Biden in his last presidency days finishes off Russian economy

As is known, the majority of the funds that Russia spends on the war come from revenues generated by oil and gas. Due to concerns over rising global oil prices, the United States refrained from imposing sanctions on the shadow tanker fleet transporting sanctioned oil and on Russia's Gazpromneft, which is considered Putin's personal asset.

Last Friday, the U.S. Treasury finally imposed sanctions on Russia's oil export infrastructure.

Nearly two hundred tankers, used by the Russians to transport oil, have been sanctioned, along with their actual and nominal owners worldwide (typically in offshore zones). The consequences are already visible today – China and India have officially refused to accept the sanctioned tankers. The expected losses are already being calculated in the hundreds of millions, and they are likely to continue growing.

There have also been reports about Russia's shadow financing of its military expenses through a subsidized financing system for the Russian defense industry. It doesn't appear in official statistics but reflects the true state of the Russian economy. This involves an additional 415 billion dollars spent by Russia to finance the war, or 19.4% of GDP. These are enormous expenditures – greater than all Russian revenues from oil and gas from mid-2022 to the fall of 2024.

We can also add a number of other factors, including those outlined in official documents from Russia's Central Bank and Ministry of Economy, which reveal inflation growth and an interest rate that is "strangling businesses." A new EU sanctions package is already on the horizon, with Poland chairing the initiative to introduce even stricter restrictions.

So, while Russia can still finance the war with its oil and gas revenues, it will become increasingly difficult to do so in the future, which directly affects the conduct of the war. For example, while in 2022, Russians were producing 60,000 shells per day, now it's only 10,000, and armored personnel carriers on the front lines are being replaced with makeshift structures based on civilian trucks.

Sanctions are working, although very slowly and not always 100% effectively. However, the fact that they are having an impact and creating conditions for Russia's degradation and reducing its warfighting capabilities is confirmed by practice.

Of course, this does not mean that Russia will collapse right now. But it does mean that the Russians have their own motivation to end the war as soon as possible — before Russia ceases to exist. And sanctions should help them do that.

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About the author. Mykola Kniazhytskyi, journalist, Ukrainian MP

The editors do not always share the opinions expressed by the blog or column authors.