The ULTIMATE Guide to Why Russia Sanctions Have Failed and a Plan for Their Removal

From the UK's leading Russia sanctions expert

If you listen to the pronouncements of European elites like Kaja Kallas and British Foreign Secretary Yvette Cooper, and read the Western mainstream media, you would be forgiven for believing that sanctions are helping to change the war in Ukraine and slowly bring Russia to its knees.

You would be mistaken.

Economic sanctions have proven a catastrophic disaster — not for Russia, but for Europe and Britain in particular. Let’s examine why.

Sanctions Lose Impact Over Time

The biggest reason sanctions fail is time: the longer they remain in place, the weaker their impact becomes. We are regularly told that sanctions are leading to Russia’s economic collapse. Yet the economic data tells a very different story.

Average economic growth since 2014, when sanctions were first imposed against Russia, has been roughly the same: around 1.5% per year for Russia and the Eurozone, and 1.6% for the UK. Despite more than twenty thousand sanctions, Russia’s economy has not been brought to its knees.

The picture becomes even more interesting — and favourable to Russia — when we break the period down into key phases since 2014.

Phase 1: Russia Weakened by Oil Prices and Sanctions (2014–Early 2017)

The first three years after the Ukraine crisis started was the best time for the West to sue for peace with Russia, at a time when Russia was suffering from sanctions and energy price collapse and still navigating the change to its economic policy.

In the three years after sanctions were imposed in 2014 until the onset of COVID, Russia suffered considerably weaker growth than the UK and the Eurozone. It was hit by both sanctions and falling global energy prices, with sharp dips in 2014 and 2016. Average growth was –0.4%, compared with 1.8% in the Eurozone and 2.5% in the UK. Russia also lost around $100 billion in the value of its foreign exchange reserves in late 2015, which slide further and bottomed out at $356 billion in 2015.

Inflation and interest rates both hit 17%, largely because of the decision to float the exchange rate in response to oil-price volatility. This policy later proved advantageous as I will explain later.

Thomas Piketty estimated that three million more Russians were pushed into poverty during this period.

This was the time I was living in Russia. After Russia imposed counter-sanctions on European food products, there was a genuine sense of scarcity of certain items in the shops. I recall in my book A Misfit in Moscow being served a dessert in one of Moscow’s best restaurants consisting of a few scrawny satsuma segments — though I suspect the chef was making a political point.

At that stage the West appeared to be winning. Sanctions were clearly hurting, and there was a real sense that Russia wanted to reach a negotiated settlement with Ukraine, partly to secure sanctions relief.

In fact, objectively, that would have been the best time to sue for peace in Ukraine, when Ukraine needed peace as much as Russia wanted peace. The situation in the Donbas was turning against Ukraine; Russia’s army was being pulled more deeply into the fight against Ukraine’s so-called Anti-Terrorist Operation, which had been gaining significant ground against the separatists before being pushed back.

That military operation by the Ukrainians had killed and injured significant numbers of civilians in the Donbas, which had acted as a stimulant for Russia to get more directly involved. The issue of civilian casualties in the Donbas has been widely reported by the OSCE, and the regular monitoring reports are available on the OSCE website.

However, at a time of economic headwinds in Russia, there is no evidence that Russia wanted to occupy the Donbas rather than prevent Ukraine’s suppression of the Russian-speaking majority there and to support their efforts at devolution.

Russia’s policy changed after it abandoned hope of meaningful peace talks in Minsk. Through 2015 and 2016 Russia reached the conclusion that Western powers were not interested in a genuine peace process and intended to keep sanctions in place indefinitely.

The European Council’s March 2015 decision — made at the urging of the United States — to tie sanctions relief to the full implementation of Minsk II effectively made sanctions permanent. Minsk II also required devolution in Donbas, which the Ukrainian state was never prepared to deliver and which Western nations were never willing to press Ukraine to accept.

Russia was still suffering economically, with problems covering its fiscal deficit in particular, which came in at 3.4% in 2015 and 3.7% in 2016.Russia briefly flirted with economically liberal ideas to fill the hole in its public finances caused by sustained low energy prices and sanctions, including widespread privatisations. In the end, Putin chose a different course.

