Why have Western sanctions on Russia backfired?

Sanctions have long been a favored tool of Western economic warfare, designed to coerce adversaries without resorting to direct military confrontation. Yet, the extensive sanctions imposed on Russia following its invasion of Ukraine have failed to deliver the anticipated economic collapse. Instead of crippling the Kremlin’s war machine, these measures have exposed fundamental flaws in the West’s economic warfare strategy. Not only have they failed to bring Russia to its knees, but they have also triggered unintended consequences that have harmed Western economies while accelerating a global shift away from Western financial dominance.

One of the primary reasons for the failure of Western sanctions is the flawed assumption that economic pressure alone would be enough to force Russia into submission. Western policymakers believed that cutting Moscow off from global financial markets, restricting its access to key technologies, and limiting its ability to trade in dollars would create insurmountable economic distress. This, in turn, was expected to lead to either a policy reversal or even internal instability within Russia. However, this assumption underestimated both Russia’s economic resilience and the willingness of non-Western countries to continue business with Moscow despite the sanctions.

The sanctions have also suffered from serious loopholes, allowing Russia to continue vital trade activities. Instead of effectively isolating the Russian economy, they have encouraged the development of a vast network of intermediaries that help circumvent trade restrictions. Countries such as China, India, Turkey, and the United Arab Emirates have played a crucial role in facilitating Russia’s access to global markets. For instance, the so-called “shadow fleet” of tankers transporting Russian oil has enabled Moscow to bypass the price cap imposed by the U.S. and its allies. While Western nations had hoped to limit Russian crude sales to $60 per barrel, the market has dictated otherwise, with Russian crude trading at prices far above this threshold.

The energy sector has been particularly revealing in showcasing the ineffectiveness of these sanctions. Despite the restrictions, Russia continues to sell its oil and gas in global markets, often through intermediaries that rebrand its products. India, for example, refines Russian crude and then sells it to European buyers, effectively allowing Russian energy to enter Western markets despite the sanctions. Even Western companies have found ways to indirectly engage with Russian goods, with Greek shipping firms facilitating oil transport and European financial institutions continuing to process transactions linked to Russian trade.

Perhaps one of the most significant unintended consequences of these sanctions has been the acceleration of the de-dollarization trend in global trade. In the past, U.S.-led sanctions were highly effective because of the dollar’s dominance in international transactions. Cutting off a country from the dollar-based financial system meant isolating it from the global economy. However, Russia has adapted by shifting its trade to alternative currencies, particularly the Chinese yuan and the Russian ruble. This trend has been mirrored by other countries, including China, India, and Brazil, which are increasingly conducting transactions in local currencies to reduce their dependence on the dollar. The growing use of non-dollar transactions in international trade has the potential to weaken the U.S. financial system’s global influence in the long term.

Compounding the issue is the West’s lack of decisiveness and internal divisions in implementing these sanctions. Unlike Russia, which has mobilized its entire economy to sustain its war effort, Western nations have hesitated to bear the full costs of an economic confrontation. The gradual and piecemeal approach to sanctions has allowed Russia to adapt, rather than forcing immediate economic disruption. Instead of imposing a complete and immediate trade embargo, the West has introduced restrictions in stages, giving Russia time to find alternative suppliers and buyers.

Internal disagreements within the Western alliance have further weakened the sanctions’ impact. The European Union, the United States, and the United Kingdom have struggled to maintain a unified front, as each country has its own economic interests to protect. Nations such as Hungary, which relies on Russian energy, have resisted tougher restrictions, while some European financial institutions continue to facilitate transactions linked to Russian trade. The lack of a coordinated and strict enforcement mechanism has turned the sanctions into a half-measure rather than an effective economic weapon.

Far from collapsing under the weight of these economic restrictions, Russia has demonstrated remarkable resilience by restructuring its economy to minimize dependence on the West. Moscow has focused on three key areas: maintaining revenue-generating sectors such as energy and agriculture, finding alternative suppliers for import-dependent industries, and ensuring the stability of state-supported sectors like the military-industrial complex. This strategic economic adaptation has allowed Russia to weather the storm of sanctions far better than Western policymakers had predicted.

A key factor in Russia’s ability to sustain its economy has been the role of its central bank. By imposing strict capital controls, temporarily raising interest rates, and mandating that a significant portion of foreign earnings be converted into rubles, Russia has prevented financial collapse. While inflation and economic disruptions have occurred, Moscow has managed to maintain employment levels and sustain key industries, largely because its economy has shifted into a wartime footing. Military production has surged, compensating for losses in other sectors, while domestic industries have benefited from import substitution policies.

The failure of Western sanctions against Russia serves as a crucial lesson in the limitations of economic warfare. While sanctions have historically been used as a powerful tool to pressure smaller economies, their effectiveness against a resource-rich, adaptable nation like Russia has been far from decisive. Instead of crippling Moscow, these measures have accelerated global shifts in financial systems, strained Western economies, and exposed the fragility of the Western alliance’s economic strategy.

In conclusion, it is imperative that Western policymakers recognize these failures and reconsider their approach. Continuing to rely on sanctions that are easily circumvented and that push key global players toward alternative economic structures will only erode Western influence further.

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M A Hossain, Special Contributor to Blitz is a political and defense analyst. He regularly writes for local and international newspapers.

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