Russia: Are sanctions effective? – Commerzbank

Tatha Ghose, analyst at Commerzbank, suggests that the impact of western sanctions on Russia since 2014 has been a controversial topic as several commentators, including Russian officials, claim that sanctions have been futile – that life goes on much the same in Russia.

Key Quotes

“These commentators point to the healthy capital adequacy of financial institutions whose access to capital markets was barred, or the increased profitability of systemic oil and gas and other exporters, which received a windfall from the weaker ruble. Because so many opposing forces act on individual sectors and institutions, the net impact can be confusing, especially because this period also happened to coincide with an abrupt downward shift in the oil price.” 

“Russia’s economic performance experienced a discrete turning point around 2014. Until before the Crimea sanctions, Russia was by and large outperforming the world average as well as its major neighbour (the euro zone).”

“After the sanctions, however, there has been steady underperformance. Per capita GDP dropped from nearly 70% of the euro zone average towards 55% within a matter of years.”