Phase 2: Russia’s Strategic Pivot and Recovery (2017–2019)

This was the period in which Russia radically changed its economic strategy in ways that would prove hugely beneficial once the war began. From entertaining a more economically liberal policy, Russia decisively chose to prioritise its existing areas of strength — its energy production and its well-developed, state-controlled industrial base.

Having absorbed a large inflation shock from the initial oil-price collapse, Russia embraced a deliberately weak rouble as an article of faith. The aim was to ensure that any further volatility in oil prices or external shocks that weakened the currency would actually increase its income from energy exports.

In short, Russia found a sweet spot that generated an excess of tax revenue during peacetime to support economic growth and build foreign-exchange reserves, while also giving the government greater freedom in its foreign policy choices, with no end to the Ukraine conflict in sight.

Despite sanctions on its energy sector, Russian oil and condensate production has not fallen below 10 million barrels per day since 2014. The energy-export sector became the foundation of Russia’s economic resilience precisely because it generates the income, reserves and tax revenue needed to sustain an independent foreign policy.

Having been in fiscal deficit for four straight years from 2014 to 2017 with an average deficit of around 2.4% (still modest by European standards), Russia moved back into the black in the two years before COVID with an average surplus of 2.7%.

On the basis that the United States still imports significant volumes of heavy crude for petroleum production, Russia remains the only truly energy-independent major global power — and this has been its strategic advantage in preparing for conflict with the West.

Four years after the Ukraine crisis began, and with a deliberately weak rouble combined with recovering energy prices, Russia was also recording higher growth than the UK and Europe. Average growth between 2017 and 2019 was 2.3%, compared with 2.1% in the Eurozone and 1.9% in the UK — despite being cut off from Western sources of lending.

Another key element of Russia’s strategy has been to use its significant trade surpluses rather than take on debt. Prior to the war starting, Russia’s debt to GDP was only 14% and even today remains only around 20% even after four and a half years of war.

As part of this approach, Russia actively bought dollars. Foreign-exchange reserves rose from their 2015 low of $356 billion to $554 billion by the end of 2019 and close to the previous historic peak of $582 billion in 2008.This was the period in which both Ukraine’s Western sponsors and Russia could have settled for peace on even terms.

Trump was in the Oval Office with a more moderate approach to relations with Russia. European policy was in a passive holding position with no big ideas to change the status quo. Russia was recovering economically, and economic relations with Europe outside of sanctions were largely carrying on as normal.

COVID happened, which arguably put the brake on peace efforts, and then Biden came to power, convincing Zelensky that the NATO dream was still alive and mobilising a radicalised British and European posture towards the Ukraine issue.

Phase 3: Wartime Resilience and Outperformance (2022 Onwards)

While it would be wrong to claim that Russia wanted war, in economic terms it had undoubtedly prepared for it.

Russia knew that should hostilities break out with Ukraine, three things would happen:

• A massive new round of sanctions would be imposed

• Russia’s currency would take a hammering

• War would precipitate a surge in energy prices

All three things happened. Western nations imposed enormous sanctions on Russia, which saw Russia suffer economic contraction in 2022 of 2% — significant but not catastrophic, and certainly not enough to make Russia change course in Ukraine.

However, the other two factors, which Russia had been preparing for since 2017, came into effect. Oil prices did surge and the rouble briefly collapsed to over 200 to the dollar.

This was widely celebrated in Western media and political circles.

Joe Biden said: “As a result of these unprecedented sanctions, the rouble was almost immediately reduced to rubble. The Russian economy is on track to be cut in half in the coming years… It will soon not even rank among the top 20 economies in the world.”

Boris Johnson said: “The rouble has plummeted to record lows against the dollar. We will continue on a remorseless mission to squeeze Russia from the global economy piece by piece, day by day and week by week.”

In reality, the opposite occurred. Russia is now the world’s fourth-largest economy by purchasing power parity, behind only the United States, China and India.

Yes, Russia suffered an economic contraction in 2022 while Britain and the Eurozone continued to benefit from the post-COVID recovery. But financially Russia was making enormous profits.

In 2022 — the year the war started — Russia recorded export earnings of $592 billion, almost three times the size of Ukraine’s pre-war GDP and its most profitable year on record.

