Russian Invasion of Ukraine: Economic Sanctions and Impacts


Disclaimer: This article solely reflects the opinion of the authors and should not be taken to represent the general views of IPPR’s management/ editorial team or those of fellow authors.

Image source: CNN

Last month, I wrote an IPPR article discussing the increasing Russian military buildup near the border with Ukraine. Unfortunately, on 24 February 2022, Vladimir Putin ordered the invasion of Ukraine under the guise of a “special military operation” to “denazify and demilitarise” Ukraine. This invasion and subsequent humanitarian and refugee crises sparked global outrage and condemnation. While the West stood to condemn the Russian invasion, they stopped short of direct military confrontation against Russia, despite pleas from the Ukrainian president to impose a no-fly zone. Instead, the West unleashed the financial weapon: economic sanctions. What is the significance of economic sanctions however?

The academic debate

Economic sanctions are one of the tools for states to exert power overseas. Robert Pape, a political scientist with expertise on international security, defined economic sanctions as a tool to weaken the economy of a target state and thus coercing the target to change its behaviour. A change of the target state’s behaviour indicates success. However, Pape deemed such a tool  ineffective to achieve foreign policy goals based on the rate of success.  Pape’s evaluation and criticism of the Hufbauer, Schott and Eliot database of historic economic coercion found that the success rate of sanctions was less than 5%.

In addition to that, sanctions create adverse humanitarian consequences. An article in The Lancet medical journal compared sanctions to weapons of mass destruction due to suspension of distribution of humanitarian aid, such as medical supplies. Moreover, sanctions generate unfavourable impacts on ordinary citizens in the target state. Sanctions can embolden the target state to violate human rights further by suppressing public protest and dissent as a result of economic failure post-sanctions if they fail to weaken the targeted state’s elite.

Who faces sanctions and what else?

Following the 2022 Russian invasion of Ukraine, a number of states, particularly in the West, unleashed packages of sanctions against Russia. Some of the most notable ones include sanctions against the highest levels of the Russian government. The following paragraphs will discuss what type of sanctions were introduced from the following: sanctions against the Russian government, against oligarchs, against financial institutions, against the media, and the energy sector.

There are packages of sanctions against the Russian government. The highest levels of Russian government officials subject to sanctions include President Vladimir Putin, Foreign Minister Sergei Lavrov, and Defence Minister Sergei Shoigu. The United States, United Kingdom, European Union, Canada and Australia issued these sanctions against the aforementioned officials. Historically neutral Switzerland followed the European Union’s sanctions directive. While Switzerland’s imposition of sanctions was deemed as breaking neutrality due to transatlantic pressure, Switzerland’s actions do not breach neutrality – Russia is the aggressor, and sanctions aim to stamp out Russian commodities and capital that had been stored in Switzerland. Switzerland’s sanctions aim to avoid a “war profiteer” reputation. 

These sanctions ban Russian officials from travelling to the aforementioned states and territories. Moreover, these officials have their assets frozen in the sanctioning state. In retaliation, Russia imposed sanctions against the United States’ and Canada’s government leaders, foreign ministers, and defence ministers.

Image of Russia’s highest-level officials from left to right: Foreign Minister Sergei Lavrov, President Vladimir Putin and Defence Minister Sergei Shoigu. (Source: RAND Corporation)

To further impact President Putin, Russian oligarchs with links to Putin faced sanctions. These oligarchs are some of the world’s richest men, many of whom pledged loyalty to Putin. They manage a range of businesses – from the steel industry, oil and gas, luxury properties, down to sports clubs. With these sanctions, these oligarchs expect to face hurdles in operating their businesses. For example, sanctions against oligarch Roman Abramovich adversely impacted the business of Chelsea FC, one of the most popular sports clubs in the world. 

Image: Roman Abramovich holding the UEFA Champions League (Europe’s highest-level club football competition) trophy won by Chelsea in summer 2021. (Source: Insider)

Further sanctions include those against Russian banks and financial institutions. These sanctions aim to weaken the Russian economy. The United States Department of Treasury justifies this decision to curtail Putin’s use of the financial system to further assault Ukraine. One of the most drastic sanctions against financial institutions is the prohibition of certain Russian banks from using the Society for Worldwide Interbank Financial Telecommunication (SWIFT). SWIFT is an inter-bank communication system which securely facilitates transactions all over the globe. By cutting Russian banks off the SWIFT system, payments and transactions in Russia face severe disruption – therefore cutting off the Russian government’s access to revenue. Furthermore, sanctions extend to businesses such as the Russian airline industry – with Aeroflot, Russia’s largest commercial airline, being banned from entering the European Union, British and Canadian airspace. In retaliation, Russia banned European Union and British aircrafts from entering Russia.

