U.S. officials spent hundreds of hours over five months debating, crafting and then touting a punishing array of economic sanctions to try to scare Russian President Vladimir Putin off invading Ukraine, but almost from the beginning, many shared the same view: This strategy probably won’t work.
Those concerns became reality Thursday when Russian forces attacked targets across Ukraine and Putin vowed to “demilitarize” the country and replace its leaders. Ukraine’s government called the Russian offensive a “full-scale invasion.” In a statement late on Wednesday night, U.S. President Joe Biden said that he would imminently announce “further consequences” for Russia, in addition to sanctions unveiled earlier in the week.
Russia has been under U.S.-led sanctions since 2014 and has escaped lasting damage. Punishments imposed after Russia invaded Crimea contributed to an estimated 2 percentage-point fall in the country’s gross domestic product. But a January report by the Congressional Research Service noted that over the long run, sanctions have had “a negative but relatively modest impact on Russia’s growth.’’ Much greater harm came from Covid-19 and from a fall in oil prices, the report said.
“The Russian economy has largely adjusted to those sanctions,’’ said Andrea Kendall-Taylor, a senior fellow at the Center for a New American Security. “They have pursued a very significant export substitution policy in other parts of the Russian economy that are now booming.’’ One example: Russia’s agriculture sector, including meat and cheese production, is booming.
Read the full story and more from Bloomberg.