It has been five months since Europe and the United States imposed tough economic and financial sanctions on Russia. While the sanctions have been gradually strengthened in the intervening months, debate rages about their effectiveness, implications for markets and the global economy, and what the West's next steps should be.
On the first question, although the sanctions have been less effective than Europe and the US had hoped, they also are proving more onerous than the Kremlin claims. Russia's central bank expects GDP to contract by 8-10% this year. Shortages are multiplying, pushing inflation higher. At this point, the country no longer has a properly functioning foreign-exchange market.
The sanctions would have bitten much harder had the West not opted for a carve-out of Russia's energy sector, and had many more countries joined the US and Europe in the effort. Because that didn't happen, Russia has not felt nearly as much pressure as it would have. Moreover, it has been able to continue trading through various side and back doors.
