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MOSCOW — The logo on their coffee cups now stands for “Vkusno i tochka,” Russian for “Tasty, period.” But the young women huddling outside the restaurant off Red Square still call it by its old name: МcDonald’s.
Despite the rebranding, the food tastes much as it always did, they said. But the void left by other Western names is less easily filled.
In the mall behind them, the shop windows of fashion brands such as H&M and Zara are now shuttered. Some of the sanctions that hit Russia after the invasion in Ukraine on February 24 last year, like the freezing of the international payment system SWIFT, have been imposed by Western governments. Others, such as the exit of McDonald’s, are the result of decisions by multinationals.
To the young women on their lunch break, it all amounted to the same thing. “We were born in the era of open borders, and now we are shut off from the world again. There’s this Cold War feeling, it’s depressing,” said 22-year-old Marina, a museum employee, who asked to withhold her last name due to fear of repercussions.
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Ukraine’s most passionate supporters want the West to renew its targeting of Moscow with harder measures. “The Russian budget deficit is growing, revenues from oil and gas are halved, components are hard to find, McPutin burgers are terrible,” Lithuanian Foreign Minister Gabrielius Landsbergis told POLITICO.
For others, the goal has not been achieved. “To state the obvious, the goal of sanctions is to end the war,” said Michael McFaul, professor at Stanford University and who has been studying sanctions. “The war has not ended,” he stated. “That means sanctions have not accomplished the goal that we set out.”
Most EU diplomats and officials involved in European sanctions policy stressed the goal was never, realistically, to make Russia pull back its troops. Instead, the aim was to weaken the Kremlin’s war machine by denying Putin the financing he needs.
But despite early predictions, the Russian economy has not collapsed as a result of the Western trading freeze. Timely interventions by Russia’s Central Bank, revenues from remaining energy exports and a pivot toward new markets have buffered the blow.
One year into the war, this raises the question: Was all the effort and economic hardship in Europe really worth it? The debate is a current one, as the EU mulls its 10th round of sanctions ahead of the anniversary of Russia’s invasion on February 24.
“Often, there are very high expectations of what sanctions can achieve in the short term and against military aggression,” said Maria Shagina, a research fellow at the International Institute for Strategic Studies. “For those who expected sanctions to end the war, that was wishful thinking.”
The first wave of economic punishment against Russia was unprecedented in its size and speed. The EU approved two wide-reaching sanctions packages in the immediate aftermath of the invasion on February 24. A third package followed a week later and excluded a number of Russian banks from the international payment system SWIFT — a measure unthinkable before the war.
“There was a huge rally-around-the-flag effect,” said one EU diplomat. “The invasion was so unprovoked and so brutal. There was a lot of unity to react very strong.”
In the months that followed, one sanctions package quickly followed another. But behind closed doors, things quickly became complicated.
Some EU countries began to push back against steps that would hurt their own economies too much. Oil and gas — Russia’s vital sources of export revenues — were initially left untouched, to the dismay of Poland and the Baltic states, Ukraine’s staunchest EU supporters.
Less than a month after Russia’s invasion of Ukraine, European diplomats were already talking about “sanctions fatigue.” When Brussels did try to sanction Russian crude oil, it led to a painful, month-long struggle to get all EU countries on board. Eventually, Hungary’s Viktor Orbán signed up to the plan — but only after he’d obtained a major exemption.
All this served to soften the blow on Russia’s economy. Sanctions on fossil fuels also came with transition periods, giving Russia time to adjust and switch its exports to other parts of the world. “You need a shock effect to be most effective, to deprive the target of this adaptation period,” Shagina said.
The European hesitancy to go all-in is just one explanation why one year on, the overall effect on the Russian economy is nuanced.
While the Russian economy last year shrank as much as 4.5 percent according to the World Bank — or as little as 2.2 percent in the International Monetary Fund’s assessment — forecasts suggest the damage will be less severe this year. According to the IMF, the economy could even grow by 0.3 percent.
“A huge number of firms has left, imports have collapsed,” said Maria Demertzis of the Bruegel think thank. “But the GDP is not -15 [percent], as some had hoped in the beginning.”
Russian exports didn’t evaporate, as they are largely driven by energy. Even though the EU steadily reduced energy purchases from Moscow, soaring prices meant that cash flows to Russia stayed high.
“The EU did not stop buying Russian energy. Why are we surprised the Russian economy hasn’t collapsed?” said Demertzis. “It was a choice the EU made, which led to the sustaining of the Russian economy.”
Another goal of the EU’s sanctions policy was to hit the Russian elite. If Russian oligarchs could no longer buy expensive Italian leather suitcases or French wines, they might turn against Putin, some supporters of Ukraine hoped. The EU has so far sanctioned 1,386 individuals, which translates into limiting their ability to travel and access their money.
Some analysts argue it’s an illusion in the first place to believe that sanctioning individuals could influence the war. Many oligarchs depend on Putin’s goodwill, and that’s not going to change just because they’ve been sanctioned by the West, former Swiss diplomat Thomas Borer said.
Sanctions also seemed to have a limited effect in changing the hearts and minds of the average Russian. A poll by the independent Levada Center pollster conducted in September last year showed that the majority of Russians were not concerned about Western sanctions.
As Brussels drafts another round of sanctions, Western European governments are beginning to ask how much point there is. While Poland and the Baltics still want harsher, deeper cuts to trade with Russia, Western EU diplomats say time and effort would be better spent enforcing existing sanctions.
Many experts predict the real pain for Russia will emerge gradually. In the absence of Western components and technology, and limited in its ability to export, Moscow risks sliding steadily toward becoming another Iran — an internationally isolated state facing growing economic troubles.
“The sanctions are a slow-action poison, a little bit like arsenic,” the bloc’s foreign policy chief, Josep Borrell, told the European Parliament this month. “It takes time.”
Paola Tamma and Eva Hartog contributed reporting.