How useful have the EU's financial sanctions on Russia been?

Publishing date
27 February 2023
Nicolas Véron
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 One year on, financial sanctions have diminished Russia’s capacity to conduct its war of aggression on Ukraine. However, it will take time to gain a full assessment of their impact. Sanctions against apartheid South Africa, often considered the most successful precedent, took several years to have observable effects.

There have been three main types of EU financial sanctions so far. In increasing order of importance, sanctions were placed on individuals (so-called oligarchs), on Russian commercial banks and on the central bank’s reserves. The sanctions on individuals are necessary but not decisive: the people most affected are probably unable to change Russia’s policies, let alone its regime.

The sanctions on commercial banks put sand in Russia’s financial wheels, but they are incomplete. Even after Sberbank was added last summer, almost a third of Russia’s banking sector still remains unaffected by them. That is far too much. The EU should block all remaining Russian banks, including those currently EU-owned, with due waivers for humanitarian and other transactions that the EU views as necessary.

The most important financial sanctions have been the immobilization of about €300 billion of Russia’s foreign reserves worldwide, of which the EU represents an unknown but presumably large share. In 2022, Russia made a lot of money from exports, but its oil and gas revenues are now decreasing and the war costs are rising. At some point, Russia will be financially squeezed. With a large amount of their spare cash blocked, this point will come significantly sooner than if no action had been taken.

Listen to Bruegel's podcast The Sound of Economics, where Giuseppe Porcaro, Elina Ribakova and Nicolas Véron pick up their conversation from last year to reflect on the impact of sanctions against Russia, one year since the outbreak of the war in Ukraine.

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About the authors

  • Nicolas Véron

    Nicolas Véron is a senior fellow at Bruegel and at the Peterson Institute for International Economics in Washington, DC. His research is mostly about financial systems and financial reform around the world, including global financial regulatory initiatives and current developments in the European Union. He was a cofounder of Bruegel starting in 2002, initially focusing on Bruegel’s design, operational start-up and development, then on policy research since 2006-07. He joined the Peterson Institute in 2009 and divides his time between the US and Europe.

    Véron has authored or co-authored numerous policy papers that include banking supervision and crisis management, financial reporting, the Eurozone policy framework, and economic nationalism. He has testified repeatedly in front of committees of the European Parliament, national parliaments in several EU member states, and US Congress. His publications also include Smoke & Mirrors, Inc.: Accounting for Capitalism, a book on accounting standards and practices (Cornell University Press, 2006), and several books in French.

    His prior experience includes working for Saint-Gobain in Berlin and Rothschilds in Paris in the early 1990s; economic aide to the Prefect in Lille (1995-97); corporate adviser to France’s Labour Minister (1997-2000); and chief financial officer of MultiMania / Lycos France, a publicly-listed online media company (2000-2002). From 2002 to 2009 he also operated an independent Paris-based financial consultancy.

    Véron is a board member of the derivatives arm (Global Trade Repository) of the Depositary Trust and Clearing Corporation (DTCC), a financial infrastructure company that operates globally on a not-for-profit basis. A French citizen born in 1971, he has a quantitative background as a graduate from Ecole Polytechnique (1992) and Ecole Nationale Supérieure des Mines de Paris (1995). He is trilingual in English, French and Spanish, and has fluent understanding of German and Italian.

    In September 2012, Bloomberg Markets included Véron in its second annual 50 Most Influential list with reference to his early advocacy of European banking union.


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