The economic sanctions imposed on Russia by the West in March 2014 have undoubtedly been painful. But they have so far failed to achieve the goal of weakening President Vladimir Putin's position. In fact, they may have the opposite effect, leaving Russia — and its president — even stronger than before.
European Union countries are estimated to have lost about $100 billion in trade with Russia, hitting the likes of Bavarian dairy farmers and eastern German industrial exporters. Russian gross domestic product, which grew modestly in 2014, contracted by 4.6 percent in annual terms in the second quarter of this year. The ruble lost more than half of its dollar value in the second half of last year, fueling inflation, which increased by 15.6 percent year on year in July.
But inflation now seems to have peaked, and the effects of the drop in oil and gas prices were mitigated by the dollar's appreciation, so that the value of Russia's foreign reserves actually increased, reaching $362 billion in June (13 percent of which is in gold). And despite belt-tightening in Russia, Putin is more popular than ever.