Western Allies Seek New Ways to Pressure Moscow
More than three years after Russia’s full-scale invasion of Ukraine, the war has reached a grinding stalemate. With the U.S.-led peace process stalled and no major breakthroughs on the battlefield, Ukraine’s allies are shifting their focus to a familiar but crucial front — the economy.
Their new goal is clear: raise the cost of war for Moscow until it becomes unsustainable for the Kremlin to continue.
So far, the West has unleashed 18 rounds of European Union sanctions and dozens of measures from the United States, the United Kingdom, and other allies. These efforts have hurt Russia’s economy — but not enough to weaken its resolve.
Experts now argue that the next phase of sanctions must be not only stronger but smarter.
“We just need to be cleverer,” said Timothy Ash, a Russia researcher at Chatham House who advises governments on sanctions strategy.
Russia’s Economy Under Pressure
Despite the sanctions, Moscow has used massive military spending to keep its economy afloat. Russia’s GDP grew by over 4% in 2023 and 2024, but forecasts show a slowdown to just 1% growth this year.
Inflation has surged to 6–7%, while interest rates remain painfully high at 17%. Oil and gas revenues — the backbone of Russia’s economy — are declining, and the budget deficit is widening fast.
Yet, the Kremlin’s latest three-year budget plan submitted in late September shows no sign of easing military spending. Defense funding will remain roughly four times higher than pre-war levels, financed largely by ordinary Russians.
Starting January, Moscow will raise the value-added tax (VAT) from 20% to 22%, with the finance ministry saying the new revenue will go “primarily toward defense and security.”
Even President Vladimir Putin has admitted that the tax hike will slow economic growth but defended it as necessary to sustain the war effort.
“This decision shows that the Kremlin is preparing for a long conflict,” said Alexandra Prokopenko, a fellow at the Carnegie Russia Eurasia Center. “They are ready to accept economic pain in exchange for military persistence.”
Ratcheting Up Sanctions: The 500% Tariff Proposal
One of the most ambitious ideas under discussion in Washington is the Sanctioning Russia Act, which proposes a 500% tariff on any country that continues to buy Russian energy exports.
Ash believes such a measure could be decisive. “That would completely halt Russian exports and crash the economy — it would stop the Russian war machine,” he told CNN.
But even Putin scoffed at the idea, calling it “impossible to imagine.” Analysts agree that implementing such extreme tariffs would likely spike global oil and gas prices — an outcome no major economy wants.
Instead, Ash suggests a secondary tariff of 20–30% on Russian exports. The proceeds, he argues, should be redirected to fund Ukraine’s defense and reconstruction.
Using Frozen Russian Assets to Fund Ukraine
A more realistic plan is already being discussed in Europe. The European Union is considering a €140 billion ($162 billion) loan to Ukraine, backed by Russia’s frozen assets held in European banks.
Under the proposal, Kyiv would repay the loan only if Russia eventually pays reparations for the war.
“This would send a powerful signal that Ukraine’s financial stability is secure and that Russia’s aggression carries long-term consequences,” said Ash.
German Chancellor Friedrich Merz, in an opinion piece for the Financial Times, echoed that sentiment: “Moscow will only come to the table when it realizes Ukraine has greater staying power.”
Targeting Russia’s Weak Spots
Some analysts believe future sanctions should focus on areas where Russia is most vulnerable — particularly its labor shortage.
The war has depleted Russia’s workforce as thousands of men are mobilized or flee the country. Alexander Kolyandr, a senior fellow at the Center for European Policy Analysis, suggests encouraging more skilled Russian professionals to emigrate.
“Rather than blocking Russian professionals from entering Western countries, we should encourage brain drain,” he said. “It would deepen Russia’s labor crisis, raise wages, and worsen inflation.”
Closing Sanctions Loopholes
Experts also stress the importance of enforcing existing sanctions more effectively. Despite sweeping restrictions, Russia continues to obtain foreign components for its weapons.
During a massive missile and drone attack on October 5, Ukrainian President Volodymyr Zelensky said Russia used over 500 weapons systems containing more than 100,000 foreign-made parts, many of them European.
“After nearly four years of full-scale war, it’s absurd to say we don’t know how to stop this,” Zelensky said.
Ash argues that tougher penalties are essential. “There’s a huge windfall for companies and individuals helping Russia evade sanctions — but no consequences. No one goes to jail,” he said.
Ukraine’s Own Economic Weapon
Perhaps the most effective pressure on Russia, however, has come not from sanctions — but from Ukraine’s own military strategy.
In recent months, Kyiv has launched a series of long-range drone strikes on Russian oil refineries, severely disrupting domestic fuel supplies.
According to Russia’s Siala analytics agency, the attacks have knocked out nearly 38% of the country’s refining capacity, though experts note that some of that infrastructure may have already been idle or repaired.
The strikes caused fuel shortages inside Russia and forced Moscow to export more crude oil — a far less profitable commodity than refined petroleum.
“You’re not only disrupting Russia’s economy at home through fuel shortages,” Ash said, “but you’re also cutting into their export income.”
He added that this demonstrates why Ukraine needs more Western long-range weapons with fewer restrictions on their use.
Putin’s Warning to Washington
At a recent economic forum, Putin warned that allowing Ukraine to receive U.S. Tomahawk missiles would trigger the “destruction of U.S.–Russia relations.”
Analysts interpret this as a sign of genuine concern in Moscow — that Ukraine’s growing ability to strike deep into Russian territory poses a greater threat to Putin’s war machine than any sanction package to date.
The Bottom Line
As the war enters its fourth year, both sides are digging in — militarily and economically. Ukraine’s allies are convinced that smarter, targeted sanctions, combined with stronger enforcement and Ukraine’s own strategic strikes, can slowly but steadily erode Russia’s ability to sustain the war.
The question now is whether the West can maintain its unity — and its patience — long enough for that strategy to succeed.