The Kremlin’s invasion of Ukraine has resulted in an unprecedented level of western sanctions. Whilst Moscow did not appear to anticipate such a united response, the nature of the conflict suggests that these developments were simply inevitable.

Vladimir Putin and his criminal war in Ukraine have returned the Russian economy back to the dark days of the early 1990s, with spiralling inflation, winding queues in front of banks and shops, stringent financial controls and a new wave of skilled Russian emigrants flowing out of the country. This crisis is only likely to get worse as Russia turns into a pariah state unpalatable for the world’s most technologically-advanced nations and enterprises.

As Vladimir Putin launched his brutal invasion of Ukraine on February 24th, a US-led coalition of like-minded governments launched their own economic barrage of sanctions against the Russian state, its largest companies and some of its most prominent individuals. The sanctions have focused on crippling Russia’s finances and its ability to pay for the war in Ukraine, as well as severing its military-industrial complex from strategic components. They have put a prohibitive lock on key Russian economic sectors like high-tech, energy and tradeables.

Armenian economists, entrepreneurs and private business owners are warning about hardships that have arisen due to sanctions against Russia following its invasion of Ukraine. The risks and consequences for Armenia’s economy are severe.

Russia’s war against Ukraine has gone beyond the borders of the conflict between the two states and has knocked on the doors of all countries, targeting their economies first. The invasion of Ukraine by Russian troops led to a global economic backlash against Russia in the form of additional economic sanctions. These complement the package of sanctions initiated in 2014 following the annexation of Crimea and the war in Eastern Ukraine. These restrictions are still valid and have already had significant negative impacts on the Russian economy.

The current situation in Ukraine remains crucial not just for the country’s future but is also an indication of the world’s ability to hold the aggressor state accountable.

Is the West ready to raise the stakes when dealing with the regime in Minsk? The answer to this question is not so clear. In fact, western states seem rather confused on how to act while the Belarusian regime continues to issue challenges.

Both Belarusian and Russian officials view the 2020 protests in Belarus as a western attempt to instigate a “colour revolution”. They see the events ultimately as a special EU and American operation in which the Belarusian people did not participate at all. Apparently, the ultimate goal of these protests was to overthrow the Russian authorities rather than simply those in Minsk.

On December 13th 2020 an ecumenical service was held in Berlin Cathedral to pay tribute to the protesters in Belarus. It was followed by a political debate, which focused on a new European Eastern policy, a new Ostpolitik. Through the organisation of these two events, the churches showed, once again, their eagerness to engage in building bridges for the way to peace and democracy.

A special new Policy Paper co-published with the Institute of Central Europe is now available.

Post-Brexit, the UK will no longer be constrained by the EU’s consensus-based decision-making and can re-calibrate its response in line with its domestic interests and with the pace of political urgency.

Despite some initial disruption, the Kremlin’s efforts to counteract and mitigate the impact of sanctions have been quite successful. The state-led redistributive model has ensured that the authorities are well placed to respond to any disruption caused by the sanctions. In essence, the effect of the sanctions has reinforced a highly interventionist economic policy and a dominant role of the state in driving economic growth.

Is Russia’s economic policy a success or failure? The answer may strike many as self-evident. By most conventional measures, the economy has performed poorly in recent years. Between 2000 and 2008, Russia’s economy grew by an impressive seven per cent per year, driven by both rising oil prices and substantial productivity gains. Over the past ten years, however, Russia’s real GDP has risen, on average, by just one per cent per year.

While the main attention is focused on the US and EU sanctions against Russia over its wrongdoings in Ukraine, Kyiv is far from setting an example in their implementation. Paradoxically, the Ukrainian leadership has been rather reluctant and slow when it comes to the sanctioning of the Kremlin’s cronies.

A relationship that used to be characterised by the 1969-invoked “change through rapprochement” and “partnership on eye-level”, has seen a rapid cooling over the course of the last two years. Germany and Russia used to be close partners with vibrant exchange on the political, economic, social and cultural levels. Even when Russia’s relations with the rest of the West began to deteriorate in 2011/2012, following the untransparent presidential election, the German government was seen as a connector and mediator. However, since the annexation of Crimea and the war in Eastern Ukraine, the German political elite also distanced itself from president Putin and became a strong advocate of sanctions. At the same time, Germany has always been in favour of dialogue and remained at the discussion table, which helped to facilitate reaching the Minsk II agreement.