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Is the economic war against Putin working?

“The 360” shows you diverse perspectives on the day’s top stories and debates.

What’s happening

When Russia invaded Ukraine last February, the United States and its Western allies swiftly put in place an unprecedentedly harsh series of sanctions designed to isolate the Russian economy from the rest of the world and undercut Russian President Vladimir Putin’s ability to fund his war effort.

At the time, President Biden said the sanctions — which targeted everything from Russia’s fossil fuel industry to its financial sector and individuals with ties to the Kremlin — would “impose severe costs” on the Russian economy. At first, that appeared to be happening. Russia’s currency, the ruble, abruptly dropped in value, citizens swamped banks looking to withdraw cash and hundreds of international companies ended their operations in the country. Forecasts predicted that Russia’s economy would contract dramatically in the intervening months, with some economists saying it would collapse entirely.

But a year later, Russia is in much stronger shape than many had predicted. The ruble has regained its value. Russia’s oil exports, the lifeblood of its economy, have stayed steady as countries like China, India and Turkey have bought up supplies that used to go to Europe. The standard of living for everyday Russians hasn’t changed. Most important, Putin’s war machine has the funding to continue its assault on Ukraine.

Why there’s debate

Russia’s surprising ability to endure the West’s economic assault during the past year has fueled debate over whether the sanctions — which have caused a huge disruption to global markets, especially energy — are working at all.

Optimists say disappointment about the impact of sanctions largely comes from misconceptions about what they’re designed to do. They argue that no level of economic punishment was ever going to win the war or lead to Putin’s being ousted from power. The real goal, many say, is to slowly chip away at Russia’s economic stability until it becomes increasingly difficult to fund the war and Russian citizens gradually start to feel the costs of the conflict.

Many experts see signs that Russia is quickly exhausting the emergency measures it used to keep itself afloat, which could lead to a serious decline over the next year. Others say the sanctions have dramatically undercut Russia’s long-term economic prospects, which will steadily decrease Putin’s power on the global stage in the coming years and decades.

But pessimists fear that Russia is well positioned to weather the sanctions for as long as it needs, thanks to its powerful trading partners, its ability to evade lax enforcement and the West’s reluctance to risk creating a spike in energy prices by aggressively targeting Russia’s oil and gas industries. There’s also danger, some argue, that the focus on sanctions might draw attention away from the most important thing Ukraine’s allies should be doing: pouring in huge amounts of military and financial support so the war can be won on the battlefield.

What’s next

Despite differing opinions on the sanctions’ effectiveness, the U.S. and its allies have shown no signs they might change course anytime soon. In fact, a new slate of restrictions put in place last week is designed to close loopholes that have allowed Russia to get around existing sanctions during the past year.

Perspectives

OPTIMISTS

Sanctions are fulfilling their true purpose

“The confusion around the effectiveness of sanctions stems from a lack of clarity about their goals. … First, Western countries are trying to send a strong signal of resolve and unity to the Kremlin. Second, sanctioning states aim to degrade Russia’s ability to wage war. Third, Western democracies are betting that sanctions will slowly asphyxiate the Russian economy and in particular the country’s energy sector. When judged on the basis of these criteria, sanctions are clearly working.” — Agathe Demarais, Foreign Policy

The U.S. and its allies can make sanctions work if they’re willing to be more aggressive

“It’s very possible that sanctions will bite harder, revenue from oil and gas will decline further, the deficit will go deeper, and Russia’s battlefield resources will be stretched to breaking point. How quickly that happens will depend on persistence in the West, where lax enforcement and deliberate evasion have helped Russia over the past year.” — Adam Taylor, Washington Post

The Russian people will soon start to feel the cost of the war personally

“The war chest the Kremlin built up is depleting. … The escalating costs of the war are forcing the regime to make deeper cuts and will eventually hit even social spending, making it more vulnerable to public discontent from both the top and the bottom.” — Editorial, Bloomberg

Russia’s place on the global stage has permanently diminished

“A year after Putin’s invasion of Ukraine, some cynics lament that the unprecedented economic pressure campaign against Russia has not yet ended the Putin regime. What they’re missing is the transformation that has happened right before our eyes: Russia has become an economic afterthought and a deflated world power.” — Jeffrey Sonnenfeld and Steven Tian, Fortune

Putin has grossly underestimated the West’s commitment to punishing Russia

“Of course, this war is still far from over, and we will likely experience many more disruptions caused by it in the near future. But it is increasingly looking like the beginning of the end for Putin’s ambitions to uproot the world economic order.” — Maximilian Hess, Al Jazeera

Russia’s economic lifelines are going to start running out

“The Russian government has spent money hand over fist in 2022 to prop up the economy and try to neutralize the worst impacts of Western sanctions. … The Russian economy has begun to look like a leaky ship. All hands are on deck bailing it out, but at some point, they won’t be able to keep up.” — Brian O’Toole and Daniel Fried, Atlantic Council

PESSIMISTS

As long as the war continues, no effort to counter Russia can be considered a success

“If the goal of the most ambitious economic sanctions regime in modern history was to end the conflict by defunding Vladimir Putin’s war machine, the mission obviously has failed. Indeed, the Western alliance has proved that armed conflict cannot be brought to an end with economic weapons alone.” — David Olive, Toronto Star

Western countries have been too weak to make the sanctions effective

“​​The most significant roadblock to sanctions being effective is the failure of Western governments to use their full diplomatic leverage to pressure many governments to cease trading with Russia or allow their banks and corporations to continue doing business in Russia. This failure continues to make life harder for Ukrainians as the war goes on.” — Frank Vogl, Inkstick

Sanctions are creating zero pressure on Putin at home

“Despite all the media reports of doom and gloom as a result of western sanctions, everything works just as before. Domestic banking is working, salaries and pensions are paid on time, ubiquitous e-commerce is bustling with activity, the shops are stuffed with food and consumer goods. In St Petersburg, at least, I’ve struggled to notice any change in daily life compared to January 2021.” — Alexander Titov, Conversation

Sanctions are an afterthought compared to the direct support Ukraine needs

“Perhaps the most urgent lesson of the sanctions’ limited effects is what they make us miss: the dire economic position of Ukraine and what the West can do to shore it up. For all the attention lavished on sanctions, they are a sideshow and not the main arena in which Ukraine’s future will be determined.” — Nicholas Mulder, New York Times

The costs to the U.S. and Europe shouldn’t be ignored

“This mode of economic warfare inflicts penalties on the perpetrator of a kind escaped by the latter’s military counterparts. … Putin has been derided for his misplaced assumption that his small invasion force could seize control of Kiev in a coup de main. Biden and his advisers thought that ‘shock and awe’ would bring swift victory. That may have been an even more serious mistake.” — Andrew Cockburn, Responsible Statecraft

China has given Russia a way to survive economically

“China, which has declared ‘no limits’ to its friendship with its northern neighbor, has thrown the Kremlin an economic lifeline, tempering the impact of its banishment from the global financial system.” — Laura He, CNN

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Photo illustration: Jack Forbes/Yahoo News; photos: Contributor/Getty Images(2)