Since 2014, Western nations have hit Russia with a total of 26,655 sanctions (to mid-September 2025), with 23,960 coming after February 2022. The largest target group, with 13,611 sanctions, is state officials, business owners, and well-known public figures. The declared intention of sanctions was to force the Kremlin to alter its geopolitical course, i.e. to quickly withdraw from Ukraine, by causing a shock crisis in the economy and creating a backlash by prominent businesspersons and the public against the Kremlin.

The economy did suffer from disruption in 2022 (-1.2%), but growth returned in 2023 (+4.1%) and in 2024 (+4.3%). The economy also received a huge boost to income in 2022-23, as the EU was not ready for sanctions and was forced to stockpile Russian oil and other materials. The external trade and current accounts have remained comfortably in surplus since 2022.

Today, there is again speculation in many parts of the western media that because headline growth in Russia dropped to just over 1.0% in the first half of this year; the rate of VAT is planned to rise to 22%, (from 20% currently); and the budget deficit is higher than had been planned; that the economy is heading for recession and that the government is facing a financial crisis. President Trump recently fuelled that narrative with his reference to Russia as a “paper tiger”. But none of this speculation or the assumption of imminent crisis holds up to scrutiny. The motivation for the reports is again, or is mostly, political optics.

As mentioned, over 13,000 of the sanctions have been directed at individuals, especially Russian billionaires and business owners. The assumption being that these individuals would increase pressure on the Kremlin to withdraw from Ukraine to alleviate pressure on their businesses and to recover their wealth from sanctions orders. But here is where there is a lack of understanding about how Russia has changed since 2000. billionaires do not have political influence in Putin’s Russia and, as such, cannot be properly referred to as Oligarchs, i.e. as originally defined in ancient Greece. So, while these individuals were targeted by sanctions intended to pressure the government, they hold little to no political influence, and the measures have therefore failed to bring about any meaningful change in state policy - and nor will they. 

Moreover, while some assets – modest volume - belonging to the business elite have been frozen under Western sanctions, the bulk of their wealth remains in Russia or in so-called friendly jurisdictions. This is largely because, in the face of an increasingly unpredictable external environment – where sanctions were often imposed based solely on high net worth – many saw no viable option other than to redomicile their wealth and business interests to Russia or allied countries. And they had plenty of notice to do so since sanctions against Russia started quite meekly from spring 2014.

The 2025 Forbes billionaire Report showed that there are now 146 billionaires in Russia, up 21 from 2024 and with 15 new names appearing. The combined wealth of the billionaires is assessed at $625.6bn, a record high for Russia. Most of that wealth is now in Russia or in so-called friendly jurisdictions and has helped create a strong financial base in the country. This is one of the reasons why the government is now able to switch from financing the federal budget deficit from the National Welfare Fund, Russia’s Sovereign Wealth Fund, to tapping into the local debt market. With state debt at only 16% of GDP, the Finance Ministry has considerable scope to borrow and still keep Russia as a low indebted country.

Instead of staging a revolt, some of the sanctioned businesspersons have adapted to the new environment and have refocused their repatriated wealth on bolstering Russia’s domestic economy. Others have pursued investments or private activities outside the West, particularly in countries “friendly” to Russia. In essence, rather than weakening the Russian state, the sanctions inadvertently reinforced it by redirecting wealth and investment into the domestic market, while also simultaneously pushing away many of the pro-Western businesspeople who were essentially punished because of their nationality. Had policymakers heeded the advice of several prominent voices in the west to not sanction Russian billionaires but to make it easier for them to settle in the west and to bring the bulk of their wealth with them, it would probably be a different story in Russia today.

Also, in terms of foreign businesses in Russia, while some left, many chose to stay, either directly or indirectly by selling their operations to local investors or changing their business models. Around 46% of the largest foreign companies operating in Russia in early 2022, sold their businesses to local investors, ensuring operations continued, providing goods and services, employment and taxes and bolstering overall GDP. Ironically, many foreign companies still operating in Russia are often finding themselves in a favorable position. With many Russian founded companies now sanctioned, foreign firms, or those which have evolved from a formerly foreign owned business, are emerging as key players in several sectors, often enjoying a competitive advantage. This has created another unintended consequence in that, according to a recent calculation published by the Kyiv School of Economics (KSE) foreign companies are now contributing significantly to the Russian federal budget, paying taxes in excess of $20bn last year, but remain outside of Western sanctions lists. 

A survey by the Association of European Businesses showed in May that most of such companies operating in Russia saw opportunities for growth. While barriers like sanctions, geopolitical risks and payment restrictions persist, these companies are continuing with their long-term strategies. The reputation risks are real, but for many businesses the long-term financial rewards provide adequate compensation for the medium-term costs.

The sanctions on Russia have also had ripple effects and unintended consequences far beyond its borders. Many countries in the so-called Global South, especially China, India and others in the BRICS bloc, have deepened their economic ties with each other and with Moscow. As a result, the shift toward a multipolar world has accelerated, with new economic power centers emerging outside of the traditional Western dominated structures.

In addition, sanctions have exposed vulnerabilities within the global financial system, particularly in terms of reliance on the US dollar and the SWIFT payment system. Russia’s, and China’s, ability to create alternative financial networks and build stronger connections with non-Western financial institutions has opened the door for other countries to re-evaluate their overdependence on Western-controlled financial systems. While this shift may not be immediate, it has started and could have long-lasting implications for global trade and finance.

Apart from the unintended consequences, of course there are damaging and direct consequences from sanctions in Russia. While the economy is now stable, albeit in a much lower but sustainable growth range, the legacy of sanctions will likely remain visible in the long run. The penalties and negative effects won’t dissolve quickly even when the sanctions start to ease. High military spending will remain for several years after a peace deal. As stated by President Trump and his senior officials, sanctions will only be removed in stages over many years and some, such as access to Western technologies in dual-use areas, may stay indefinitely. Moscow also faces even greater challenges dealing with demographic challenges.

Russia has for sure been impacted by the weight of sanctions, and previous plans for economic development have been disrupted. But the country, big businesses, and people proved a lot more resilient and adaptable than those applying sanctions had expected. Trade has shifted from a previous Western dominance to the East and South. Innovation has accelerated, and localization has moved from being an ambition to a reality. Assumptions made about the nature of political power and influence in Russia was very wide of the mark.

It can also be argued that sanctions have had many unintended consequences and, in some instances, the opposite effect of what was originally hoped for by those who demanded them. Rather than fracturing Russia, the restrictions have inadvertently helped reinforce the country’s economic, social and political stability. Rather than isolating Russia within the global community, there is now a more visible fracture between the West and the Global South, and it is growing. This realization is at least one reason why The White House is now opposed to additional sanctions against Moscow (despite the frequent threats) even as Brussels prepares yet another, the nineteenth^, package of sanctions.