International sanctions during the Russo-Ukrainian war

Based on Wikipedia: International sanctions during the Russo-Ukrainian war

The Economic Weapon

In February 2014, Russian soldiers in unmarked uniforms began appearing in Crimea. Within weeks, Russia had annexed the peninsula. The West faced a question that would define international relations for the next decade: how do you punish a nuclear-armed superpower without starting a war?

The answer was sanctions—an economic weapon that countries have wielded against each other for centuries, but never quite like this.

What followed became the most comprehensive sanctions regime imposed on a major economy since the Cold War. By 2024, thousands of Russian individuals, hundreds of companies, and entire sectors of the Russian economy found themselves cut off from Western financial systems, technology, and markets. The ruble crashed. Capital fled. Russia's economy, which had been integrating into global markets for two decades, suddenly found itself isolated.

But this isn't simply a story of Western resolve punishing Russian aggression. It's messier than that. Sanctions hurt Europe too—costing the European Union an estimated hundred billion euros by 2015 alone. Russia retaliated with its own sanctions, banning food imports from Western countries. And perhaps most striking: even as of late 2023, Russia's nuclear industry remained completely exempt from sanctions, with the state-owned company Rosatom continuing as the world's largest builder of nuclear reactors.

Before Crimea: The Magnitsky Precedent

To understand the sanctions on Russia, you have to start with a tax accountant named Sergei Magnitsky.

In 2008, Magnitsky uncovered a massive tax fraud scheme involving Russian officials stealing $230 million from the Russian treasury. Instead of being celebrated as a whistleblower, he was arrested. For nearly a year, he was held in increasingly brutal conditions in Moscow's detention centers. Denied medical treatment for pancreatitis and a gall bladder condition, he died in custody in November 2009. He was thirty-seven years old.

His death outraged the international community. In December 2012, the United States Congress passed the Magnitsky Act, which did something novel: it targeted individual Russian officials believed responsible for his death. These people couldn't enter the United States or use American banks. It wasn't a sanction against Russia as a country—it was a sanction against specific people for specific human rights abuses.

Eighteen individuals were initially affected. That might seem like a small number, but the concept was revolutionary. For powerful people who kept their wealth in Western banks, sent their children to Western schools, and vacationed in Western capitals, this was personal.

The law proved so effective that in 2016, Congress expanded it globally. The Global Magnitsky Act allowed the United States government to sanction foreign officials anywhere in the world who were implicated in human rights abuses. Other countries followed with similar legislation. A new tool had been added to the diplomatic arsenal.

The First Wave: Targeting Individuals

When Russian forces moved into Crimea in late February 2014, the Western response came quickly—but carefully.

On March 6, 2014, President Barack Obama signed an executive order declaring a national emergency. This legal mechanism, invoking the International Emergency Economic Powers Act, gave the administration authority to freeze assets and ban travel for individuals who had "asserted governmental authority in the Crimean region without the authorization of the Government of Ukraine."

Notice the precision of that language. The initial sanctions didn't target Russia broadly. They targeted specific people for specific actions.

Eleven days later, on March 17, the United States, the European Union, and Canada announced targeted sanctions against named individuals. The timing was deliberate—this came one day after Crimea held a referendum on joining Russia, and just hours before Vladimir Putin signed a decree recognizing Crimean independence.

These were the most wide-ranging sanctions imposed on Russia since the collapse of the Soviet Union in 1991. Japan joined in, suspending talks on military cooperation, space programs, and investment. Australia followed two days later. Within weeks, Albania, Iceland, Montenegro, and even Moldova had imposed similar restrictions.

The European Union was explicit about its reasoning. These sanctions, the EU stated, were "not punitive, but designed to bring about a change in policy or activity." The door remained open. The EU declared itself "ready to reverse its decisions and reengage with Russia when it starts contributing actively and without ambiguities to finding a solution to the Ukrainian crisis."

Russia's response was defiant. The State Duma—the lower house of the Russian parliament—unanimously passed a resolution asking that all of its members be added to the sanctions list. Being sanctioned by the West became, in some Russian political circles, a badge of honor.

