Key Points and Summary on Ukraine War Sanctions – Despite Russia’s struggling wartime economy, which faces high interest rates and a growing labor shortage, the international sanctions regime imposed on Moscow remains largely ineffective due to tepid enforcement.
-According to US Special Envoy Lt. Gen. Keith Kellogg, current sanctions rate a “6 out of 10” in severity, but their enforcement is only a “3 out of 10,” leaving significant room to increase pressure.
-However, truly “breaking the back” of Putin’s economy would require an Iran-style oil embargo and secondary sanctions, a move the West has been unwilling to take due to the risk of creating a global energy crisis and price shocks.
Ukraine War Sanctions: Time to Hit Russia Hard?
A common question asked over the last three years is, “With all the sanctions that have been imposed on Moscow over President Vladimir Putin’s February 2022 invasion of Ukraine, why has the Russian economy not ground to a halt a long time ago?”
Speaking this year on February 15 at the Munich Security Conference, Lt. Gen. Keith Kellogg, United States President Donald Trump’s Special Envoy for Russia and Ukraine, answered this question and explained what is and is not being done about sanctions on Moscow.
The US could “employ sanctions that break the economy’s back” by depriving Russia of oil revenues to pressure Putin into concessions, he said.
But Kellogg rated the severity of current sanctions against Russia by the US and its allies as a “6 out of 10”. Making those sanctions even less effective is that, as he explained, their enforcement is a tepid “3 out of 10.”
Message: There is plenty of headroom left in the sanctions regime to hurt Putin. That is, if there is the will to do so.
Unfortunately for the Ukrainians and those who would like to see Russia punished to the fullest extent possible, increasing the pressure from sanctions on Moscow is in that unhappy category of “easier said than done.”
The Economy and Inflation
Ratcheting up sanctions sounds like an easy solution.
Still, that course always runs up against the same obstacles presented by the realities of economics and the global trade network, which creates numerous interdependent relationships between the US and other nations.
These complications have hampered the US and its allies from employing sanctions more effectively in the past and are having the same effect now.
Conventional wisdom says that the deteriorating state of Russia’s economy should make it easier for a regime of targeted sanctions to cause enough damage that Russia would back off its war aims for fear of internal instability.
The costs of Putin continuing his war are rising every day; his country is suffering a pronounced and growing labor shortage as hundreds of thousands of workers are either sent to the front or pulled from civilian-sector jobs into the defense industry.
The public spending on the war has been another growing crisis. The massive amount of money being poured into the economy all at once has led to persistent inflation. The head of the Russian Central Bank (CBR) has prevented the Russian ruble from collapsing into hyperinflation (as it did in the 1990s) by increasing interest rates, which are now at 21 percent.
That price for controlling the rouble and keeping it from going into freefall has been these suffocatingly high interest rates. These, in turn, make it impossible for defense companies to stay in business. Some of the leading Russian defense companies have had to close their doors as the cost of doing business has become higher than the profits they make selling their products at state-controlled prices.
Breaking Moscow’s Back: It Is Possible (For a Price)
If Washington wanted to “break the back” of Putin’s economy, as General Kellogg has described it, sanctions would have to go much further than what was instituted during the Biden Administration, including the package of new embargos instituted on January 10 just before he left office.
For one, this would involve blocking most Russian oil exports.
The US can do this by instituting an Iran-style oil embargo and threatening secondary sanctions against buyers of Russian oil. But the unfortunate side effect would be throwing the rest of the world’s oil markets into disarray.
As an Indian colleague stated to me today, “If New Delhi were to be sanctioned for buying and refining Russian oil and that oil taken off the market the worldwide price would rise so high as to cause international panic among other nations.”
The other option would be to find a nation to pump more oil if Russia were cut off from exporting oil altogether, as a form of compensation. Still, the only nation capable of doing so is Saudi Arabia, which would be unlikely to do so for several reasons.
One more possible option would be to target Moscow’s liquefied natural gas (LNG) industry. The US has already virtually closed down one major Russian LNG project, Arctic LNG 2, before it ever came into operation. This could also be achieved with Russia’s other major LNG project, Yamal LNG, which exports approximately 20 million tons of LNG per year.
At current gas prices in Europe, that quantity of gas would amount to about $15 billion in annual export revenues.
Sanctioning LNG “has the advantage that it helps the numerous new American LNG suppliers that have sprung up to find additional customers in Europe. The US could also decide to go after other Russian exports such as fertilizer, which so far has been spared from sanctions and is one of the main imports from Russia to the US”, said a western media report earlier this year.
There are several other factors, including having the correct personnel at the US Treasury Department to implement an effective sanctions regime, which is no small feat. However, regardless of how the Trump Administration chooses to proceed, there is no instant impact of sanctions. They have been in place for months already, and it will take months more for them to inflict the desired level of pain on Russia.
About the Author: Journalist Reuben F. Johnson
Reuben F. Johnson is a survivor of the February 2022 Russian invasion of Ukraine and is an Expert on Foreign Military Affairs and Director of the Asian Research Centre with the Fundacja im. Kazimierza Pułaskiego in Warsaw. He has been a consultant to the Pentagon, several NATO governments and the Australian government in the fields of defense technology and weapon systems design. Over the past 30 years he has resided in and reported from Russia, Ukraine, Poland, Brazil, the People’s Republic of China and Australia.
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Jim
July 8, 2025 at 8:02 pm
Inflation & labor shortages. That can suggest a difficult economy or weak if you prefer.
But it can also be the sign of an economy which is slightly overheating because it’s a smooth running machine and working hard.
There are no shortages (beyond labor), the stores are full of food and consumer goods.
Biden had already declared the Ruble will be turned into rubble… but no.
Kellog’s description seems a bit self-serving.
But here’s the thing… there is nothing else to try and so if you’re desperate you’ll do anything.
So, as ol’ Clint Eastwood said, “Make my day!”
And, “A man’s got to know his limitations.”
I suspect Russia will overcome any additional sanctions just like they overcame the previous sanctions.
Secondary sanctions, against India and China… and others.
I thought we were trying to build a strong relationship with India… put sanctions on them for buying Russian oil and it will only drive India away from the U. S.
Sanctions on China will hurt an already fraught and fragile relationship… how much further down that path do you want to go?
The Bone Crushing sanctions may end up having more blowback onto us than harm to Russia.
But who knows… it certainly will further alienate Russia, while Trump has expressed interest in normalizing relations with Russia.
I get it there are plenty of people in Washington who don’t give a darn about normal relations with Russia.
But they should… they should.