Russia’s foreign-exchange reserves later reached a new high of $833 billion by January 2026. Despite Western powers freezing around $300 billion of its assets at the start of the war, Russia’s unfrozen reserves were still higher than they had been before the Ukraine crisis began in 2014, with roughly $400 billion now held in gold and therefore beyond the reach of Western sanctions.

Let’s look at how the war actually affected economic growth. The picture is revealing.

Russia suffered a contraction in 2022 that Britain and the Eurozone did not experience. Even so, Russia’s average growth since 2022 has been higher than in the UK and Eurozone: 2.15% compared with 2% in the UK and 1.6% in the Eurozone.

Since 2023 the gap has widened further: Russia has averaged 3.3%, compared with 0.9% in both the UK and the Eurozone.

So Russia has both much larger reserves and stronger economic growth four years into the war, despite facing enormous sanctions.

How Russia Adapted and Why It Outperformed

The major reasons are time and strategy.

The longer sanctions remain in place, the weaker their impact becomes, because targeted nations find ways to work around them and adapt. The Foreign Office itself wrote a paper acknowledging this in 2022, yet largely ignored the advice of its own economists.

Russia has shifted to its own internal payments system, redirected trade towards Eastern partners, found alternative sources for components, and developed its domestic agricultural sector to reduce reliance on European imports.

On the export side, it has developed third-country trans-shipment routes and used less formal shipping arrangements — what Western media often calls the “shadow fleet”.

At the heart of this adaptation is a stable economic and financial policymaking apparatus to which President Putin has given significant freedom to innovate. Key figures such as Elvira Nabiullina (Central Bank Governor), Anton Siluanov (Finance Minister) and German Gref (Chairman of Sberbank, Russia’s largest commercial bank) have remained in post unchallenged since 2014.

Russia has also centralised and consolidated its major production and extraction industries under Gazprom, Rosneft and Rostec. The chairmen of these entities — Alexei Miller, Igor Sechin and Sergei Chemezov — have likewise remained unchanged.

Compare this with policy stability across Europe. During the same period, Britain, Germany and France together have had 23 finance ministers — an average of roughly eight each. Britain will soon have yet another.

They have also had 20 foreign ministers between them, compared with just one in Russia: Sergei Lavrov. This ministerial continuity gives Russia a policy clarity that does not exist in Europe.

Russia’s policy has been clear: to support the state-run industrial sector — centred on mineral extraction and defence production — in order to generate the wealth needed to sustain a prolonged conflict.

Economic and industrial policy in Russia directly supports the prosecution of war in a way that is not possible in Europe.

Sanctions Become an End in Themselves

Here lies another uncomfortable truth about sanctions: they often become an end in themselves and blind those imposing them to their own consequences.

Lacking any clear economic or industrial strategy beyond the goal of defeating Russia, European policymaking has been characterised by fighting a war by committee and repeatedly making choices the system seems unable to recognise as damaging.

Russia’s industrial production has remained robust since the war began, averaging around 3% per year, while British and Eurozone industrial production has been in reverse. Russia has seen growth in industrial employment of 4–6%, while it has remained flat in the Eurozone and fallen by 3% in the UK.

Russia’s wartime production vastly outstrips that of Europe and the UK, with estimates of around 4,500 tanks and infantry fighting vehicles produced per year compared with low single-digit or low double-digit figures across much of Europe, and up to 7 million artillery shells, mortar rounds and rockets per year compared with roughly 2 million across Europe.

Sanctions Have Hurt the Imposers More Than Russia

Here is an uncomfortable truth: sanctions have hurt the countries imposing them more than they have hurt Russia.

Let’s begin with the largest self-inflicted wound: energy. Since 2022, European gas imports from Russia have fallen from 150 billion cubic metres per year to just 36 billion cubic metres in 2025. Oil imports have dropped from around 25% of total supply to just 2%.

Russia has therefore lost roughly $180 billion per year in exports no longer received by European customers — a sum not much smaller than Ukraine’s entire pre-war GDP.

