Fortress Russia: Completely Lost in (Financial) Sanctions Warfare, A Deep Economic Crisis Is Unavoidable

Abstract

Russia has been preparing for years for measured Western economic and financial sanctions as part of its so-called Fortress Russia strategy. With the invasion of Ukraine, an unpredicted and extraordinarily broadbased spiral of sanctions has been unleashed by the Western world. Tools of economic warfare - specifically the freezing of substantial public and private funds - were deployed quickly, while "private" voluntary sanctioning (company withdrawals, supply stops in non-sanctioned sectors, etc.) has been unexpectedly comprehensive. The bulk of sanctions and company withdrawals will likely remain in place for a long time. Russia's economic crisis management has so far appeared eclectic and defensive; stronger countermeasures may yet follow. In the West, a clear strategy is needed to use the hundreds of billions of dollars/euros in frozen Russia-related funds as reparations for the reconstruction of Ukraine.