Ghosts in the Machine: Opposing Putin

Like the Russian opposition, economic sanctions are popular but ineffective.

By Edward Lucas

Foto: Vladimir VELENGURIN / KP

Sanctions on Russia are crippling the Kremlin’s war machine and stoking public discontent. Compounded by the human and physical cost of the war, this will bring political change and peace. That, in a nutshell, is many Western countries’ Russia strategy. 

This is not just wrong. It is harmful. Wishful thinking, like careless talk, costs lives. Politicians who believe the current sanctions are working will be reluctant to incur the cost and risk of escalating them. Why hurt your own economy and annoy your voters needlessly? Every time that Western leaders impose a new round of sanctions, they praise their previous efforts, exaggerating the effects. Announcing the latest, 18th (yes, you read that right) package of sanctions, on June 12th, the European Commission president Ursula von der Leyen said:

“The Russian economy is deeply affected by the sanctions…Russia’s oil and gas revenues have fallen by almost 80% compared to before the war. Its deficit is skyrocketing. Interest rates are prohibitively high. Inflation is on the rise, well above 10%. The price of importing technologies and critical goods is six times higher than before the war and compared to global average prices. In short, Russia’s economy is limited to a war economy and sacrificing future prospects.“

As my CEPA colleague Alexander Kolyandr notes, most of this is not true. State oil and gas revenues have not fallen by 80%; inflation is dropping, not rising, and it is below 10%. The cost of imported technology has not risen sixfold, and Russia has not been reduced to a “war economy.” True, the deficit has tripled (from the forecast at the end of 2024) to 1.7% of GDP. But if that is “skyrocketing,” how to describe the French deficit, a yawning 5.4%? 

Sanctions did dent the Russian economy at the start of the war. And the long-term cost to the country’s development is huge. Russia is vulnerable to pressure, particularly from lower oil and gas prices. The 2025 budget reflects a $33 billion drop in oil revenues, while slowing growth also damps revenues from the rest of the economy. The government borrows expensively at home to finance this, while the rainy-day National Wealth Fund (now $36.4 billion in liquid assets), could be depleted by 2027. But plenty can happen before then – not least further splintering of the Western coalition behind sanctions, exemplified by the difficulty the G7 group of rich countries find in enforcing a much lower oil-price cap, or seizing Russia’s frozen central bank reserves.

As a new report from the Center for Strategic and International Studies notes, Russia can maintain the current levels of attrition through a mixture of domestic efforts and foreign help. Conversely, the prospect of sanctions relief is not tempting enough to make the Kremlin want to change course. For now, Vladimir Putin is constrained not crippled. 

If the previous 17 packages of EU sanctions had worked, there would be no need for this new one. Every one of the measures now being considered could and should have been applied in the first week of the war (or preferably sooner). Instead, we continue the cycle, announcing new set of painless (to us) but also magically effective measures that will absolutely, totally, finally, completely, one-hundred-and-ten-percent do the trick. Amid applause and back-slapping, the decision-makers get back into their limousines. And on the frontline, Ukrainian soldiers, outgunned and exhausted, die, while civilians see their cities pounded to rubble. 

Even more ill-informed (and thus hardly worth mentioning) is the Western belief in something called the “Russian opposition.” Devastatingly effective operations are indeed underway, deep inside Russia. But they are carried out by Ukraine.

---

By Edward Lucas. Edward Lucas is a Non-resident Senior Fellow and Senior Advisor at the Center for European Policy Analysis (CEPA). Article and pictures first time published on CEPA web page. Prepared for publication by volunteers from the Res Publica - The Center for Civil Resistance.