The US Department of Treasury recently published a blog revealing that sanctions and export controls issued by the United States and its partners are having a negative impact on Russia’s economy and Putin’s ability to wage war. While the Treasury Department acknowledged that Russia was able to fund the war in the short-term, the Department reports that Russian leaders have been forced to sacrifice long-term prospects. The impacts of three forces – the war, sanctions imposed by the United States and its partners, and policies imposed by the Russian government in response to those measures – are allegedly forcing Russia to reorient its economy away from private consumption and towards defense spending at the expense of private citizens, whose long-term living standards are expected to decline.
The Treasury Department offered four key conclusions regarding the impacts of sanctions and related measures on Russia’s war with Ukraine:
- The war combined with the impact of sanctions by the United States and its partners is causing Russia’s macroeconomic performance to suffer and causing Russians to leave the country.
- The fiscal pressure on Russia is increasing due to growing expenditures and the impact of sanction on revenues.
- Policies imposed by Russia in response to our sanctions are becoming increasingly expensive for Russia.
- Innovative measures taken by the US and its partners have prevented the global economy from suffering unnecessary damage from Russia’s war.