new restrictions on both financial flows and technology, particularly dual-use components, pose a challenge for producers of sophisticated weaponry. Nonetheless, Russia’s leadership has historically insulated major nuclear and missile projects from broader economic problems, a pattern likely to persist.

    Throughout their article, the authors emphasize that recent events, such as the extensive sanctions following the invasion of Ukraine, amplify Russia’s longstanding difficulties in acquiring high-end electronics. Yet they find that the Kremlin is expected to continue seeking alternative supply routes (whether via third parties or ”illicit trade networks that pass through friendly countries”) and ramping up domestic substitutes where possible. This adaptation, while imperfect, means that disruption to Russia’s defense industry may remain less severe than some foresee, especially for smaller-scale items essential to nuclear and missile programs.

    Another central theme is that the Kremlin treats strategic weapons as a hedge against its weaker standing in conventional warfare. The authors highlight how Russia’s military difficulties in Ukraine and the depletion of advanced conventional stocks could prompt even heavier investment in sub-strategic or “theater” nuclear arms. Such systems, from shorter-range warheads to dual-capable launchers, offer a cost-effective offset in a scenario where Western technology is harder to source and conventional rearmament lags. In addition, they discuss multiple “novel” Russian weapons projects—like new intercontinental ballistic missiles and hypersonic glide vehicles—that appear primed to continue, given past successes in shielding them from economic downturns.

    Ultimately, the authors present two contrasting trajectories for 2030: one in which Russia effectively circumvents export barriers, secures energy export revenues, and maintains a wide range of modernization programs, and another where deeper sanctions and heavier conventional losses compel it to focus more narrowly on nuclear options. In either path, the authors caution that nuclear forces remain a core strategic pillar for Moscow, underscoring that sanctions alone may not fully prevent Russia’s push to sustain or even expand key elements of its deterrent. One of the core messages is that consistent monitoring and strategic planning around Russia’s ongoing technical pursuits, particularly in nuclear fields, will remain essential, given the Kremlin’s resilience and willingness to prioritize its deterrent above nearly all other spending needs.

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