Senior USA officials are disappointed that the sanctions have so far not had a bigger impact on the Russian economy, and now predict that the most serious effects will probably not be felt until early next year.
Senior officials told CNN about this.
Officials hoped that sanctions would quickly stifle the Russian military machine, making it difficult for the Kremlin to sustain its efforts on the battlefield in Ukraine. But the Russian economy has turned out to be much more resilient than many high-ranking officials in the Biden administration expected. According to the Finnish Center for Energy and Clean Air Research, in the first 100 days of the war, Russia received a record €93 billion in revenue from oil, gas and coal exports.
Russiaʼs economy continued to shrink by about 4% between April and June compared to the same period last year, but not the 15% decline that some had previously expected.
"We expected that things like SWIFT and all the blocking sanctions on Russian banks would completely collapse the Russian economy and that basically by September we would be dealing with a much weaker Russia economically than it is now," noted one high-ranking US official, referring to the decision of the U.S. and Europe to disconnect some Russian banks from the SWIFT international banking system.
Another U.S. senior official echoed that, telling CNN that many in the administration expected the Russian economy to suffer even more by then, given the unprecedented harshness of coordinated Western sanctions. However, another administration official warned CNN that officials drafting the sanctions even before the Russian invasion always believed that the most serious consequences would not necessarily be immediate, "itʼs a long-term game."
The official acknowledged that while there had been some "pre-shocks" in the Russian economy, such as the fall of the ruble, Russia was able to recover quickly thanks to its energy revenues. Still, the official and Western intelligence officials told CNN that they estimate the Russian economy will suffer greatly in the long run, both because of the cost of the war itself and Western efforts to cut it off from world trade.
"As a result, long-term damage will be caused to the Russian economy and generations of Russians. I think Russia will pay a very high price for a long time,” CIA Director Bill Burns stated at a cybersecurity conference last week.
The discrepancy between initial expectations and reality is probably due to the fact that many American and Western officials underestimated the sky-high revenues that Russia will receive from rising oil prices and the willingness of countries such as China and India to continue buying Russian oil.
Despite these concerns, the U.S. and European officials generally agree that the benefits to the Russian economy from high oil prices are not sustainable in the long term and that the Russian economy may feel the worst of the sanctions in the first half of 2023. Some believe that the recession may come earlier, by the end of this year. Export controls have also greatly undermined Russiaʼs ability to develop new technologies and weapons, and it has recently turned to Iran and North Korea for drones and munitions.