Yet Russia has simply replaced that lost income with revenue from other countries, notably China and India. Total export income has remained above pre-war levels. Since 2014 there has been only one year — 2018 — in which Russia’s export earnings were slightly higher than the levels seen in 2023–2025.

In 2022, as noted earlier, Russia achieved its most profitable export year on record.

Western leaders have nevertheless continued to claim success. When imposing the EU’s 20th package of sanctions in February 2026, Ursula von der Leyen said: “This confirms what we already knew: our sanctions work, and we will continue to use them until Russia engages in serious negotiations with Ukraine for a just and lasting peace.”

Kaja Kallas has stated: “Sanctions work. Every sanction weakens Russia’s ability to fight… Russia has lost tens of billions in oil revenues.”

In March 2022 Boris Johnson said: “Vladimir Putin has been allowed to ‘blackmail’ the West because of its ‘addiction’ to Russian oil and gas… We cannot go on like this… That dependence must — and will — now end.”

Even after the war in Iran began and the United States issued sanctions waivers in the face of surging prices, Friedrich Merz said: “We believe that is wrong… Easing sanctions now, for whatever reason, is something we believe is wrong. We will continue our support for Ukraine.”

In March 2025 at the “coalition of the willing” summit, Keir Starmer said: “Now is not the time for pulling back or weakening sanctions — now is the time to increase sanctions to get them to the table… It means increasing the economic pressure on Russia, accelerating new tougher sanctions, bearing down on Russia’s energy revenues.”

It is not simply that Western leaders are deluded in their pronouncements. In many cases they are objectively wrong.

Sanctions have not produced the desired effect on Russia. Instead they have strengthened Russia’s resilience while weakening Europe. They have become an end in themselves, regardless of whether they are actually working.

Sanctions Lack Clear, Measurable Purpose and Evaluation

The EU describes the purpose of its sanctions as achieving “the EU policy objective of ending Russia’s war of aggression against Ukraine, through maximising pressure on Russia and using all tools available to diminish Russia’s ability to wage its illegal war of aggression.”

The UK describes the purpose as “encouraging Russia to cease actions destabilising Ukraine or undermining or threatening the territorial integrity, sovereignty or independence of Ukraine.”

After the war began, the UK added a further objective: “promoting the payment of compensation by Russia for damage, loss or injury suffered by Ukraine on or after 24 February 2022 as a result of Russia’s invasion of Ukraine.”

It remains EU policy that Russia should pay damages to Ukraine.

So let us evaluate whether sanctions are achieving their stated purposes.

Are they helping to end the war in Ukraine or to stop Russia from destabilising Ukraine? No, they are not, because the war continues.

Why?

Because sanctions in practice have the opposite effect: they encourage Russia to keep fighting.

The EU has imposed 20 new rounds of sanctions since the war began; the UK has introduced countless additional measures. At no point have these measures appeared likely to encourage Russia to end the war.

There is no certainty that sanctions would be lifted even if the war ended.

Given that Russia has outperformed Europe economically since the war began, why stop fighting if its underlying concerns — principally Ukrainian neutrality — have not been addressed?

New rounds of sanctions have often been announced precisely when the United States has tried to broker diplomatic negotiations, undermining any confidence Russia might have in Europe’s sincerity about bringing about peace.

Russia believes it will not recover its $300 billion in frozen assets, providing another disincentive to engage seriously in peace talks.

Since 2015 Russia has understood that sanctions are effectively permanent and has decided to live with them by shifting its economic relationships elsewhere.

Britain and Europe are therefore locked into sanctions and unable to escape.

One reason is that there is no mechanism to review success. Neither European nor British institutions systematically evaluate sanctions against their stated objectives.

In the Foreign Office, for example, there is no periodic mechanism to assess existing sanctions against the goal of encouraging Russia to cease its actions in Ukraine.

Once a sanction is in place, it effectively becomes permanent. In the European system sanctions are periodically renewed, but the process is driven by the domestic political priorities of member states rather than any informed assessment of whether the measures are actually working.

The Vast Majority of Sanctions Have Little or No Impact

A classic illustration of how sanctions are not properly evaluated is the approach to individual designations.

