Although the study of war often focuses on strategy, attacks, troop movements, and spectacular operations, wars are usually decided by logistical factors. And at the heart of this question is often the ability of an economy to support ongoing war operations. In the current conflict, Ukraine is completely dependent on the West for weaponry, but also to keep its economy running. Leaving aside Western military aid, without the economic aid that has flowed into the country, Ukraine would have a difficult-to-impossible task to be able to continue the war against Russia.
But what of Russia? At the beginning of the war, the West introduced massive sanctions, sold as intending to collapse the Russian economy. In theory, this is a sound strategy as a country with a collapsed economy, along with the financial/social unrest that such a condition is likely to foster, would be in a difficult position to prosecute a war. However, the initial onslaught of sanctions was not sufficient to achieve the desired result, and so the West has steadily increased sanctions over the last two years with limited discernable effect.
Why Has The Impact Not Been As Expected?
One reason that we haven’t seen the expected effect of sanctions is that our expectations of what sanctions can accomplish was likely too high. After all, the U.S. has sanctioned Cuba, Iran, North Korea and Syria for decades without seeing an appreciable change in policy. UN sanctions had limited effect on Sadaam Hussein, and it took a military invasion and deposing the regime to change the policy of that country. As a method of foreign policy, sanctions have a mixed track record at best in effecting radical policy changes in the targeted country.
The second reason is that many countries, including China, have not really been onboard with the sanction regime. Using sanctions to try and effectively lay siege to a country only has a chance of working if all countries are truly onboard. This is not the case in the current situation in which China is able to sustain Russia. In addition, many countries of the “Global South” are taking a neutral or pro-Russian positions, which has kept Russia from ending up in an economically isolated position similar to that of North Korea.
Thirdly, as the war has gone on, Russian economic management appears to have had some success in modifying the Russian economic structure into something better aligned with the current geopolitical reality. While trade with the West has been significantly reduced, a fair amount of this reduction has been offset through increased trade with India, China, and other countries. Despite a more challenging environment, Russia still appears able import computer chips and other technology needed for its weapons to a certain extent. While perhaps reduced from what it would be in a sanctions-free environment, Russia appears to have found enough of a way around the sanctions to continue to produce some high-tech weaponry.
In addition, it should also be noted that the Russian financial authorities have been dealing with some sorts of sanctions since 2014 when Russia took over Crimea. Consequently, they spent the years leading up to 2022 working to build up foreign currency reserves in anticipation of harsher sanctions to come. While the U.S. has been successful in freezing roughly $300 billion dollars’ worth of Russian assets held overseas, Russia initially had about another $300 billion in unfrozen foreign currency reserves in its own banks. Furthermore, Russia has been able to increase the amount of trade that it does with China that uses rubles/yuan, which is helping to stretch these reserves.
While all of these factors have not completely offset the effects of sanctions, they have given the Russian economy some breathing space that was not expected by western analysts at the outset.
The Long Run
Over the long run, the sanctions and reduced technological exposure to the West will have an impact in reducing Russian competitiveness and overall standards of living. The war has caused a “brain drain” as many IT specialists, scientists, and other Russians have left to avoid possible military service; individuals who are unlikely to return in any significant number after the war ends. While one might assume that Russia could keep pace with technological developments by simply buying, borrowing, copying, or stealing it, this strategy tends not to be as effective as one might suppose. China has been copying technology for decades. And while China has grown economically and become more powerful over the last 40 years, in many areas it still trails the West and others in technological advancement. The act of going through and developing technology creates benefits (i.e. smarter engineers/scientists/technicians) than what occurs when someone simply produces a copy of a machine and/or reverse engineers a process. Russian scientists/engineers who haven’t left are often being shut out of international technological symposiums and are not being exposed to western tech companies through business interactions as a result of the sanctions. That Russia is reducing this exposure to technological ecosystems means that its overall competitiveness is likely to suffer even after the war ends. Perceptions on the riskiness of doing business in Russia are likely to continue even after sanctions are lifted, thereby slowing the sort of technology transfer that would occur more rapidly in a country perceived to be more stable.
Another long run factor are some apparent labor shortages in Russian industry. The longer the war goes on, the more acute these shortages will become, both from men killed/injured at the front, and from more men being sent (even if they are not killed/wounded). Some of these shortages might be mitigated in theory by encouraging immigration from former Soviet states and other locations. However, there have been reports of foreign workers being shipped off to the military at some point after arriving in Russia. How extensive these cases are is hard to say. However, if the perception takes that this is a major risk, finding foreign workers willing to go to Russia to alleviate labor shortages might prove challenging.
Conclusion:
To answer the question as to how long the Russian economy can hold up and support the Russian war effort, the answer is likely ‘more or less indefinitely’. Putin needs to have something that he can sell as a win, and he has partners such as China, and to a lesser extent India, that are willing to continue to do business with him. China doesn’t want him to lose and will act where it can to ensure his economic capacity remains adequate to at least not lose as his actions put some pressure on the U.S. While China still needs the U.S. as a trading partner, having someone else put pressure on the U.S. (or its allies) is a good thing from China’s perspective. This dynamic ensures that the war is likely to go on until either the West supplies Ukraine with massive military aid that would somehow allow the Ukrainians to militarily eject Russia from Ukrainian territory, including Crimea (unlikely as Ukraine appears to have some manpower shortfalls currently), or Putin achieves some result that he can live with.
While sanctions against Russia and the restriction in trade is likely to create a Russia with lower standards of living in ten years than what they are today and also less technologically advanced relative to certain other places, the idea that the Russian economy will collapse to the point that Putin is forced to sue for peace or be forced to negotiate from a hopeless position does not appear to be realistic. Some have predicted that Russia will eventually be reduced to a very large version of North Korea. This too is likely unrealistic. North Korea is only relevant because it has nuclear weapons; it really has nothing else to offer. Russia, on the other hand, has large quantities of natural resources, thereby making it potentially relevant to many countries. Whatever a future Russian economy looks like and whatever shortcomings it is likely to possess, it probably won’t be as a collapsed economy forced into stopping the war entirely on the West’s terms as had been intended.
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