Evolution of Sanctions Against Russia -

Evolution of Sanctions Against Russia

Economic and Financial Sanctions

February 25, 2025

The author

Andreas Winde Managing Director

Introduction

Let’s start with a brief historical context of Russia’s aggression against Ukraine.

Following Russia’s annexation of Crimea in 2014 and support for separatists in eastern Ukraine, tensions between Russia and Ukraine escalated. Despite diplomatic efforts such as the Minsk agreements, the conflict in Donbass continued with low intensity.

On February 24, 2022, (btw. Only 4 days after the Olympic winter games in China ended, Russia launched a multi-front offensive into Ukrainian territory, resulting in global condemnation, massive displacement of civilians and extensive Western military and economic support for Ukraine. The invasion quickly developed into the largest military conflict in Europe since World War II, leading to severe humanitarian and economic repercussions. In response, governments around the world imposed unprecedented sanctions on Russia and its ally Belarus to weaken their ability to wage war and signal support for Ukraine.

16 Sanctions packages

The first 3 packages of sanctions were imposed in late February 2022, immediately after the invasion became known. They mainly involved the freezing of assets and travel bans. The sanctions were directed against the Russian and Belarusian political elite, senior officials and oligarchs. In addition, major Russian banks were cut off from SWIFT and transactions with the Russian central bank were largely banned in the USA and the EU. Export controls and technology restrictions were also imposed, focusing on cutting-edge technologies, aerospace and components important to the Russian defense industry.
From March 2022, the financial sanctions were extended. More Russian banks lost SWIFT access, and further restrictions were imposed on financial services for Russian companies. In addition, sanctions were imposed on further individuals and companies affiliated with the state, excluding them from global capital movements. States prohibited transactions in new Russian government bonds, bonds and shares linked to Russian state-owned companies.
In April, the next package dealt with measures in the energy sector. The EU is gradually introducing bans on Russian crude oil by sea; the G7 countries have introduced a price cap mechanism for oil exports to third countries. Access to Western shipping and insurance services for Russian oil was made dependent on compliance with the price caps.
Trade embargoes and sectoral bans followed from June 2022. The export of technology, luxury goods and dual-use goods to Russia was banned. Import bans were imposed on Russian goods (coal, steel, timber, gold and other products), which are considered important sources of income for Moscow. Consulting, legal, auditing and other professional services for Russian companies – especially those close to state power – have been restricted.
Another cornerstone was the freezing and confiscation of Russian assets. Russian foreign exchange reserves held in Western banks were frozen. Assets such as luxury yachts, airplanes and real estate linked to sanctioned elites were confiscated. Currently, there are debates on redistribution. EU and UK governments are considering using Russian state assets to rebuild Ukraine, but legal obstacles remain.
As of February 2023, several sanctions packages targeted third-party intermediaries and transshipment networks that attempted to circumvent the restrictions. The starting was the 10th package. Yesterday, tht 16th package have been released and published. Entities in third countries accused of assisting Russia or Belarus in circumventing sanctions were added to the sanctions lists. Additional measures restricted the import of semiconductors, special electronics and other components used for military purposes.
Restrictions were directed against Belarus as well. Belarusian banks have faced similar SWIFT shutdowns and bans related to the Central Bank. Corresponds to Russian export controls aimed at preventing the shipment of sanctioned goods through Belarus. Sanctions have been imposed on high-ranking Belarusian officials and business leaders associated with President Lukashenko.

Conclusion

The sanctions against Russia since the outbreak of the full-scale invasion of Ukraine have had a far-reaching impact on the Russian population and the economic and military capacities of the Russian government.

The cumulative effect of financial restrictions, import and export bans and limited foreign investment has put additional strain on Russia’s economic situation. Access to certain consumer goods was restricted, inflationary pressure on everyday goods increased and real incomes fell due to the devaluation of the Russian ruble. International travel became more complicated for many Russians, and opportunities for global cultural and academic exchange were limited by extensive visa and travel restrictions.

Although Russia has attempted to circumvent the sanctions – often with the help of neutral or benevolent third countries – the constant tightening of loopholes has left Moscow less and less able to fund and equip its armed forces.

Nevertheless, despite the unprecedented scale of the sanctions, the Russian government and its military apparatus have continued to function – albeit under increasing pressure. Although the sanctions have undeniably weakened certain aspects of Russia’s economic and military capabilities, they have not led to a complete collapse.

In short, the sanctions have not toppled the Russian government or brought the military to a standstill, but they have significantly limited Russia’s ability to project and maintain its power at previous levels.