Members' Research Service By / February 18, 2022

Western sanctions and Russia: What are they? Do they work?

In 2014, the EU and the US adopted sanctions against Russia after it annexed Crimea. Since then, they have added various other restrictive measures, responding to Russia’s use of illegal chemical weapons, cyber-attacks and human rights abuses.

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Written by Martin Russell.

Russia has become increasingly problematic for the EU. The 2008 war against Georgia only resulted in a temporary cooling of relations, but after Moscow’s March 2014 annexation of Crimea, there was no return to business as usual. The EU adopted its first sanctions against Russia in response to violations of Ukrainian sovereignty, and these have stayed in place ever since. With fears of renewed aggression against Ukraine in 2022, the EU is considering additional measures. Russia’s actions in other areas also challenge international norms – illegal use of chemical weapons, cyber-attacks aimed at undermining Western democracies, and human rights abuses: these too have met with EU sanctions.

For maximum effect, the EU coordinates its restrictive measures with the US and other countries such as Canada. EU and US sanctions focus on similar targets, but there are also significant differences in approach, which sometimes cause frictions between the trans-Atlantic partners.

While most Western sanctions target Russian individuals and organisations rather than the country as a whole, Ukraine-related sectoral sanctions have a much broader economic impact. These measures, adopted by both the EU and the US, are directed at three strategic sectors of the Russian economy: defence, energy, and finance.

Defence sector sanctions include an arms embargo, restrictions on exports of dual-use (civilian-military) goods, and (from the US side) secondary sanctions against third countries purchasing Russian weapons. Overall, sanctions have not stopped Russia from pursuing its military modernisation programme, but may have hampered production of certain types of weapons and helped to curb arms exports. With regard to energy, restrictions on cooperation led to the cancellation of some oil projects; in spite of this, Russia’s oil and gas sector continues to flourish. In the financial sector, banks were initially hard-hit by the loss of access to Western financing, but are now more resilient than in 2014.

The overall impact on Russia’s economy is hard to measure; estimates put the cost of sanctions at between 0.2 % and 2 % of GDP a year, but there is consensus that oil price volatility and deep-seated structural factors rather than sanctions are the main constraints on Russia’s economic growth, which has averaged less than 1 % since 2014.

The political impact of sanctions is unclear. There is no evidence that they have persuaded Russia to modify its behaviour, nor have they created any visible pressure for change within Russia itself. Arguably, they have deterred further aggression in eastern Europe, although their effectiveness in this respect is now being put to the test by Russia’s threatening military manoeuvres on the Ukrainian border.

Read the complete ‘in-depth analysis’ on ‘Western sanctions and Russia: What are they? Do they work?‘ in the Think Tank pages of the European Parliament.

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