 The essence of the situation is this would not have happened without the sanctions. You could have had the war, and it would have gone pretty much as it has gone. But the Russian government in 2022 was in no position to force the exit of Western firms. It didn't want to, wouldn't have done that. It was in no position to force its oligarchs to choose between Russia and the West. It didn't wish to do that. These choices were imposed by the West, and their results were actually, in many respects, favorable to the long-term independent development of the Russian Federation's economy. I'm James Galbraith, and I teach at the University of Texas at Austin. Well, there were numerous stated goals, and the most important ones were to, so to speak, defund the war to deprive Russia of export revenue, to prevent Russia from having access to critical technologies, to put pressure on the Russian regime, both through the civilian population and through this group of extremely wealthy people known as the oligarchs. So there were a range of things to degrade Russia's military capacity. The sanctions were imbued by the advocates of this policy with enormous supposed powers and a whole range of things. And you can go back and see the claims that were made in early 2022 and up into the first part of 2023 that the sanctions were, in fact, devastating the Russian economy or rendering it permanently irrelevant to the world. So this was an interesting problem that I thought I'd look into and see to what extent those claims had validity, to what extent they were backed up by evidence. If you take, in particular, the leading advocate of sanctions, which I would say was Professor Sonnenfeld at Yale and his team, they took the view that the sanctions were effectively destroying the Russian capacity to conduct the war. At the time I wrote this paper, which was in the early part of 2023, I was already fairly well persuaded that this was not working out as they expected. But the question was, were they wrong on the facts? Or was it something about the interpretation and the analysis that they brought to a body of facts? And that was the question that the paper really tries to address. While there was a reduction in the flow of Russian oil and gas, other materials, minerals in particular, to their Western markets. So the question was, how does that affect, let's say, Russia's access to international purchasing power? And the answer to that was, it didn't. Because although Russia sold a smaller volume of oil and gas, it sold it at a higher price. So its export revenues actually increased and didn't decrease. And secondly, the effect of the other sanctions and restricting Russian imports meant that Russia was spending less, less on, for example, imported consumer goods than it had been. And so Russia's current account surplus went up. So if you believe that foreign funding was somehow essential to the Russian war effort, actually the sanctions increased Russia's access to foreign funds. Now, I don't believe that this was material in all to the Russian war effort. Because in fact, the Russian war effort was entirely constructed, almost entirely constructed from within Russia. So their access to dollars or euro was essentially immaterial. But that was the argument that was being made. And on its own merits, it failed on the grounds I've just stated. Other things which were substantially more material, let's say, access to components, access to imports of equipment, machinery, that kind of thing, and semiconductors in particular were thought to be essential to Russia's ability to provide material support for the war. And the answer to that is, well, first of all, Russia had this war did not happen at the last minute. The Russians were aware of the risk of being at war for quite some time. So any prudent planning would lead to a stockpiling of anything that they actually needed. It is not even clear to me that there were important components that they needed to acquire in the West for military purposes. There were components, of course, that they needed to acquire for civilian industry, automobiles, aviation, and a lot of non-durable goods, and importing food and various kinds. The reality of that is that the sanctions did interrupt Russian production of many things, cars, appliances. The production indices fell very, very sharply in 2022. But then the question is what happens next? And the answer to that is capacity to produce these major products, for example, automobiles, didn't go away. The factories were there, the workers were there, the managers were there, the engineering was there. So what they needed to do was to replace some designs and some equipment, which they were able to do. In some cases, with the assistance of the Chinese, as the Chinese are now major exporters of automobiles, so they converted lines that had previously been, let's say Japanese or European, to Russian lines, Moskvich, Lada, using Chinese designs, and they've restarted those production lines. I don't know that they are back yet to the volumes that they were previously producing, but they'll get there. It is clearly the industry has been transformed from one which was oriented toward the West, to one which is no longer oriented toward the West, and that's really the effect that the sanctions have had on the Russian civilian economy. And that's true for both durables and non-durbals, the poultry and cheese and other grains and fruits and vegetables, lots of things that Russia imported from Europe or from Turkey. They have in the last eight years and especially in the last year, or so, basically reshorred or onshore to the Russian Federation itself. And so they are making, taking advantage of the opportunities that sanctions, if you go back to the period before introduction of sanctions in 2014 and even up until 2022, the Russian economy was very heavily colonized by Western firms, that was true. Again, automobiles is true in aircraft, it was true in everything from fast food restaurants, big box stores, Western firms were present all throughout the Russian economy. A great many of them, not all, but a great many of them either chose to exit Russia or were pressured to exit Russia after early 2022. So on what terms did they leave? Well, they were required, if they were leaving permanently, to sell their capital equipment, their factories and so forth to, let's say, a Russian business which would get a loan from the Russian banks or maybe have other sources of financing at a very favorable price for the Russians. So effectively a lot of capital wealth which was partly owned by the West has been transferred to Russian ownership and you now have an economy which is moving forward and has the advantage compared to Europe of relatively low resource costs because Russia is a great producer of resources, oil and gas and fertilizer and food stuffs and so forth. And so while the Europeans are paying maybe twice in Germany what they were paying for energy, the Russians are not, they're paying perhaps no more and perhaps less than they were paying before the war. So again, I characterize the effect of the sanctions in fact as being in certain respects a gift to the Russian economy. And this is, I think, quite different from what the authors of the sanctions expected. And the interesting thing here is that the assessment of the impact of the sanctions from the West and from the Russian side is not terribly different. Both sides see this as having a major impact initially on the Russian economy. The Russian Academy of Sciences issued a report in September of 23 that summarizes this as having a major crisis impact on all sectors of the Russian economy. But the difference is that rather than causing a collapse of the economy, the Russians see that what actually happened was an adjustment. And it's an adjustment that you might expect to happen when the conditions are favorable and what you've got is essentially a market economy with capable businesses that are able to move into market space, which has been created for them by the sanctions. And the essence of the situation is this would not have happened without the sanctions. You could have had the war and it would have gone pretty much as it has gone. But the Russian government in 2022 was in no position to force the exit of Western firms. It didn't want to, it wouldn't have done that. It was in no position to force its oligarchs to choose between Russia and the West. It didn't wish to do that. These choices were imposed by the West and their results were actually in many respects favorable to the long-term independent development of the Russian Federation's economy. I don't think that there was an option here that was going to achieve the goals that were set out for sanctions. It is one thing to sanction an island economy like Cuba, which has been under sanctions for many decades and has suffered enormously from the sanctions, or an economy which is essentially a pure resource economy like Venezuela. Again, very difficult for an economy in that position to meet all of its requirements under extensive sanctions from the United States and secondary sanctions and all of that. This is not Russia. Russia is not in this position. Russia has one-sixth of the landmass of the world. It has maybe 20 or 30% of the world's resources. It has 145 million people. It has extreme competence in science and technology and engineering. It has, after the chaos of the 1990s, it has developed a reasonably effective relationship between the state, the parastatal sector, major corporations like Gazprom and the private sector. It was in a position to adjust to the sanctions. Also, of course, it has trading partners. Many of them did not impose the sanctions, the most important of them being, of course, China, but that was also true. The sanctions have not been imposed by major Latin American countries, Brazil, Mexico. They've certainly not been imposed by African countries. They've not been imposed by the BRICS. So Russia is by no means, this is a situation in which the sanctions were imposed by one important sector of the world economy, which then cut itself off from resources that it needs, particularly true in Western Europe, in return for cutting Russia off from various things that Russia doesn't really need and could do without and could adjust to the absence of. And that process has been going on since 2014, but accelerated gravely in 2022, 23.