Britain has sanctioned around 2,000 people, mostly Russian citizens, since 2019. When sanctioning an individual, the UK must demonstrate that the measure advances the purpose of encouraging Russia to cease its actions in Ukraine. The theory is that freezing the individual’s assets and preventing travel to the UK will create pressure on Vladimir Putin to end the war.

There is one major problem, however.

The last time I asked the Treasury, 92% of the individuals sanctioned had no assets in the UK and had never travelled here. So we are imposing sanctions on people that have literally no effect on their assets or movements, and expecting them to take this as a signal to protest to Putin.

A second problem: only a tiny proportion of these people have ever met Putin. The more people we sanction, the less important they become in Russia’s hierarchy. We are therefore expecting relatively minor state officials to convince Putin to change course. This is clearly unrealistic.

And there is a third, even bigger problem. Most individual sanctions are effectively extra-judicial.

How is it possible to impose asset freezes and travel bans on people who have no assets in the UK and have never travelled here? The simple answer is that individual sanctions are justified on the basis of policy rather than rigorous legal necessity.

British and European officials are driven by a political imperative to sanction more people as the war continues. New designations are often decided on volume rather than following detailed legal scrutiny.

Lists are frequently supplied by the Ukrainian government and by Alexei Navalny’s Anti-Corruption Foundation. These names are batched together and sanctioned whenever a new round of measures is announced.

Little detailed legal scrutiny takes place to determine whether sanctioning that particular person can legitimately advance the purpose of the sanctions regime. It has become a numbers game.

After the war began, the UK imposed around 800 individual sanctions within the space of two months. It would not have been possible to carry out thorough legal assessments of that many cases in such a short time.

In practice, the decision to sanction was often taken before the full case file had even been prepared. Preparing the file and making the formal designation became a box-ticking exercise.

Ministers could respond to formal requests within minutes. I cannot recall a single instance in which it was decided not to sanction someone under consideration.

If a proper legal process were being followed, a significant proportion of those 800 individuals would presumably have failed the “reasonable grounds to suspect” test and had their cases rejected.

Instead, sanctions met a political need for ministers to have something new to announce when attending meetings about the war in Ukraine. Whether the sanctions were legally robust was secondary to the desire for visible action on the world stage.

Courts Have Stepped Back from Scrutiny of Sanctions

In July 2025 the UK Supreme Court, in a sanctions appeal brought by Eugene Shvidler, ruled that it could not contradict a decision taken by expert civil servants at the Foreign Office.

This means that the imposition of sanctions by unelected officials against people they have never met and about whom they may know relatively little cannot effectively be challenged in UK courts.

In a notable dissenting judgment, Lord Leggatt warned: “There is also a risk that the Regulations may be used to impose sanctions on individuals, not because there is any realistic prospect that the measures imposed will actually contribute to achieving the desired international aim, but for the purpose of signalling to a popular audience that the government is taking firm action to curb Russian aggression. Such a purpose is not a legitimate basis for curtailing individual freedom.”

Sanctions have therefore become an extra-judicial process, largely free from meaningful judicial scrutiny. They are imposed with limited rigour by unelected officials, have very little practical impact on most of the people targeted (except perhaps the super-rich, who in any case have limited ability to influence Putin), and serve a political imperative — yet they have had no decisive effect on the course of the war.

There’s a wider problem too. Sanctions have increasingly been turned in on Europe itself, with European citizens becoming sanctioned if they disagree with Europe’s handling of a war in Ukraine that quite obviously cannot be won.

We have seen people like Jacques Baud get sanctioned merely for speaking out about the direction of the war in Ukraine. These sanctions are effectively a denial of statehood by removing a sanctioned individual’s right to free movement in and to their own country, and the problem is that these sanctions on citizens are imposed in an extra-judicial way — decided by policymakers and politicians, rather than as part of a rigorous legal process.

This simply adds weight to the perception among ordinary European citizens that its leaders are resorting to increasing internal repression to mask the fact that their foreign policy is failing in Ukraine and demonstrably worsening the conditions in Europe itself.

This feeling of repression is added to by a complete shuttering of people-to-people relations with Russia, with borders closed, Russia excluded from cultural and sporting events, and active efforts by European states to send Ukrainian citizens back to their homeland to fight.

