After Russia’s illegal full-scale invasion of Ukraine in February 2022, Western partners imposed unprecedented financial sanctions and export controls against Russia. These measures aim to achieve three objectives:
1. Significantly reduce Russia’s revenues from commodities exports;
2. Cripple Russia’s military capability and ability to pursue its war;
3. Impose significant pain on the Russian economy.
The Atlantic Council’s Russia Sanctions Database tracks the restrictive economic measures Western allies have placed on Russia and evaluates whether these measures are successful in achieving the stated objectives.
The Database also centralizes the financial designations of more than five thousand Russian entities and individuals sanctioned by the Group of Seven (G7) jurisdictions, Australia, and Switzerland. The Database is updated quarterly and can be queried to determine if an individual or entity is designated. Please refer to the appropriate designating jurisdiction’s websites and platforms for additional information and confirmation. The data provided in the Database is intended for informational purposes only.
Key takeaways:
- Russia’s total commodity exports declined by 28 percent in 2023. Russia is blaming sanctions, specifically the EU ban on Russian crude oil, for this decline.
- Russia’s partnership with Iran, North Korea, and China enables its military resilience. Russia’s primary military vulnerability lies in its ammunition manufacturing.
- Russia’s economic growth has been largely driven by war-related spending. Nearly a third of the Russian budget is now directed toward national defense.
How to use this database to reveal sanctions gaps: Click on the check mark (✅) and cross mark (❌) filters at the top of each column. Doing so will build a list of entities/individuals that are sanctioned by one country but not by another.
The seven jurisdictions covered in this database are the United States, the United Kingdom, the European Union, Switzerland, Canada, Australia, and Japan. Data in the database was last updated on April 29, 2024
Objective 1: Significantly reduce Russia’s revenues from commodities exports
Russia’s total commodity exports declined by 28 percent in 2023. To reduce Russia’s revenues from commodities exports, Western authorities have imposed financial sanctions on major Russian banks that process payments going to Moscow from exports. They also put a ceiling of $60 on the price of Russian crude oil per barrel. Russia was able to mitigate the effects of these measures by reorienting oil exports to Asia—mainly China and India—and transacting in national currencies. However, in February 2024, the Federal Customs Service (FCS) of Russia reported a 28.3 percent drop in total exports in 2023 compared to the previous year, although it should be noted that in 2022, Russian exports were the highest since 2012. As Russian media outlets report, sanctions were the reason for this decline, and more specifically the EU ban on Russian crude oil sold above the price cap that went into effect on December 5, 2022.
The only commodity that experienced export growth was agricultural products. Russia may be diversifying its exports and increasing the share of products that generally fall under humanitarian exemptions to sanctions, such as grain. Notably, Russia has been actively working on replacing Ukraine as the top supplier of grain to Africa by blocking the exports of Ukrainian grain through the Black Sea. Russia also stole around six million tons of Ukrainian grain in 2022 alone. Western authorities should work on securing Ukraine’s grain exports to Africa in close coordination with international financial institutions.
The United States is increasing pressure on third country jurisdictions. Despite the $167 billion drop in commodity exports, Russia still made $425 billion from exporting commodities ($260 billion from oil and other mineral products), which was enough to continue financing Russia’s war on Ukraine. To increase pressure, US President Joe Biden issued a new executive order at the end of 2023, providing the Treasury’s Office of Foreign Assets Control (OFAC) the authority to apply secondary sanctions on foreign financial institutions transacting with US- designated Russian entities or individuals. While the Treasury has not yet issued designations under this authority, secondary sanctions have created a chilling effect as banks from China, United Arab Emirates (UAE), Turkey, Central Asia, and the Caucasus are cutting financial links with Russia.
Russian banks are struggling to collect oil payments from China, Turkey, and the UAE. Following the Biden administration’s launch of the Russia secondary sanctions authority, banks in the UAE, Turkey, and China have started asking clients to provide written guarantees that the recipient of the payment is not on OFAC’s Specially Designated Nationals (SDN) List. Consequently, payments from these countries to Russia are either being delayed or suspended. Three out of the four largest Chinese banks have stopped accepting payments from sanctioned Russians, and a major Turkish terminal stopped importing oil from Russia. UAE state-owned bank Emirates NBD, which had created a department for managing Russian wealth and Russian oil transactions in 2022, closed down the department and cut off ruble transfers. Oil revenue, especially from China, is a lifeline to the Russian economy, and hurdles in collecting oil payments could significantly hit Russia’s war chest.