Escalation: Targeting Sectors

As violence spread into eastern Ukraine through spring and summer of 2014, the sanctions expanded dramatically. What had begun as targeted measures against individuals evolved into something much broader: sectoral sanctions designed to cripple key parts of the Russian economy.

Three sectors bore the brunt:

• Energy: Western companies were banned from providing technology for oil and gas exploration, particularly for arctic, deepwater, and shale projects
• Finance: Russian state banks and major companies were cut off from Western credit markets
• Defense: Arms exports to Russia were embargoed, along with dual-use goods that could have military applications

In July 2014, the United States extended its transaction bans to major Russian energy firms Rosneft and Novatek, as well as two banks: Gazprombank and Vnesheconombank. The European Union followed, adding dozens of individuals and entities to its lists.

By September, the United States had sanctioned Sberbank, Russia's largest bank, along with Rostec, a major arms manufacturer. The biggest Russian oil companies—Gazprom, Gazprom Neft, Lukoil, Surgutneftegas, and Rosneft—faced restrictions on cooperation with Western energy firms. This wasn't just symbolic. It meant that companies like ExxonMobil and BP couldn't share technology or services with their Russian counterparts.

Vice President Joe Biden was blunt about the strategy. "It was America's leadership and the president of the United States insisting, oftentimes almost having to embarrass Europe to stand up and take economic hits to impose costs," he said in October 2014. The results, he argued, were visible: "massive capital flight from Russia, a virtual freeze on foreign direct investment, a ruble at an all-time low against the dollar, and the Russian economy teetering on the brink of recession."

But Biden also articulated the limits. "We don't want Russia to collapse," he said. "We want Russia to succeed. But Putin has to make a choice."

The Crimea Blockade

Beyond the broader sanctions against Russia, Western countries imposed specific measures targeting Crimea itself—treating the annexed peninsula almost like a separate jurisdiction under embargo.

In December 2014, the European Union banned certain investments in Crimea, halted support for Russian Black Sea oil and gas exploration, and prohibited European companies from purchasing real estate or companies on the peninsula. Tourism services were restricted. Seven specific ports were listed where cruise ships could not dock.

The United States matched these measures. President Obama signed an executive order prohibiting exports of American goods and services to Crimea. Payment networks Visa and MasterCard stopped operating in Crimea between December 2014 and April 2015, cutting residents off from the global financial system.

For people living in Crimea—whether they supported the annexation or not—daily life became significantly more complicated. International businesses pulled out. Payment systems stopped working. Travel became restricted. The peninsula that Russia had seized became, in many practical ways, an economic island.

Russia Strikes Back

Russia didn't simply absorb these sanctions passively. In August 2014, Moscow announced a total ban on food imports from the European Union, the United States, Norway, Canada, and Australia. Later, Japan was added to the list.

This wasn't just retaliation—it was a bet. Russia calculated that European farmers, who had been exporting billions of dollars worth of food to Russia, would pressure their governments to ease sanctions. The strategy had some logic. European agricultural interests were indeed hurt, and there were regular calls from some quarters to normalize relations with Moscow.

Russia's finance minister estimated that sanctions had cost Russia about $40 billion. But the drop in oil prices that same year—2014—caused an additional $100 billion in losses. For an economy so dependent on energy exports, the price of oil mattered more than Western sanctions.

This distinction matters. When you hear that sanctions "devastated" the Russian economy, the reality is more nuanced. Sanctions hurt. But the collapse in oil prices, which happened for unrelated reasons having to do with global supply and demand, hurt more. Untangling these effects is genuinely difficult.

The Swiss Exception

Switzerland's response to the Ukraine crisis illustrates the complexity of modern sanctions regimes.

Officially neutral, Switzerland initially tried to stay out of the conflict. But as sanctions expanded, the country faced a problem: its banking system could become a conduit for Russians evading Western restrictions. If sanctioned individuals could simply move their money through Zurich, the entire sanctions regime would have a gaping hole.

In August 2014, Switzerland began adopting measures to prevent sanctions evasion. It added dozens of Russians and pro-Russian Ukrainians to its restricted list. Five major Russian banks would need special authorization to issue long-term financial instruments in Switzerland. The neutral nation had chosen a side—or at least chosen not to provide a back door.

