SNA (Tokyo) — The limited impact of economic sanctions on Russia represents an additional data point proving that the West, even when relatively united, no longer rules the world. Indeed, its losing streak in major 21st century military conflicts continues unbroken, and it serially overestimates its ability to shape global affairs.

Estimates by the International Monetary Fund hold that Western sanctions did cause disruption to the Russian economy in the first year, but that the regime of Russian President Vladimir Putin successfully made adjustments and returned the country to economic growth.

Last year, Russia’s real GDP is believed to have shrunk by about 2.1% under the immediate impact of the sanctions; while this year it bounced back and grew by about 2.2%. The IMF is projecting that the Russian economy will grow by about 1.1% next year.

Comparatively, this means that the IMF sees Russia nearly matching next year’s projected growth rate for the Euro area (1.2%) and exceeding that of some of the nations that imposed the sanctions, including Japan (1%), Germany (0.9%), and the United Kingdom (0.6%).

Naturally, these top-line figures tell us nothing about how the Russian economy has been restructured as a result of the Ukraine war and the West’s sanctions, but two obvious points are that the economy has become much more militarized in its focus on arms production, and that it is now much more reliant on the Chinese market. There is also quite a bit of evidence that Russia’s economy has turned away from post-Soviet neoliberalism and its attendant crony capitalism, offering substantial direct payments to the families of the war dead and injured soldiers, for example, which is leading to overall improvements in economic equality.

To get a sense of just how badly the West’s economic sanctions policy has failed, it only needs to be recalled what was being said at the time when these punishing measures were originally imposed.

Secretary of the Treasury Janet Yellen declared in February 2022, at the time of banning Russia from the SWIFT banking system, that it represented “serious and unprecedented action to deliver swift and severe consequences to the Kremlin and significantly impair their ability to use the Russian economy and financial system to further their malign activity. Our actions, taken in coordination with partners and allies, will degrade Russia’s ability to project power and threaten the peace and stability of Europe.”

EU Commission President Ursula von der Leyen exulted that such sanctions would “paralyze the assets of Russia’s Central Bank.” She added that “cutting banks off will stop them from conducting most of their financial transactions worldwide and effectively block Russian exports and imports. Putin embarked on a path aiming to destroy Ukraine, but what he is also doing, in fact, is destroying the future of his own country.”

Note that far from destroying the future of Russia, her own home country of Germany is projected by the IMF to experience slower economic growth rates next year than Putin’s Russia.

Finally, in a “fact sheet” issued by the Biden White House in June 2022, the US government triumphantly declared: “The United States, alongside over thirty partners around the world, has imposed unprecedented sanctions and export controls to hold President Putin to account for his war against Ukraine, restrict Russia’s access to critical technology it needs to fund its war machine, and turn Russia into a global financial pariah. The Russian economy is staggering under the weight of financial and trade sanctions, export controls, and the exodus of approximately a thousand US and multinational businesses. Analysts are projecting a double-digit decline in Russian GDP in 2022, soaring inflation estimated near 20% in 2022, and Putin’s war is projected to wipe out the last fifteen years of economic gains in Russia.”

This article was originally published on December 18, 2023, in the “Japan and the World” newsletter. Become a Shingetsu News supporter on Patreon and receive the newsletter by email each Monday morning.