The latest Western sanctions on Russia – including the EU’s 19th package and the first major U.S. measures under President Trump – mark a new phase in the economic pressure. After nearly four years of restrictions, Russia’s economy has proven resilient in the short term, but growing strains are evident. The sanction regime itself has become entrenched, raising questions about its effectiveness and the challenges of unwinding it if the war ends. Even a ceasefire would not simply return things to business as usual, as Russia’s wartime economic reorientation and the deep mistrust will complicate any post-war reset.
New Waves of Sanctions: EU’s 19th Package and a U.S. Surprise
Western allies have continued ratcheting up sanctions in late 2025. In October, the European Union approved its 19th package of measures – an expansive set of restrictions aimed at choking off revenue for Moscow’s war. This latest EU round bans imports of Russian liquefied natural gas (LNG) and intensifies restrictions on Russia’s energy sector, expanding export controls, asset freezes and curbs on services that support their operations. The package also adds over a hundred vessels to the so-called “shadow fleet” blacklist and targets a broader network of sanctions-enablers abroad — including refineries purchasing Russian crude and banks in third-countries facilitating opaque transactions. In a symbolic twist, reports noted that the EU even banned seemingly mundane items from export to Russia – from sanitary ware like toilets and bidets to motorized toys and models – underscoring how granular and sometimes ambiguous each new restriction has become when viewed against its original intent.
Meanwhile, Washington delivered a surprise by imposing its first major new sanctions on Russia since Donald Trump returned to the White House. In late October, the U.S. announced sweeping sanctions on Rosneft and Lukoil, Russia’s two largest oil companies . This move – the first U.S. sanctions against Moscow under Trump – signaled a stark shift in his approach to ending the war. President Trump hailed the sanctions as “tremendous,” underscoring the administration’s impatience after diplomatic overtures (including a planned Trump-Putin summit that fell through) failed to yield progress . The U.S. measures freeze any of Rosneft and Lukoil’s assets under U.S. jurisdiction and bar Americans from doing business with them, alongside dozens of their subsidiaries . Washington is also threatening secondary sanctions on foreign banks that facilitate Russian oil transactions – a warning shot to lenders in China, India, Turkey and elsewhere that prop up Russia’s energy trade. Together, the U.S. and EU steps in October indicate a transatlantic resolve to escalate economic pressure as the conflict grinds on.
A Long Game of Attrition: Sanctions’ Effectiveness and Limits
After multiple sanction waves, a paradox has emerged: the Russian economy has not collapsed – in fact, it rebounded after the initial shock – yet the cumulative damage is real and mounting. In 2022, Russia’s GDP fell by a modest ~2%, far less dire than early forecasts of an 8%+ plunge. By 2023 and 2024 the economy even managed to grow in real terms, buoyed by high commodity prices and massive state spending on the war effort .
However, these headline figures mask a steady erosion of Russia’s economic base. Western sanctions have started damaging its economy and will erode it further in the long term. Russia can keep the economy functioning and the ruble soldiering on, but at the cost of severe distortion: the country is essentially limited to a war economy, sacrificing future prospects.
Crucially, sanctions have not achieved their primary political aim – forcing Russia to halt the war – at least not yet. The Kremlin has weathered the economic pain by prioritizing immediate military and political goals over long-term prosperity. A grinding war of attrition means sanctions’ impacts unfold gradually. This disconnect helps explain why 19 EU packages (and numerous U.S./UK rounds) have not compelled an about-face in Moscow. Sanctions inflict long-term, delayed effects whereas Russia is responding to “here-and-now” incentives.