Britain and Europe increasingly look like the aggressor instead of Russia, led by a political class lacking the imagination or ideas to escape the trap they have built for themselves.

This leaves European nations in a dead end, staring down the barrel of significant political change across Europe as elections take place in France, Germany and Britain over the coming three years.

This also leaves Russia in a position where the only role that sanctions play is to act as an irritant and as confirmation that Ukraine’s sponsors have no investment in peace.

Having been through the pain in the three years after the Ukraine crisis started in 2014, having shifted policy to cancel out the sanctions impact in the three years before COVID, and having outperformed Europe economically since the war began, sanctions now objectively have no impact on Russia.

Where Do We Go from Here?

It has actually been clear for many years that the best role that sanctions can play is through their removal as part of a peace process.

Ukraine has now become a huge economic and political burden on Europe. Despite Zelensky’s efforts to urge his sponsors to fight to the last Ukrainian, it has become increasingly clear both that Ukraine can never win, that Zelensky is increasingly falling out of favour with his own people, and is as much part of the problem as part of the solution.

The rational thing to do, as part of any peace process, is for European leaders to set out a clear path for the relief of sanctions should a peace deal between Ukraine and Russia be reached.

Not having clarity on the future of sanctions after peace in Ukraine breaks out both holds back the point at which that peace will be agreed and also fosters conditions in which the peace might not hold long term, if Russia considers Europe is continuing the war through economic means, even if the specific economic impacts now hurt Europe more.

The purpose of sanctions reduction should be to:

• Normalise relations between Britain, Europe and Russia in support of a longer-term peace between Russia and Ukraine;

• Allow all sides to gain economic benefit from normalised relations through the elimination of barriers that can cause objective economic damage to the economies of Europe;

• Allow for a normalisation of people-to-people relationships in the interests of longer-term peace for all on the Eurasian continent.

Some of this was already sketched out in the now defunct Trump 28-point peace plan, which European leaders did everything in their power to kill. This plan should explicitly be between the UK, Europe and Russia, with the US making its own arrangements on sanctions and wider links should peace in Ukraine be agreed.

But I would suggest a plan might look like the following:

Immediately upon a peace plan for Ukraine and Russia being announced

• An immediate lifting of all zero-impact sanctions on Russian individuals and entities, accounting for almost 90% of all sanctions imposed so far;

• A revocation of sanctions imposed on EU or wider European citizens during the course of the war;

• A reopening of borders between the UK, EU and Russia and the normalisation of travel arrangements between those countries;

• Russia to be readmitted to international sporting and cultural events;

• A restarting of education and cultural exchanges, including university-to-university links and city twinning, among other things.

All of these measures would be by far the easiest to introduce by UK and EU member states, offering minimal economic benefit to Russia but providing a significant confidence-building boost between all sides.

Within 30 days of the peace plan being introduced

• The UK, EU and Russia negotiate and agree a plan to restore normal energy relations that allows for the purchase of Russian energy in the European marketplace;

• All sides negotiate a lifting of remaining individual sanctions in both directions, including sanctions imposed by Russia on high-profile individuals and entities;

• All sides negotiate a settlement to the issue of the frozen $300 billion in Russian assets and an appropriate distribution of those assets in a way that is acceptable to all sides;

• All sides negotiate a plan for the lifting of sectoral sanctions in both directions, including sanctions imposed by Russia on the European agricultural sector and sanctions imposed by Europe on Russia’s access to finance and energy technologies;

• There is an agreed phased lifting of all export bans between both sides, subject to normal trade policy controls;

• Other normal areas of dialogue are resumed and Russia is invited to re-participate in the EBRD and the G8 group if it wishes to do so.

The risk is that the current mainstream will not be able to see the obvious benefits to the Ukraine peace process, to European prosperity and longer term to the safety of European citizens from ending the war and establishing relations with Russia on a more constructive footing.

With the war in Ukraine going nowhere, with sanctions long ago having failed, with Europe falling into increasing economic and political disrepair, it is time to face the difficult truth and explore a new approach that focuses on peace-making, not warmongering.

If sanctions have become a replacement for war by Europe, they can become part of British and European diplomacy to bring war to an end and to re-establish the conditions for peace that citizens of all countries yearn for.