The Expanding Web

By 2015, the sanctions regime had grown into something extraordinarily complex. The European Union's list covered 151 individuals and 37 entities. Canada's list included major Russian corporations and senior military officials. Ukraine itself sanctioned over 388 individuals and more than 105 companies, formally declaring Russia "an enemy of Ukraine" in September 2015.

Small countries joined in. Lithuania sanctioned 46 individuals. Montenegro's foreign minister acknowledged a "centuries-old tradition" of good ties with Russia but said joining EU sanctions had "always been the only reasonable choice" for a country seeking European integration.

The complexity created its own problems. Lawyers specializing in sanctions compliance became highly sought after. Banks hired entire teams to screen transactions. The compliance costs—just figuring out who you could and couldn't do business with—ran into billions of dollars globally.

The Nuclear Exception

Here's a detail that surprises many people: through all of this, Russia's nuclear industry remained completely untouched by sanctions.

As of December 2023—nearly a decade after the annexation of Crimea and almost two years into Russia's full-scale invasion of Ukraine—Rosatom, Russia's state nuclear company, remained the world's largest actor in nuclear reactor construction. It played key roles in nuclear fuel supplies, equipment manufacturing, and handling nuclear waste. Western countries that had imposed sweeping sanctions on Russian oil, gas, and finance continued doing business with Russian nuclear companies.

Why? The answer involves a mix of practical necessity and political calculation. Many countries depend on Russian nuclear fuel and technology. Transitioning away would take years and cost billions. Some argue that maintaining nuclear cooperation provides a channel for communication with Moscow. Others simply note that nuclear energy wasn't the target—hydrocarbon exports that fund the Russian state were.

Critics call this hypocrisy. Defenders call it pragmatism. Either way, it demonstrates that even the most comprehensive sanctions regime has limits and exceptions.

2022: The Invasion and the Response

When Russia launched its full-scale invasion of Ukraine on February 24, 2022, the sanctions that had been building since 2014 suddenly seemed inadequate. The West responded with measures that went far beyond anything seen before.

Selected Russian banks were cut off from SWIFT—the Society for Worldwide Interbank Financial Telecommunication—which is the messaging system that banks use to transfer money internationally. Being cut off from SWIFT doesn't make transactions impossible, but it makes them dramatically harder and slower. It's like being removed from the internet: you can still communicate, but only through much more cumbersome means.

The sanctions now targeted Vladimir Putin personally, along with senior government officials. The European Union and United States froze Russian central bank reserves held in Western institutions—hundreds of billions of dollars that Russia couldn't access.

The global response triggered what became known as the 2022 Russian financial crisis. The ruble collapsed (though it later recovered). International businesses fled Russia. Flights were banned. Sporting events were cancelled. The economic isolation that had been building for eight years suddenly intensified exponentially.

The 2024 Expansion

The sanctions continued expanding even years into the war. In February 2024, following the death in custody of Russian opposition leader Alexei Navalny—echoing, grimly, the fate of Sergei Magnitsky fifteen years earlier—the United States imposed more than 500 new sanctions.

These targeted not just Russian entities but companies in other countries that were helping Russia evade restrictions. Ninety-three entities faced new trade restrictions for assisting Russia's war effort: 63 in Russia, 16 in Turkey, 8 in China, and 4 in the United Arab Emirates. A UAE company called Crynofist Aviation, which provided spare parts for aircraft, was specifically named.

This represented a new phase in sanctions enforcement. Instead of just targeting Russia directly, Western countries began penalizing companies anywhere in the world that helped Russia circumvent restrictions. The message was clear: you can do business with Russia or you can do business with the West, but not both.

The Damage Assessment

How effective have sanctions been? The honest answer is: it depends on what you expected them to accomplish.

If the goal was to force Russia out of Crimea, sanctions failed completely. Russia annexed Crimea in 2014 and still holds it as of this writing.

If the goal was to prevent further Russian aggression, sanctions also failed. The 2022 invasion happened despite—or perhaps partly because of—the existing sanctions regime.

