Ukraine’s Allies Keep Hitting Russia with More Sanctions — and Russia Keeps Finding Ways Around Them

Sanctions have, to some extent, "achieved an economic shock to Russia," said Rachel Ziemba, an adjunct fellow at the Centre for New American Security who tracks the impacts of financial sanctions.

"The problem is that Russia is quite willing to jettison long-term economic growth," she said in an interview from New York.

In January, the International Monetary Fund (IMF) revised its Russian GDP growth projection to 2.6 per cent, up from its October 2023 prediction of 1.1 per cent, though the economy remains weaker than it was before the war and the IMF predicts growth will shrink next year.

Ziemba says the measures unveiled last week may be more incremental than policymakers are trying to make them out to be, but they're a necessary step in attempting to prevent Russia from circumventing previously implemented measures.

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Russia did not enter the war with a great deal of domestic or external debt, said Ziemba, and it had more than $600 billion US in foreign currency and gold reserves — approximately half of which has been frozen by the West.

Although its war chest has dwindled as the conflict enters it third year, domestic defence spending is actually helping to keep the country afloat — and it's a major reason the IMF revised its economic forecast for Russia this year.

"They've really reoriented their economy around a war economy," Ziemba said. "Even automakers, suddenly, were making military tanks."

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