Three years into the most comprehensive sanctions regime ever imposed on a major power, Russian sanctions have produced a paradoxical outcome: rather than crippling Moscow’s war machine, Western economic pressure has inadvertently reinforced Russia’s strategic resilience whilst exposing fundamental flaws in UK and European foreign policy assumptions.
Russia’s Economic Adaptation Defies Sanctions Predictions
When EU sanctions on Russia were dramatically expanded following the February 2022 invasion of Ukraine, Western policymakers predicted severe economic contraction would force Moscow to reconsider its military campaign. The reality has proven starkly different. According to analysis by Professor Mark Galeotti, Russia’s economy grew by approximately 4 per cent in 2023, with the Russian Central Bank maintaining sufficient reserves to sustain military operations indefinitely.
The Russian defence industrial complex now operates continuously, with factories running three shifts daily to meet military demand. Critically, this production surge has not transformed Russia into a total war economy. President Putin has deliberately cushioned the civilian population from the harshest economic impacts, ensuring that ordinary Russians maintain access to consumer goods and services, albeit often through circuitous supply chains.
Real incomes in Russia have risen faster during the war period than in the previous decade, contradicting predictions that economic hardship would generate domestic opposition to the conflict. By 2024, polling data indicated that 42 per cent of Russians expected their country’s situation to improve over the coming years, whilst only 10 per cent anticipated deterioration.
The Strategic Miscalculation: Underestimating Russian Preparations
Trade economist Rebecca Harding identified a fundamental error in Western strategic thinking: the failure to recognise that Russia had been preparing for economic confrontation for decades. Moscow began diversifying its economy away from exclusive reliance on oil and gas exports as early as 2000, systematically building alternative revenue streams.
Russia shifted export support measures toward grain production in 2017, years before the Ukraine conflict escalated. Today, Russia controls nearly 25 per cent of global wheat exports, making African and European markets highly dependent on Russian supplies. When sanctions were eventually imposed, Russia could predict their impact on Western food and energy prices with considerable accuracy, whilst the West had made no comparable preparations for the economic disruption that would follow.
This asymmetry reveals what Harding characterised as a critical weakness: Western policymakers assumed their dollar-based international rules-based order was universally aspirational. They believed economic exclusion would be sufficiently painful to modify Russian behaviour. This assumption has proven catastrophically wrong.
How Sanctions Strengthened Russia’s Strategic Partnerships
Perhaps the most significant unintended consequence of international sanctions has been accelerating Russia’s economic and strategic integration with China. Exclusion from the SWIFT international payment system propelled Russia’s adoption of China’s Cross-Border Interbank Payment System, which operates in renminbi rather than dollars. This represents a fundamental shift in global financial architecture that directly undermines the Western monetary system’s centrality.
In September 2025, Russia and China signed a memorandum to construct the Power of Siberia 2 pipeline, a £13.6 billion project designed to deliver 50 billion cubic metres of gas annually to China. Analysts predict this pipeline will cause a structural shock to global liquefied natural gas trade, reducing China’s reliance on seaborne cargoes and directly undermining American ambitions to dominate European energy markets through long-term LNG contracts.
According to analysis from UnHerd, Europe has voluntarily severed itself from cheap Russian energy only to commit to decades of dependence on expensive American LNG, whilst Russia secures long-term Asian markets. This represents a complete reversal of the intended sanctions impact.
The Enforcement Gap: Why Sanctions Are Not Working in Practice
Even within their stated parameters, enforcement of sanctions regimes has proven systematically inadequate. The United Kingdom has launched over 100 investigations into law firms for sanctions breaches since 2021, yet has publicly punished only one entity. The Office of Financial Sanctions Implementation imposed a £465,000 penalty on Herbert Smith Freehills CIS LLP for making payments totalling nearly £4 million to designated Russian banks during the firm’s Moscow office closure.
This enforcement record suggests either insufficient resources for comprehensive sanctions monitoring or a deliberate policy of selective prosecution designed to encourage voluntary compliance through high-profile examples rather than systematic enforcement. Either interpretation reveals significant implementation weaknesses.
Russia’s so-called shadow fleet of oil tankers exemplifies the circumvention problem. The Kyiv School of Economics estimated that approximately 70 per cent of Russia’s seaborne oil exports travel on vessels specifically acquired to evade sanctions. Meanwhile, Europe continues indirectly importing Russian oil through intermediaries. In the first half of 2025, the European Union and Turkey imported 2.4 million tonnes of petroleum products from India, with approximately two-thirds originating from Russian crude. Europe now pays India a premium for oil that is Russian in origin, effectively increasing costs whilst failing to restrict Russian revenues.
The Domestic Cost: European Industrial Decline
The impact of sanctions on Russia pales compared to the self-inflicted damage European economies have sustained. Germany, once the continent’s industrial engine, has experienced three consecutive years of stagnation, with 125,000 industrial jobs lost in recent months alone. Replacing cheap Russian pipeline gas with expensive American and Russian LNG has created sustained inflationary pressure across Europe, contributing to political instability and the rise of populist movements questioning the sanctions strategy.
The European Union’s decision to “future-proof” sanctions by permanently blocking Russian gas imports removes any incentive for Russia to care about eventual sanctions removal. If Russian energy can never again access European markets regardless of policy changes in Moscow, why would the Kremlin moderate its behaviour to secure sanctions relief?
The Path Forward Requires Acknowledging Strategic Failure
The comprehensive failure of UK and European sanctions policy stems from multiple reinforcing errors: misunderstanding Russian strategic culture, overestimating Western economic leverage, underestimating Russia’s preparedness for economic conflict, and failing to anticipate how sanctions would accelerate dedollarisation and Sino-Russian integration. Three years of evidence demonstrates that sanctions have neither constrained Russia’s war-making capacity nor created domestic pressure for policy reversal. Instead, they have weakened European economies, strengthened Russia’s partnership with China, and validated Putin’s narrative of Western hostility to Russian domestic audiences. Unless Western policymakers acknowledge these failures and fundamentally reconsider their approach, sanctions will continue damaging European interests more effectively than they constrain Russian military operations.