If the goal was to impose economic costs on Russia, sanctions succeeded. Russia's finance minister acknowledged $40 billion in direct losses. Economic growth was reduced by an estimated 0.5 to 1.5 percent of GDP. The ruble crashed repeatedly. Foreign investment dried up.

But sanctions also imposed costs on the sanctioning countries. The European Union estimated its losses at €100 billion by 2015. Energy prices spiked. Supply chains were disrupted. European companies lost access to Russian markets.

Perhaps most importantly, sanctions didn't change Russian behavior, at least not in the ways Western leaders hoped. Putin didn't withdraw from Ukraine. He didn't fall from power. If anything, the siege mentality created by sanctions may have strengthened his domestic political position, at least initially.

The Sanctions Paradox

There's a fundamental tension at the heart of economic sanctions. For sanctions to hurt, your adversary needs to be economically connected to you. But if your adversary is economically connected to you, sanctions hurt you too.

In the case of Russia, decades of post-Cold War integration meant that cutting economic ties would be painful for everyone. Europe depended on Russian gas. Russian wealth was stored in European banks. Russian oligarchs owned property in London. Russian companies were listed on Western stock exchanges.

Sanctions work best against smaller economies that are more dependent on larger ones. Cuba, Iran, North Korea—these countries have been under various sanctions for decades. But Russia is simply too big, too resource-rich, and too geographically significant for sanctions alone to bring it to its knees.

This doesn't mean sanctions are useless. They impose real costs. They signal international disapproval. They may, over time, erode Russia's military capabilities by restricting access to advanced technology. But they are not a magic solution. They are one tool among many, and not necessarily the most effective one.

Living Under Sanctions

For ordinary Russians, life under sanctions has meant higher prices, fewer choices, and restricted travel. International brands left. Credit cards stopped working abroad. Flights to Europe and North America were cancelled.

For wealthy Russians—the oligarchs whose yachts and mansions once made headlines—sanctions meant frozen assets, seized property, and exile from the Western playgrounds they once enjoyed. Some lost billions on paper. Others managed to move their wealth to jurisdictions beyond Western reach.

For Europeans, sanctions meant higher energy bills, at least initially. German industry, which had built supply chains assuming cheap Russian gas, had to adapt quickly. Agricultural exporters lost access to Russian markets.

For Ukrainians, the question of whether sanctions were "working" became almost beside the point. Their country was being invaded. Sanctions, however economically painful for Russia, weren't stopping Russian missiles from falling on Ukrainian cities.

What Sanctions Cannot Do

Economic sanctions are not a substitute for military force. They cannot stop tanks. They cannot shoot down missiles. They cannot liberate occupied territory.

Sanctions are a form of siege warfare, and sieges take time. The theory is that economic pain will eventually force a change in policy. But "eventually" might be years or decades. And authoritarian governments are often quite skilled at insulating themselves from economic pain while passing the costs on to their populations.

The Russian government has adapted to sanctions in various ways. It has found alternative suppliers for restricted goods, often through third countries. It has developed domestic alternatives to some Western products. It has redirected trade toward China and other countries that haven't imposed sanctions.

None of this means sanctions have been costless for Russia. They haven't. But they also haven't been costless for the West, and they haven't achieved their stated goals of forcing Russia to change its behavior toward Ukraine.

The Future of Sanctions

As of mid-2023, sanctions by the European Union and United States remained in full effect, with no end in sight. The EU continued extending its measures in six-month increments. The United States showed no signs of lifting restrictions.

The longer sanctions remain in place, the more permanent the economic divorce becomes. Companies that left Russia are unlikely to return. Supply chains that were redirected won't easily redirect back. The integration between Russia and the West that took thirty years to build has been substantially dismantled in just a few years.

Some see this as a success: Russia has been economically isolated, its ability to wage war constrained, its technological development hampered. Others see it as a failure: Russia still occupies Ukrainian territory, the war continues, and the sanctions haven't forced any meaningful change in Russian policy.

The truth is probably somewhere in between. Sanctions are neither the decisive weapon their proponents sometimes claim nor the ineffective gesture their critics dismiss. They are a tool—imperfect, costly to both sides, and slow-acting. In a world where great powers possess nuclear weapons, they may be the only tool available short of war. Whether that makes them adequate is a question that history will answer.