Russia has found a solution to keep transacting with Chinese banks. The current scheme for processing payments between Russia and China is to open an account at a Russian bank’s branch in China and trade in rubles. The problem is that VTB is the only Russian bank with a functioning branch in China, and the branch itself is not very big, resulting in up to six-month delays while processing documents. Sberbank was planning to open a new branch in China by the end of 2023 but has not yet succeeded. Alfa-Bank also plans on opening two new branches in China but is still at an early stage. VTB, Sberbank, and Alfa-Bank are sanctioned by the West.
If Russia’s solution of using foreign subsidiaries of Russian banks to continue transacting with China finds success, it is likely that Russia will seek to open more subsidiaries of Russian banks abroad, and encourage trade settlement in rubles. To address this challenge, Western partners could consider sanctioning Russian subsidiaries abroad or delivering a diplomatic message to third country jurisdictions that they should prohibit the growth in size or number of Russian bank subsidiaries in their countries.
India continues to trade with Russia. While others are cutting ties with Russian banks, India appears to be conducting trade with Russia as usual. The two countries are trading in national currencies, which allows India to work around Western sanctions. As such, Russia has developed a similar economic relationship with India as it has with China: Russia exports oil to India and imports machinery, and this trade is denominated in national currencies. As the Indian external affairs minister stated, India needs Russian oil to make up for the Middle Eastern oil that has been rerouted to Europe since the price cap went into effect. Meanwhile, Russia is desperate for machinery, as the West has imposed export controls on Western technology. Indian engineering exports to Russia, including auto parts, electrical equipment, and machinery, increased by 88 percent year-on-year in December 2023. The United States and its allies should deepen diplomatic engagement with India on this issue and ensure that no dual-use technologies are being exported to Russia that could help its war effort, potentially leveraging the secondary sanctions authority as well.
OPEC+ decisions are undermining Western measures on Russian oil. It remains to be seen how secondary sanctions will impact Russia’s oil revenues in 2024, but for now, Russia is likely to hit its revenue targets. Russia’s energy revenues have increased due to a spike in prices for Urals, Russia’s main blend, and one-time tax payments from oil companies. If global oil prices remain high, which seems likely given the OPEC+ decision to limit global oil supplies, Russia will continue filling its coffers. The West should engage more with the OPEC+ group, considering that OPEC’s decisions seem to be undermining Western measures by increasing Russia’s oil revenues.
The West is taking steps to reduce dependence on Russian enriched uranium
Russia dominates the global market of enriched uranium. Russia supplies over 40 percent of enriched uranium to the world, which is used as a fuel for nuclear reactors. Even more concerning, Russia has a complete monopoly on the production of advanced nuclear fuel, which is used by the next generation of nuclear reactors. Russia’s State Atomic Energy Corporation, Rosatom, is not sanctioned by the West and supplies some 440 nuclear plants in many of the thirty countries in the world generating nuclear energy. As Western countries increase reliance on nuclear power as an alternative to fossil fuel for electricity generation, they are also heading towards increasing reliance on Russian nuclear fuel. This dependence has not yet been emphasized in the sanctions and economic statecraft context because Russia has never weaponized enriched uranium exports, unlike oil and gas.
Western countries plan on boosting capacity to enrich uranium. To address this vulnerability, the United States, along with the United Kingdom and France have announced plans to expand their own capacity to enrich uranium. On May 13, Biden signed a bipartisan bill to ban the import of Russian uranium. Members of Congress have argued for reviving US uranium production in states such as Wyoming and New Mexico. The law will gradually phase out Russian uranium exports, with a full ban in place by 2028, and also free up some $2.7 billion to support the US domestic uranium industry. This is a welcome step in reducing US dependence on Russian energy exports, but its success will depend on coordination between the government and private players in the US uranium industry.
Objective 2: Cripple Russia’s military capability and ability to pursue its war
Months of delayed US funding provided Russia with an opportunity to capitalize on Kyiv’s shortage of artillery ammunition and air-defense systems and make advances in eastern Ukraine.
Russia’s partnership with Iran, North Korea, and China enables its military resilience. The January 2 attack on Kyiv and Kharkiv was carried out with weapons featuring technology from China, missiles from North Korea, and drones from Iran, revealing deep interconnections between these countries. In 2023, Beijing supplied 90 percent of Russia’s micro-electronics imports for military equipment, along with M-17 military helicopters, jamming technology, fighter jet parts, and defense systems components. A Chinese shipyard in eastern Zhejiang province also provided moorage to the US-sanctioned Russian vessel Angara, facilitating arms transfers from North Korea, which has already supplied Moscow with ballistic missiles and over 2.5 million rounds of ammunition. Throughout the conflict, Iran has supported Moscow with more than 3,700 drones, including Shahed 131, Shahed 136, Mojaher 6, and other models that use commercial off-the-shelf components.
