‘Crippling’ Western sanctions are hitting Russia much harder than Putin is letting on, say Yale economists

Business retreats and sanctions are catastrophically crippling the Russian economy, say a group of Yale University economists and business experts led by Professor Jeffrey Sonnenfeld

By Michael Day

Chief Foreign Commentator

Putin’s propaganda is hiding the real and devastating effect of Western sanctions, a report claims.

A group of Yale University economists and business experts led by Professor Jeffrey Sonnenfeld have released what they say is one of the first comprehensive surveys of Russian current economic activity five months into the invasion of Ukraine.

The conclusion is stark. “From our analysis, it becomes clear: business retreats and sanctions are catastrophically crippling the Russian economy,” they say.

Their analysis is based on private Russian language and direct data sources, including high-frequency consumer data, cross-channel checks, releases from Russia’s international trade partners, and data mining of complex shipping reports.

Among the conclusions, they state:

  • Russian domestic production has come to a complete standstill with no capacity to replace lost businesses, products and talent; the hollowing out of Russia’s domestic innovation and production base has led to soaring prices and consumer angst
  • Vladimir Putin is resorting to unsustainable, dramatic fiscal and monetary intervention to smooth over these structural economic weaknesses… and Kremlin finances are in much, much more dire straits than conventionally understood 

The authors note that Putin has ensured that official reports on the Russian economy are skewed by political appointees in Rosstat, the Federal State Statistics Service.

“Favorable statistics which are released are questionable, if not downright dubious,” it says, “when measured against cross-channel checks and given the political pressure the Kremlin has exerted to corrupt statistical integrity.”

Western media outlets have also, by relying on limited or outdated statistics, given an unrealistically upbeat assessment of Russia’s economy post-invasion.

The survey notes how in June, Bloomberg reported that “even with some countries halting or phasing out energy purchases, Russia’s oil-and-gas revenue will be about $285bn [236.4bn] this year… based on Economy Ministry projections. That would exceed the 2021 figure by more than one-fifth”.

But the Yale economists says that such forecasts “are irrationally extrapolating economic releases from the early days of the post-invasion period, when sanctions and the business retreat had not taken full effect”.

The Kremlin finally disclosed only a few weeks ago that total oil and gas revenues dropped by more than half in May from prior months, for what its figures are worth.

The Kremlin has since stopped releasing any new oil and gas revenues data.

Putin has said that Eastern markets can easily replace Western ones. But these claims don’t bear much scrutiny. Russia cannot easily redirect its gas to Asia, because less than 10 per cent is liquified and therefore special pipelines would be needed to export it.

It’s true that China and India are buying more Russian oil – but at a bargain price. Capitalising on Russia’s predicament they have demanded a price cut of $35 a barrel. Russia’s claims that it is replacing loss of vital Western imports – for spare parts, technology – with goods from Asia. But this claim appears suspect, too. Russian imports have collapsed by over 50 per cent in recent months, the Yale team says.

Data from Beijing shows that Chinese exports to Russia fell by more than 50 per cent from the start of the year to April, from $8.1bn (£6.7bn) monthly to $3.8bn (£3.1bn). This suggests that China is more concerned about running foul of US sanctions than of losing marginal positions in the Russian market.

Russia’s much talked about foreign reserve war chest is also looking smaller than Putin would have hoped for at this stage of the war in Ukraine.

Half of his $600bn (£498bn) in foreign exchange reserves has been frozen and placed out of reach by banks in the US, Europe, and Japan. The report estimates that a quarter – $75bn (£62bn) of what’s left – may have already been used up since the start of the war.

The rouble has risen on the foreign exchanges. But this is only due to draconian currency controls. The restrictions make it effectively impossible for any Russian to legally purchase dollars or even access most of their dollar deposits.

Professor Sonnenfeld says that all this suggests sanctions are working. “Defeatist headlines arguing that Russia’s economy has bounced back are simply not factual – the facts are that, by any metric the Russia economy is reeling, and now is not the time to step on the brakes,” he says.

Some observers have argued that as the ruthless leader of an authoritarian state, Putin is better placed to ride out the economic storm caused by his war on Ukraine than western leaders.

Although not everyone agrees.

Fiona Hill, the top Russia adviser to three US presidents, said in Foreign Policy this month, that it would be a mistake to think that Putin can continue under such economic pressure indefinitely, even as the leader of a police state.

“The very fact that we frame it like this [suggesting the West will tire of inflation and energy shortages] … hides the fact that Putin, himself, may also be running against time limits,” she said. “He wants that we are the ones who are on the back foot, always wondering about whether we can make it, whether we can persevere. This is part of an information war.”



  1. Now is the time to label Russia a state sponsor of terrorism, and invoke the secondary sanctions that will totally destroy Putler’s economy.

    Liked by 3 people

    • As I and others have said since 2014, ban all Russians from Europe and North America and take all the money that putlerites have stashed in banks in Switzerland, Liechtenstein, Monte Carlo etc. That will soon make a difference.
      If putlerstan is branded a terror state, then all US companies still operating there will have to leave.
      One of putler’s most long-standing, sly, cunning and persistent propagandists: the UK’s Peter Hitchens, has continued his prolific output. Pre-2014, he was more open with his kremkrapper views; describing Ukraine as a “fanciful” country. These days, sensing the mood of the people, he has moderated himself somewhat. The result is even more dangerous: it’s kremkrapper propaganda disguised as “concern”’for Ukraine.
      A truly despicable bastard.

      A commenter; “Hector”, has his number :

      “Peter the war for Ukraine started well before the putsch in 2016 – it started hundreds of years ago when Ukraine was being pulled between multiple states.
      Why does your history always align with Putin’s? Why wont you answer this question? Why do you always align with Moscow?”

      I am banned from Hitchens blog and am banned from the DT comments also. I used the term “Russian scum”. But since then I have seen at least one person use the same words.

      Here is Hitchens latest kremkrapper article :


      Liked by 2 people

  2. I love what I read and hear but Russia’s downfall isn’t fast or even as severe as I’d like. DECIMATED, is the word I’d like to see invoked whenever Russia’s name is used. Anything less means the cockroaches will return.

    Liked by 3 people

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