Russian sanctions boomerang effect means a year of stagnation for Europe in 2024
The boomerang effect of the Russian sanctions on the EU member states is having a mixed impact. Germany, France and Italy are worst affected as the pain from the changes in energy and input supplies impact their economies, dragging them down into recession, while the less dependent on Russia like Spain and Portugal are already showing signs of recovery, according to ING analysis.
Overall Europe is headed for a year of stagnation that could be worse than in 2023. By contrast Russia reported growth of 3.5%, according to the preliminary results. And on January 18, an ebullient Russian President Vladimir Putin said that growth could come in at over 4% after revisions. The Russian Ministry of Finance (MinFin) also revised its GDP growth outlook for 2024 up to 3.5%, much improved from the earlier Central Bank of Russia (CBR) forecasts of around 2% for this year.
Currently, sanctions seem to be doing more harm to Europe than they are to Russia.
Russia sanctioned-proof themselves in anticipation of the consequences of invading Ukraine. They have long history and experience after all since the Soviet days of international sanctions. However, autarky always shows to only have short term effect but in the long run, the severe consequences always catches up in the end. Just look at how Soviet Union led to its eventual demise and the war in Afghanistan accelerated that collapse. The war in Ukraine will do the same to the current regime.
Conversely, even though the EU had been dependent on Russian fossil fuel before, the boomerang effect you mentioned is only short to medium term because disruption in trade is always expected during a war. But this only pushed the EU to import American gas and accelerate the EU Green New Deal to compensate for the loss of Russian gas and oil.
With Russia only having 1/5th the GDP of Italy and endemic corruption, the failure to subdue Ukraine is only going to eat at the Russian economy and political prestige. Even if Russia wins or gets concessions, it will be a Pyrrhic victory. Because loss of demographics (Russia is experiencing population decline before the war) will have severe consequences to the workforce and economy, the sanctions after the war will continue to hit the Russians, and the country will become more economically reliant to China and by extension politically as well. More importantly, the claim to stop NATO expansion just had the boomerang effect of just admitting two new nations into the alliance. With Russia tied in Ukraine, they loss influence in CSTO as member states resumed border clashes, especially with Armenia becoming frustrated on the issue of Nagorno-Karabakh.
