Alexandra Prokopenko, Columnist

A Sickly Ruble Reveals What Putin Will Not

Sanctions have not breached Russia’s economic fortress, but they have put a time bomb under its foundations.

August 17, 2023 at 4:00 AM UTC

Alexandra Prokopenko is a non-resident scholar at Carnegie Russia Eurasia Center, visiting fellow at the German Council on Foreign Relations and research fellow at the Centre for East European and International Studies. She was previously an adviser at the Bank of Russia.

Don’t look too closely.
Photographer: ALEXANDER KAZAKOV/AFP

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In the 18 months for which Russia has been waging war against Ukraine, Western countries have imposed more than 13,000 sanctions on Russia — yet the Russian economy shows no sign of collapsing. On the contrary, the International Monetary Fund forecast for the country is for 1.5% growth this year — more than the economies of Germany or the UK.

The Kremlin likes to boast that sanctions don’t work, and similar reservations are increasingly being expressed by Western observers. Yet the rapidly depreciating ruble, which in August became the worst-performing currency among developing countries, suggests otherwise. The Bank of Russia was even forced to hike the key rate to 12% from 8.5% in one day during an emergency meeting on Aug. 15. This move is likely aimed at taming inflation that will be fueled by the ruble’s weakening.