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Since taking office, President Trump has threatened to levy additional sanctions and tariffs on Russia should its president, Vladimir Putin fail to negotiate a peace in Ukraine. The existing sanctions, however, have not hurt Russia that much. From Moscow, NPR's Charles Maynes looks at how the Kremlin survived the pressure and how it could still lose.
CHARLES MAYNES, BYLINE: Let's acknowledge that predicting the future, much less forecasting an economy, is, at its core, a risky game. So when the U.S. imposed massive sanctions on Russia following its full-scale invasion of Ukraine in February of 2022, perhaps it's not surprising that nearly everyone, from reporters to politicians to experts, misread the moment.
NATALIA ZUBAREVICH: (Non-English language spoken).
MAYNES: "We were wrong - all of us. Russia adapted much faster than we thought," now says Natalia Zubarevich, an economist with Moscow State University who was among those predicting doom.
There was no economic collapse, no large-scale panic, obviously, no end to the war. After an initial sputter, Russia's economy grew in 2023 and surged to become one of the world's fastest growing last year. How did Russia do it? In retrospect, Zubarevich cites both a savvy Kremlin economic team and the limits of Western pressure in an increasingly diverse global economy.
ZUBAREVICH: (Through interpreter) Sanctions were imposed by developed countries, but Russian raw exports are bought by everyone. It turns out you can't just put a fence around one half the world. The other half will just continue trading.
MAYNES: Nations like China and India continued to purchase Russia's key exports - oil and gas - filling government coffers just as Moscow's energy business with much of Europe was drying up. Illicit imports from other countries - often former Soviet Republics - provided an avenue for trade in otherwise banned Western goods - everything from airplane engines to the latest iPhones. Meanwhile, many Russian businesses flourished with the exit of high-profile Western companies, grabbing essentially abandoned market share.
EUGENIYA POPOVA: Oce effect of sanctions is that there's no more fair competition, so we have, like, vacuum in the Russian market. And we, as a company - we're happy to fill in the gaps that appeared after many foreign vendors left.
MAYNES: Eugeniya Popova is with the Russian cybersecurity firm Positive Technologies. She says their company picked up leading industry specialists and plenty of new contracts at home and abroad, and that's after Positive Technologies was sanctioned directly by the U.S. government.
POPOVA: So we understood that sanctions is something which cannot stop the company from being, you know, on the market doing the things that the company believes it should do and so on. So for us, it's, like, a part of our life, nothing more.
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PRESIDENT VLADIMIR PUTIN: (Non-English language spoken).
MAYNES: President Vladimir Putin has repeatedly argued Western sanctions are a boon to Russian industry, a sunny take on the economy that has browed its way into pop culture.
(SOUNDBITE OF TV SHOW, "GOODBYE")
UNIDENTIFIED ACTOR #1: (As character, snoring).
UNIDENTIFIED ACTOR #2: (As character, non-English language spoken).
UNIDENTIFIED ACTOR #3: (As character) Mr. President.
UNIDENTIFIED ACTOR #2: (As character, non-English language spoken).
MAYNES: A new Russian TV comedy called "Goodbye" even imagines now former president Joe Biden going on an undercover trip to Russia to discover just how on Earth the country keeps thriving despite Western pressure. The answer, he finds out...
(SOUNDBITE OF TV SHOW, "GOODBYE")
UNIDENTIFIED ACTOR #2: (Non-English language spoken).
MAYNES: ...Russians now make everything themselves. Only the real picture is proving more complicated. Take last fall, when Putin's prime minister, Mikhail Mishustin, attended the unveiling of the newest addition to Russia's long-running Volga car line only to discover the vehicle was now entirely assembled from Chinese components.
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PRIME MINISTER MIKHAIL MISHUSTIN: (Non-English language spoken).
MAYNES: "Where's the wheel from? Also China?" said an exasperated Mishustin to Volga's glum-looking director. "I would like," he added, "for at least the wheel to be made in Russia."
And 2025 sees the Russian economy facing bumpy roads in other ways, says Vladimir Inozemtsev, a Russian economist now living in the U.S.
VLADIMIR INOZEMTSEV: There are now new challenges, new problems, and they cannot be treated by ordinary measures. Something is going out of control.
MAYNES: Defense and security will account for some 40% of all government spending this year - that's up a quarter - and an investment in guns that's so heavy, it's making a mess of the proverbial butter.
Prices on basic food staples, such as real butter, are up, way up, so much so there's even been reports of supermarkets keeping it under lock and key. Inozemtsev says runaway inflation, as well as the tumbling value of Russia's currency, the ruble, and high interest rates - they're all indications that sanctions are working, just more slowly than anyone imagined.
INOZEMTSEV: These sanctions - they are biting the Russian economy every day, but the most important thing is the timeline. Yes, maybe in 2027, the Russian economy will go deep into recession, but not now, not tomorrow.
MAYNES: And yet, there's some problems felt today.
UNIDENTIFIED PERSON #1: (Non-English language spoken).
UNIDENTIFIED PERSON #2: (Non-English language spoken).
MAYNES: Take my apartment building in central Moscow, where the elevator breaks down routinely with spare parts once from the West now hard to find.
UNIDENTIFIED PERSON #1: (Non-English language spoken).
MAYNES: "Everyone's gotten stuck in that elevator, and now they're scared to get in," my neighbor says to the repairman who shrugs because he knows.
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MAYNES: Like with most problems tied to sanctions, at least so far, there's usually a way around. Charles Maynes, NPR News, Moscow. Transcript provided by NPR, Copyright NPR.
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