Three years after becoming the most heavily sanctioned country in the world, Russia finds itself navigating an uncertain but potentially transformative phase in its economic trajectory. Since March 2022, over 7,400 sanction measures have been imposed against Russia—surpassing those against Iran and North Korea combined. These sanctions have affected nearly every sector, from banking and finance to trade and technology. Yet despite this unprecedented pressure, Russia has demonstrated a notable capacity for adaptation. With political shifts in the West and signs of possible policy changes, the question arises: is the era of sanctions nearing its end, and what would that mean for the Russian economy?
According to an analysis by Dmitry Kuvalin, Deputy Director of the Institute of Economic Forecasting of the Russian Academy of Sciences, while the initial wave of sanctions had a significant impact—Russia’s GDP contracted by 1.4% in 2022—the downturn was less severe than predicted. More importantly, 2023 marked a turning point: GDP growth accelerated, capital investment surged, and businesses found new supply chains and export markets. This resilience sparked debates within Western policy circles about the long-term effectiveness of sanctions. Some governments are now openly reconsidering their stance, especially in light of mounting economic costs for their own industries.
Erosion of Pressure and Cyclical Responses
Sanctions have become a routine component of Western policy, with new restrictions introduced in regular intervals. However, over time, these measures have been undermined by practical realities. Businesses on both sides of the sanctions divide have sought workarounds—resorting to alternative payment schemes, parallel imports, and informal trade routes. Some countries, while officially supporting sanctions, have adopted a less rigorous approach to enforcement.
Russia, in turn, responded with targeted countermeasures. Domestic innovation, import substitution, and closer ties with neutral countries helped mitigate the impact. Enterprises redirected investments, shifted logistics, and expanded into emerging markets. Surveys conducted by the Russian Academy of Sciences indicate that while over 66% of companies reported adverse effects in 2022, by late 2024 that number had declined to around 52%.
Nonetheless, the bureaucratic inertia behind sanctions remains formidable. Many analysts expected the current regime to persist regardless of its actual outcomes. But with recent changes in U.S. leadership and shifting geopolitical dynamics, expectations of a partial rollback have grown. Discussions about potential sanctions relief are now surfacing more frequently in both political and business circles.
Anticipating an Economic Shock from Sanctions Relief
Paradoxically, the removal of sanctions could itself trigger a new kind of economic shock. While restrictions have imposed costs, they also forced Russia to restructure, innovate, and reduce external dependencies. Their removal would alter the economic equilibrium once again.
Most notably, easing financial sanctions would allow exporters and importers to abandon complex workaround mechanisms and return to direct banking payments. This shift would significantly lower transaction costs, expand trade volume, and increase business and government revenues. In theory, these developments would also lead to a stronger ruble, reduced inflation due to cheaper imports, and broader consumer choice.
However, Kuvalin cautions against predicting a strong ruble rebound. Despite being officially “floating,” the ruble’s exchange rate is subject to strategic management by the Central Bank and Finance Ministry. Available evidence suggests policymakers prefer a moderately weak ruble to support exports. As a result, even under sanctions relief, significant currency appreciation may be contained.
Market Reintegration and Foreign Companies’ Return
A major question concerns the potential return of foreign companies that exited the Russian market in recent years. On the surface, renewed competition and broader product availability would support economic development. However, there are several complications.
First, most returning companies are unlikely to regain their former market share. Their space has been filled by Russian, Chinese, and other non-Western firms. Some alternative suppliers have improved product quality and developed effective marketing strategies tailored to Russian consumers.
Second, the conditions for reentry are unclear. The Russian government may require foreign firms to offer technology transfers, localized production, or capital investments to compensate for past disruptions. In some scenarios, companies could be asked to provide physical assets in Russia as collateral to ensure long-term market commitment.
Third, foreign firms themselves operate under political and legal constraints at home. Their ability to re-enter the Russian market depends on alignment between Russian requirements and the policies of their home governments—an alignment that remains uncertain.
The Role of Financial and Technological Autonomy
One of the clearest lessons from the sanctions era has been the importance of strategic autonomy. Russia has made progress in developing independent financial and trade infrastructure, but much work remains. Building an alternative international payment system could serve as a long-term hedge against future sanctions and reduce rent payments to global financial monopolies.
More pressing, however, is the issue of technological isolation. While Russia has managed the short-term consequences of sanctions reasonably well, long-standing technological gaps remain. Sanctions have worsened or preserved problems in sectors like aerospace, IT, and pharmaceuticals. Although there have been notable breakthroughs in drone manufacturing and digital technologies, these are exceptions, not the rule.
Addressing this structural vulnerability is essential for leveraging any future economic relief. Without deeper technological integration and innovation, the Russian economy risks stagnation—even in a post-sanctions environment.
Outlook and Strategic Planning
Public expectations about the timing and scope of sanctions relief remain mixed. According to a March 2025 survey, only 7% of respondents believe that all U.S. sanctions will be lifted by year-end. Thirty-nine percent expect partial easing, while others foresee no change or even further restrictions. Among business leaders, there is growing interest in developing plans to respond to changing conditions, though considerable uncertainty remains.
In this context, Kuvalin proposes a targeted reentry policy for foreign companies. Firms with advanced technologies that agree to produce locally and transfer know-how could return on favorable terms—provided there is a robust enforcement system in place. Such an approach would allow Russia to benefit from global innovations while maintaining strategic control.
Ultimately, strategic readiness is critical. The possibility of sanctions relief, whether rapid or gradual, calls for clear policy frameworks and coordinated responses—not only from foreign business associations but from Russian authorities themselves.
