The real economic pain for Russia is yet to come

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As the first year has passed since the Russian invasion of Ukraine, the European Commission is working on a new sanctions package. This tenth package, if approved by all 27 members of the European Union, will target Russian individuals and the circle around President Putin himself. The question is what the effects of those sanctions really are.

BNR put this question to Han de Jong, house economist of the station, and sanctions lawyer Heleen about de Linden. ‘They do suffer from it,’ says Over de Linden, although the figures from the Russian statistical office, Rosstat, paint a different picture.

Europe is working on a new tenth sanctions package against Russia.  The question is what the effects really are.
Europe is working on a new tenth sanctions package against Russia. The question is what the effects really are. (Unsplash)

Russia’s gross domestic product (GDP), the total of goods and services produced in the country, shrank by 2.1 percent last year. That is better than expected, but that does not mean that the sanctions against the country are not working.

No symbolism

“This is not symbolic politics. It may have been until the invasion last year, when there were already sanctions. But hardly anyone knew that’, emphasizes Over de Linden.

Russia was a very large trading partner of the EU. And that’s largely gone now. It’s billions a day. So you can’t actually say it has no effect.’ Nor is the purpose of the sanctions to remove a dictator. “The goal is to make that leader and his entourage pay a higher price.”

Russia will not want to admit that the sanctions do hurt for several reasons, she thinks. Just as they won’t acknowledge losses on the battlefield, they won’t say anything about economic measures.

The blow to the Russian economy is indeed great, says Han de Jong. ‘They have lost an important part of their suppliers and their markets.’ The main source of income, oil and gas, now goes to India and China, which are now the major customers. But those countries will not long agree to the high prices that Russia asks. ‘That is already happening,’ says De Jong. Before the war, the price of Russian oil was about the same as Brent oil. Now the price is much lower. So Russia gets less for it.’

Central bank

The Russian central bank is ‘quite open about this’, says De Jong. The trade balance, the balance of payments, will show a surplus of USD 80 billion in 2021, according to the figures. In 2022 it was 227 billion, but the central bank of Russia predicts that this year will drop to 66 billion. ‘That is a huge setback,’ says De Jong. ‘It remains a surplus, they have sufficient financial reserves, but it is starting to bite.’

However, Russians have experience with pain, also know About de Linden who studied in Moscow in the 1980s. ‘That country couldn’t take it anymore. It was dead, penniless. No more products, no more basic needs.’ According to Over de Linden, if this situation, the war and the sanctions, continues for a long time, Russia could end up in the same situation. “We’re not there yet.”


For the time being, neither Putin nor his entourage nor the oligarchs in the country seem impressed by the announced sanctions. “They were supposed to be hit, but that hasn’t happened so far anyway. As far as we know’, says De Jong.

The population, on the other hand, does. The question is therefore what the long-term effects will be. ‘There will always be a Russian population, but Putin will disappear at some point. And what about our relationship with the Russian population? Russia remains a very large and important neighbour, with a large stock of natural resources.’

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