War Economy: Who Benefits and Who Bears the Costs
After nearly three years, the conflict and sanctions have created new vested interests and unexpected beneficiaries on both sides. In Russia, the economy’s militarization has buoyed certain sectors even as overall prosperity falters. Defense contractors and affiliated industries are booming. For many workers – especially in depressed provincial towns dominated by arms plants – the war has ironically brought a surge in income and job security. This emerging “war boom” constituency has a stake in continued high military spending. Likewise, a whole ecosystem of sanctions evaders and middlemen is profiting from Russia’s isolation. Traders in places like Turkey, the UAE, Central Asia, and the Caucasus have seen windfall business rerouting goods to Russia that Western companies can no longer directly sell. A class of “sanctions profiteers” has emerged, both inside Russia and abroad, with little incentive to see the restrictions lifted quickly.
Western societies are not untouched by the economic knock-on effects either. Europe has incurred significant costs in supporting Ukraine. And each new sanctions round can carry collateral costs for the West: higher energy prices, disrupted trade in certain sectors, and the expense of enforcing complex export controls. The political risks are obvious too. Within Europe, political rifts have at times emerged – countries like Hungary or Slovakia, more exposed to Russian trade, periodically balk at tougher measures.
Not everyone in the West loses out, though. The protracted conflict has spurred a renaissance in Western defense industries. Arms manufacturers in the U.S. and Europe have seen soaring orders, as governments ramp up military spending and restock arsenals depleted by aid to Ukraine. In 2024, defence spending by EU Member States reached approximately €326 billion, marking a sharp increase from previous years.Benefits have also been felt by American companies, which have now taken Russia's place in the gas trade in Europe. Such interests could subtly shape debates on how the war is prosecuted and how it might end.
In sum, the sanctions war has complex economic feedback loops. It creates distortions and dilemmas: each side finds itself with both losers and winners, regardless of the outcome of the conflict. Moral and ethical considerations often clash with the laws of the market economy and the interests of business. As a result, we have an economic stalemate wherein the capacity to bear pain and adapt could prove as decisive as any battle outcome.
No Easy Way Back: Russia’s Post-War Future
Whenever the war in Ukraine finally draws to a close – whether through a peace deal or a frozen conflict – the legacy of this extensive sanctions regime will loom large. It is unlikely that a peace agreement will simply remove all sanctions overnight or restore full business-as-usual relations with Moscow. Too much has changed, and too much trust has been broken. Western officials and experts have openly doubted that lifting sanctions would mean a return to normalcy. For example, even in a hypothetical ceasefire, the U.S. and EU might maintain bans on military and high-tech exports to Russia.
Moreover, Russia’s economy itself has transformed under the pressure of war and isolation, and that cannot be undone quickly. Since 2022, Moscow has pivoted trade and supply chains away from Europe, finding new (if less efficient) partners in Asia, the Middle East, and Africa. Critical industries have been retooled for import substitution or military needs. By necessity, Russia has grown more economically dependent on China – now its biggest buyer of oil and gas and a key supplier of electronics – as well as on a web of secondary partners for sanctioned goods.
The scope and scale of sanctions also mean any rollback will be complicated. There are 19 EU sanction packages (and counting), numerous U.S. executive orders, UK and Canadian measures, and more – a tangled web targeting hundreds of entities and thousands of products. These measures are now codified in laws and regulations that would need coordinated repeal.
Even a “sanctions ceasefire” would involve protracted negotiations and phased steps. We have precedents – such as the slow removal of Iran sanctions after the nuclear deal, or the decades it took to unwind apartheid-era sanctions on South Africa. Those examples suggest that sanctions can outlast the conflicts that sparked them.
Sanctions have become much more than just a tool to pressure Russia during the war; they are shaping the very framework of any future peace. The economic estrangement of Russia is both a means to impede its war machine now and a potential obstacle to a lasting settlement later.
Policymakers will need to think beyond the battlefield and consider how to eventually transition from punishment to engagement – or at least to a stable deterrence. That planning must start even as the sanctions marathon continues, to avoid a scenario where the war ends but a dangerous economic standoff persists due to lack of foresight. Achieving that will require as much creativity and resolve in the economic realm as has been shown in military and diplomatic efforts. The challenge is to use the gains made through the sanctions regime to the maximum effect in building a more secure and sustainable future when the guns finally fall silent.