Russia is drawing on its Cold War-era military stockpile. Eighty percent of Russia’s tanks and other armored fighting vehicles result from upgrades and renovation of surplus military inventory. However, this stockpile may soon be depleted, as most available stocks of vehicles are expected to be exhausted by 2026.
The primary military vulnerability of Russia lies in its ammunition manufacturing. The Russian Ministry of Defense (MoD) forecasts that around 4 million 152mm artillery shells and 1.6 million 122mm shells need to be manufactured or procured by 2024 to secure significant territorial gains in Ukraine by 2025. According to the MoD, the current capacity imposes limitations on achieving this target, highlighting Russia’s ongoing reliance on Western components.
The United States and its Western partners should continue to target Russia’s military-industrial base and its facilitators in China, Iran, and elsewhere with sanctions. These sanctions have a disruptive effect and make it more difficult for Russia to procure the military equipment, materiel, and dual-use items it desperately needs to fight its war in Ukraine. Further, the US threat of secondary sanctions on foreign financial institutions doing business with these designated individuals and entities expands the reach of sanctions and increases the risk of doing business with Russia.
Objective 3: Impose significant pain on the Russian economy
Western measures have encountered mixed success imposing pain on the Russian economy. Measured by gross domestic product (GDP) growth, Moscow continues to surpass expectations. The IMF’s World Economic Outlook (WEO), released in April, now predicts the Russian economy to grow by 3.2 percent in 2024, up from the previous forecast of 2.6 percent. Notably, this is faster growth than all advanced economies. While GDP growth may not be the best indicator of economic resilience to sanctions, the significant upward revision still confounds expectations of a prolonged recession at the beginning of the conflict.
The Russian economy is doing well enough to support its war against Ukraine. How has it continued to grow, and what challenges does it still face?
Economic growth has been largely driven by war-related spending. Nearly a third of the Russian budget is now directed toward national defense, representing about 6 percent of GDP, and defense is expected to overtake social spending this year. Despite sanctions on the Russian arms industry, manufacturing production has boomed in war-related sectors such as computers, electronics, and optics, finished metal goods, and vehicles. The Economy Ministry has joined the Central Bank in warning that there are signs of overheating, including high inflation which is still at almost double the 4-percent target and a rapid acceleration of lending.
For now, Russia has sufficient fiscal resources to sustain its war effort. Higher oil and gas export revenues have temporarily narrowed the budget deficit, which two months ago had reached 1.5 trillion rubles—nearly the entire deficit planned for 2024. The new budget projects spending to increase by 25 percent over the next three years. However, its forecast of revenues, which rests on the optimistic assumption of higher global oil prices, is still vulnerable to the tightening of sanctions, decreased global demand, and lower prices. Despite this risk, Moscow can seek new tax increases to sustain its invasion and continue to draw from its National Wealth Fund to cover shortfalls. Notably, the liquid pillar of the National Wealth Fund would last for one or two years if the price of Russian oil were below fifty dollars per barrel.
Conclusion
Sanctions have succeeded in reducing Russia’s revenues from commodities exports and had mixed results in crippling Russia’s military capabilities and imposing significant pain on the Russian economy. One of the challenges in evaluating the success of sanctions in achieving objectives is that desired outcomes have never been articulated. For example, a 28 percent drop in exports seems significant, but policymakers never stated how much of a decline the West was aiming for when sanctions were put in place.
We can no longer analyze the effectiveness of sanctions against Russia without factoring in the role other sanctioned regimes and China play in sustaining Russia’s wartime economy and military capabilities. Western partners should continue to pressure Russia and continue draining its resources while identifying its financial linkages with other sanctioned regimes, and targeting them.
Authors: Kimberly Donovan, Maia Nikoladze, Ryan Murphy, Alessandra Magazzino
Contributions from: Charles Lichfield
Data source: Castellum.AI
Past editions
Related content
Join our list
Sign up for other events and analysis from the GeoEconomics Center.
Economic Statecraft Initiative
Housed within the GeoEconomics Center, the Economic Statecraft Initiative (ESI) publishes leading-edge research and analysis on sanctions and the use of economic power to achieve foreign policy objectives and protect national security interests.
Follow us on social media