What if Russia was losing the war on the ground and winning the war on the sanctions?

«Russian forces are struggling in Ukraine – the latest fiasco being the destruction of almost an entire battalion while trying to cross the Siverskyi Donets River. But the sanctions war? That does not appear to be going quite so badly for the Russians. At the beginning of the invasion there were assertions that this might be the first conflict won by the West by economic forces alone, without the need for a single western soldier to fire a weapon. Sanctions were immediately imposed, as well as the freezing of Russian assets. But two-and-a-half months on it is western economies which are struggling to cross metaphorical rivers, while the Russian economy has managed to dig in surprisingly well.

EuroIntelligence looked at figures for the Russian balance of payments – something the country no longer publishes, but which can be calculated from the figures other countries publish on their trade with Russia. Remarkably, it found that the value of Russia’s imports fell by 44 per cent last month – but the value of its exports rose by 8 per cent. While Europe talks of trying to reduce its reliance on Russian oil and gas, it is still importing significant volumes.

Moreover, the price that Europe is having to pay for its oil and gas has surged as a direct result of the war – in other words, sanctions are helping to boost the value of Russia’s exports. It is not just oil and gas, either: Europe continues to rely on imports of nickel, chrome, copper, palladium and aluminium. While European countries have at least tried to cut their imports from Russia, many of the country’s other buyers see no need to do so: the value of China’s imports from Russia surged 56 per cent last month. Much of the oil and gas which has stopped flowing to Europe has simply been redirected to Asia.

This doesn’t mean everything is rosy with the Russian economy. The 44 per cent plunge in Russia’s imports last month tells a story of its own: foreign goods which were previously being bought by Russian consumers are no longer getting through. But what it does mean is that Russia’s trade balance is rapidly building a surplus. Last year, Russia had a trade surplus of $120 billion: this year it could be twice that. Russia might have been militarily embarrassed and its citizens might be suffering from shortages in the shops, as well as losing their freedoms as a result of Vladimir Putin’s repressive rule. But the West won’t drive Russia to bankruptcy – at least for the foreseeable future.»

«Is Russia winning the sanctions war?», Ross Clark, The Spectator newsletter