The Sanctions Are Already Working
The immediate goal is to prevent the Russian army from resupplying its forces. Look for a sharp drop in exports to Russia from the major manufacturing centers.
Russia is in danger of running out of military equipment if it continues its invasion of Ukraine. Catastrophic battlefield losses are rapidly depleting Russia’s existing inventories of tanks, fighter jets, ships, helicopters, rocket launchers, missiles, and other weapons systems, while the sanctions imposed by the democracies are preventing the Russians from replenishing their supplies.
Preliminary customs data from key manufacturing centers shows that Russia’s arms industry is being deprived of essential parts and components. Combined with ongoing arms shipments to the Ukrainians, the sanctions should therefore tilt the military balance increasingly in favor of the defenders.
What Are the Sanctions For?
When the democracies first imposed sanctions on Russia in response to Putin’s aggression, they framed them as financial measures that would limit Russia’s ability to “pay for” the war. This was how U.S. Treasury Secretary Janet Yellen put it after a meeting of G7 finance ministers and central bankers on March 1:
Our collective efforts have resulted in the world’s major financial and economic centers acting in concert to sever Vladimir Putin’s access to the international economy, including international capital. We expect these efforts to have a debilitating impact on Russia’s economy and hamstring the Russian government’s ability to fund its invasion. Most recently, we and our G7 partners worked to effectively immobilize key assets held by the Central Bank of Russia, a major step that already has had a strong impact on Russia, visible in the financial market reactions.
The clearest financial market reaction was the 50% plunge in the value of the ruble versus the U.S. dollar and the euro. Initially, there were hopes that sanctions would spark bank runs in Russia and potentially lead to hyperinflation. But that didn’t happen.
Even with substantial discounts on Russian oil and gas, high prices have ensured a steady inflow of hard currency, while extreme capital controls limiting deposit withdrawals and purchases of foreign currency. As a result, the ruble has erased its initial losses—it’s even trading higher against the yen than it was before the invasion—and the banks have stabilized. The Central Bank of Russia has already pivoted from raising interest rates and providing trillions of rubles of emergency loans to lowering borrowing costs and cutting back its support for the banking sector.
From this perspective, the sanctions seem to have failed. Putin has repeatedly made this argument, claiming that Russia has proven its superiority over the democracies. Others, effectively agreeing with Putin’s analysis, have concluded that the Europeans must immediately curtail their purchases of Russian oil and natural gas, or find other ways to tighten the sanctions.
But this focus on financial indicators misses the significance of what has already been achieved in the military sphere, as well as the extent to which the continued enforcement of existing sanctions will inflict increasing damage on Russia’s capacity to fight.