Rapid Lifting of Sanctions against Russia is a Path to a New War

What happens if the international community eases sanctions on Russia after a ceasefire? Could it pave the way for further escalation and a new round of conflict?

Since the beginning of Russia's large-scale aggression against Ukraine on February 24, 2022, the international community has imposed many tough sanctions on Russia. In the initial stages, the restrictions targeted Russian political and business elite representatives.

Still, the third package, adopted on February 26, 2022, by the G7 countries, involved the freezing of about $300 billion of Russian assets. This amounted to half of Russia's international reserves and significantly affected its financial stability and ability to finance the war.

Ukraine emphasizes the need not only to maintain the freeze on these assets, but also to confiscate them so that the funds can be used to rebuild Ukraine and compensate for the damage caused. 

The interest accrued on these seized reserves is already enabling the West—particularly the EU, the US, the UK, Canada, and Japan—to provide financial support to Ukraine. And since the return of the assets to the Russian government is effectively blocked until interest is paid, it seems unlikely that the Kremlin will be able to regain access to these vast sums quickly.

Over the past three years, packages of technological, financial, and energy sanctions have been adopted. As a result, the Russian economy’s ability to finance the war has been significantly limited.

Risks of Premature Lifting of Sanctions and the Effect of Sanctions

Moscow's demands to ease or lift sanctions are constantly heard, especially when it comes to the prospects for a ceasefire. They say that if the fighting stops, sanctions will lose their meaning. In fact, this approach only plays into the hands of the Kremlin: sanctions cannot be seen as a temporary mechanism that should end simultaneously with a formal “lull” on the frontline. The cessation of shelling does not mean the end of the aggression, but only a temporary respite. Moscow is quite capable of using this pause to regroup, rebuild its military economy, and start a new round of escalation.

The sanctions against Russia have caused significant losses, which are reflected not only in the frozen state reserves. According to Vladyslav Vlasyuk, the Presidential Commissioner for Sanctions Policy, Russia has “said goodbye” to $300 billion in sovereign assets and lost approximately $200 billion in potential energy profits that it could not realize on world markets due to sanctions and reduced exports.

In particular, some of these restrictions are directed against the Kremlin's key revenues - gas and oil sales. “Gazprom” is increasingly losing ground, its capitalization has declined, and it is now showing losses. In addition, the decline of the hydrocarbon market is depriving the Russian economy of the cheap money it was used to.

The Russian National Welfare Fund, which was supposed to serve as a kind of “safety cushion,” has been virtually exhausted. The Russian Central Bank's attempts to curb inflation and the devaluation of the ruble have led to an increase in the key policy rate: it has reached 21%, which is a serious blow to the entire Russian financial system.

The Kremlin is forced to inject significant funds remaining at the disposal of the government into the defense sector. According to various estimates, Russia plans to spend $140-160 billion on military needs in the next budget period. All of this, in turn, reinforces the effect of sanctions on citizens: there is simply not enough money to develop other sectors.

Why Lifting Sanctions after the Ceasefire is too Risky

Against the backdrop of these problems, the worst thing for Russia is that geopolitical isolation, loss of investor confidence, and difficulties in financing pose long-term risks to the Russian economy.The sanctions have restricted access to technology, blocked the ability to attract foreign investment, led to an embargo on microchips and equipment, and undermined the country's reputation in international markets.

Even a partial easing of sanctions in the event of a cessation of hostilities without clearly defined conditions, such as the withdrawal of Russian troops, the restoration of Ukraine's sovereignty, payment of compensation, and investigation of war crimes, would be a powerful incentive for Moscow to continue to build up its military-industrial complex. The Kremlin will have the resources to modernize its armed forces rapidly, and then the whole point of international pressure will be nullified.

Maintaining and strengthening sanctions pressure should remain the main task for those states seeking long-term stability in Europe. Lifting sanctions immediately after the ceasefire in Ukraine is also extremely dangerous because the Kremlin likes to play “diplomatic maneuvers” by delaying the negotiation process.

This allows it to buy time and try to negotiate with individual countries on lucrative contracts or political concessions. Moscow has tried and is still trying to destroy the sanctions coalition by offering cheap energy or promising attractive investments to those who dare to go against the common position of the West. As soon as one of the countries reduces the pressure or offers relief, the effectiveness of the remaining restrictions will begin to decline rapidly.

We should not forget that sanctions were imposed not only because of direct military aggression. They were a response to the annexation of Crimea, cyberattacks, interference in foreign elections, spreading disinformation, and other hostile actions by Moscow. Therefore, the formal cessation of shelling does not eliminate the reasons that led to the decision to impose sanctions.

If the international community, especially the EU and the US, does not remain consolidated, the price of such weakness may be much higher than the benefits promised by Russian diplomacy. Without sanctions pressure, Russia is unlikely to abandon its revisionist plans, and in the future, such plans could lead to another destabilization of the entire international security system.

Sanctions as a Prerequisite for a Just Peace

Sanctions are also part of the process of restoring justice: Ukraine and other states affected by aggression have the right to demand compensation. Any easing of pressure without a clear system of mechanisms for compensation will look like a concession to the aggressor, who actually provoked the current crisis.

Destroyed infrastructure and thousands of human victims require at least partial material satisfaction, and the source of such funds may well be confiscated Russian assets. In this context, $300 billion in frozen Russian reserves is the most realistic tool to force the Kremlin not only to cease fire but also to think about the long-term consequences of the new aggression.

Of course, there are sometimes proposals to lift sanctions as a “goodwill gesture partially.” But practice shows that as soon as Moscow receives even a small relief, it immediately uses it to its advantage: it strengthens its military potential, negotiates with individual countries to circumvent sanctions, and launches new schemes for importing critical technologies.

Such actions by the Kremlin only confirm that sanctions should remain in place until Russia fulfills the key conditions for peace. If the sanctions are lifted in full or in part only on the basis of a ceasefire, the world risks facing a “frozen” conflict that could easily escalate into a new round of hostilities.

Conclusions: Sanctions as a Long-Term Strategy for Stability

Therefore, sanctions against Russia are not a single step, but a long-term strategy that includes financial, political and military pressure. The essence of this strategy is to deprive the aggressor of cheap resources and technologies and make escalation of the war unprofitable for the Kremlin at any time. History proves that all frozen conflicts that remain unresolved become a prerequisite for new crises. If Moscow continues to be able to act uncontrollably, restoring its economic and military potential, the peace in Europe will not last long.

That is why lifting sanctions immediately after a ceasefire is a road to nowhere. Instead, the effective application and maintenance of restrictions even after de-escalation will ensure sustainable security, prevent a repeat of aggression, and ensure that Russia truly respects international law.

And until there is a proven withdrawal of Russian troops, respect for Ukraine's sovereignty, compensation payments and a real investigation of war crimes, sanctions should be maintained in full. Only a comprehensive and long-term approach will help to avoid the trap of a “quick peace” that will, in fact, be a respite before a new wave of war unleashed by Russia.

Igor Popov, Expert at Kyiv-based United Ukraine Think Tank