ALEX BRUMMER: Russia sanctions fail to deliver as support for Ukraine wavers

When my dental hygienist heads home to visit her mother in Moscow it takes the best part of 24 hours travel via Istanbul as direct commercial flights from Western Europe remain suspended. 

But when finally she arrives in her home town she finds little has changed.

Starbucks branches have been reborn as Stars Coffee cafes and like so many Western commercial brands are operating as before.

Putin’s kleptocracy offers firms three options: sell to a rich Putin crony, a management buyout to existing Russian-based executives or carry on as before. 

Unilever, among others, remains firmly entrenched in Russia – on the grounds of support for long-serving colleagues – in spite of pledges of business with a purpose.

Defiant: Russian leader Vladimir Putin has remained in power and the Russian economy grew 2.8% last year despite Western economic sanctions

When Russia’s war on Ukraine was launched almost two years ago, it was assumed in Western capitals that sweeping sanctions would bring the Kremlin to its knees. 

The legal net imposed on trade with Moscow included a ban on energy exports to Europe, the seizure of financial assets, the withdrawal of Western multinationals and freezing the Kremlin out of the CHAPs money transfer system.

Putin-friendly oligarchs watched as their football clubs and accessible yachts were seized and their children expelled from the UK’s public schools as families could no longer transfer fees. 

Contributions to charities supported by oligarchs stopped.

None of this has stopped Russia’s territorial ambitions. Arguably the very sanctions which were meant to starve Russia of hard currency, debilitating its war machine, did as much damage to the West as Russia.

The great inflation of 2021-22, the bloated budgets of Nato countries as they dished out hundreds of billions of dollars in energy subsidies and aid to Ukraine shattered faith in free markets.

Russia has suffered but as critics of the UK Government like to point out, in 2023 the Russian economy expanded by 2.8 per cent while our output flat-lined. 

Moscow was helped by a pick-up in arms manufacturing with the defence budget surging to 6 per cent of output – three times the 2 per cent of gross domestic product expected of Nato allies.

The idea that the sanctions would bring Russia to the negotiating table has proved wide of the mark. 

Half of Russia’s oil exports in 2023 went to China. India is going from zero imports of Russian energy to a forecast 40 per cent over the next year or so. 

Moreover, a Putin deal with Saudi Arabia restricted drilling and kept the energy price elevated.

This at a moment when support for Western assistance for Ukraine is fading. 

President Biden is being blocked by Republicans on Capitol Hill from handing a proposed $100billion plus of assistance to Ukraine and Israel.

In Europe, large budget deficits together with Hungarian obduracy have made it hard to deliver the economic assistance required to support Ukraine’s fragile economy. 

The G7 currently is seeking to circumvent domestic politics by authorising the re-designation of frozen Russian assets to support Ukraine. Such a diversion raises difficult issues about the rule of law.

Preventing Putin from his aspiration of restoring empire will be among the greatest challenges for the world and economic stability in 2024.

This post first appeared on Dailymail.co.uk