Image: An Aeroflot aircraft in London Heathrow Airport circa 2014 (Source: Airplane-Pictures)

In addition to sanctioning Russian banks, there are sanctions against Russian state media from broadcasting in the West. These sanctions were responses to Russian disinformation and propaganda campaigns over the invasion of Ukraine. Russia has been a major disinformation and conspiracy theory peddler to promote its foreign policy agenda and Putin’s regime. Russian state media responsible for disinformation include Russia Today (RT) and Sputnik. Western states and social media companies such as Facebook have restricted RT’s operations. In retaliation, Russia banned foreign media outlets including the BBC.

After the sanctions against Russian state media,  one of the most contentious issues in the sanctions debate is the withdrawal of the Russia-European Union natural gas pipeline. Germany has been reluctant to cut the pipeline off due to its energy needs. Germany has been subject to criticism from the United States over this dependence on Russia. In a reversal of policy, Germany curtailed the Nord Stream 2 pipeline approval. Other than the curtailment of Nord Stream 2, the British, Australian, American and Canadian governments decided to ban imports of Russian oil which impacts 13% of Russia’s exports. Yet, there are major consequences following sanctions against the energy sector, which will be explained in the next paragraphs.

Effectiveness in Russia

Sanctions have managed to plunge Russia into a deep economic crisis. The economic impact of sanctions is one of the triggers to domestic anti-Putin dissent criticising the invasion. The under-pressure Russian government cracked down harshly on these protesters and passed a “fake news” law which imprisons dissenters for up to 15 years. Russia’s further domestic assault on human rights and use of sophisticated military equipment against civilians shows what Peksen argued about how sanctions can worsen human rights abuses in the targeted state. Therefore, despite the sanctions issued by Western governments following Russia’s human rights abuses, Russia has worsened such abuses.

Images: Russian police arresting an anti-war protester (Source: Evening Standard) and Ukrainian civilians defying Russian soldiers (trucks with “Z” symbol) in Kherson, Ukraine (Source: iNews)

Russian citizens face difficulties in conducting foreign transactions. In addition to exclusion from SWIFT, major international credit card companies such as Visa and Mastercard have suspended operations in Russia – therefore Russian bank accounts are unable to process international transactions at home and abroad. Consequences include Russian tourists unable to take out cash in Bali, Indonesia and Thailand. International companies have been withdrawing from Russia as a result of sanctions and as a message to condemn Putin’s invasion.

The impact of sanctions on oligarchs shows a mixed picture. One of the sanctioned oligarchs, Mikhail Fridman, deemed that sanctions will have little to no impact to stop the war. Fridman eventually had his shareholdings frozen indefinitely. Sanctions do not actually change Putin’s mind, but it shows the commitment of the West to expel Russian money and deal with long-existing Russian capital.

Impact on the West

United States President Joe Biden stated that imposing sanctions will be hard for Americans due to an increase in energy prices but it is necessary to do so as a moral response towards Russia’s aggression. This statement indicates that sanctions adversely impact those who imposed them too. Therefore, the consequences of Russian sanctions to the West centre around energy needs and are exposing the long overdue need to shift to alternative energy sources. 

As I had said in my IPPR piece a month ago, the impact of Russia’s war in Ukraine on the West centres around the energy sector. Germany’s reluctance to impose sanctions was due to dependence on gas pipelines originating from Russia until Germany decided to curtail Nord Stream 2. The consequences to energy supply in the West are huge – as there remains a potential for Russia to counter Western sanctions by either retaliating or using its oil and gas supplies to protect Russia’s economy from sanctions. 

Yet the European Union admitted that for far too long they have been over-reliant on the Russian energy sector. Euronews Green has put forward several alternatives, which include liquified natural gas, renewables and coal. The latter option will impede the European Union’s green economic recovery agenda as a return to coal will increase greenhouse gas emissions.


Economic sanctions are tools that show willingness to stand up against Vladimir Putin’s invasion of Ukraine. These sanctions targeted the top officials of Russia’s government, Russian oligarchs, Russian financial institutions, Russian state media and the energy sector. These sanctions, as of now, do not change Vladimir Putin’s behaviour significantly. Yet, many of these sanctions impact both Russia and the West. Russian oligarchs scrambled to sell their assets or face asset freezing. Russians cannot use their bank accounts to do international transactions. The Russian people face increasing economic hardship yet each dissent against such hardship results in Putin committing further human rights abuses. The West has no choice but to phase out energy sources from Russia. Therefore, the effectiveness of sanctions at this stage only impacts the oligarchs as a show to stamp Russian money out of the West, whilst Putin continues to commit human rights violations in Russia and Ukraine while the West is figuring out alternative energy sources.

This blog post discusses an ongoing event, and further developments may happen beyond the date of publication.

By Ivan,

I am a UCL MSc International Public Policy student, passionate on discussing issues in international relations. Nottingham Politics and International Relations graduate

You May Also Like

Sexism: Alive and Well?

Disclaimer: This post reflects solely the opinion of the authors and should not be taken to represent the general views of IPPR’s management/ editorial team or those of fellow authors…

The Principles of Representation

Political leadership in the United Kingdom is undergoing a rapid diversification unprecedented in its history. In the past year alone, the UK has seen its third female Prime Minister, its…