On the occasion of the second anniversary of the Russian attack on Ukraine, the European Union adopted a new package of sanctions against Russia.

The aim is to send a signal and freeze the assets of more Russian companies, individuals and institutions.

Already two years ago, the European Union imposed its first sanctions against the Russian state.

The goal was to weaken the economy so that Vladimir Putin could not finance his war.

Did this plan work?

What is the state of the Russian economy today?

The answer comes from Deutsche Welle.

Currently, the defense industry is the most important pillar of the Russian economy.

Thanks to greatly increased government spending, this industry represents 10% of GDP.

Other sectors, such as the steel industry, also benefit from it.

After the decline in 2022, the Russian economy is already showing growth, according to data from Moscow.

The forecasts are for growth in 2024 as well.

"What's happening right now is that Russia is actually, in a way, almost paradoxically, looking more and more like the Soviet Union.

Because there are high costs for the army and in some cases for heavy industry, and at the same time the consumption level of the population is falling", explained Sebastian Hoppe, expert on Russian affairs, FU Berlin.

Industrial production is also developing surprisingly well, for example in the automotive sector.

Components increasingly come from China after the Europeans withdrew from Russia.

Thanks to Chinese imports, the Russian economy is kept afloat.

"China, of course, is not officially involved in the sanctions.

They are not a partner of Western countries when it comes to sanctions," explained Hope.

To finance imports, Russia needs export revenues from the sale of gas.

They have dropped dramatically.

The European Union's broad import ban appears to have had an impact.

Attracting new customers with new pipelines is only a partial substitute.

"The volumes associated with pipelines are very, very different," explained energy expert Giovanni Sgaravati.

However, sales of oil, Russia's second-largest source of export earnings, are almost as good as they were before the Ukraine war.

This is despite EU sanctions aimed at imposing a price ceiling of US$60 per barrel.  

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"Transportation of oil probably violates the price ceiling.

So there is weak enforcement of sanctions by the authorities.

There is also trade in the gray sector, where, you know, oil is taken off one ship and loaded onto another ship abroad," Sgaravati also said.

More and more oil is ending up in India.

Its most important oil supplier is now Russia.

However, the growth of the Russian state is partly financed by credit, including military spending.

How long can Putin actually afford to do this?

“It can go on for quite a long time.

Russia had a very low level of debt at the beginning of the war, which is still the case now," Hope said. 

There is no prospect that Russia will soon run out of money to finance the war in Ukraine.  

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