Russia’s economy is going strong despite sanctions from the U.S. and its allies

Despite sanctions over its invasion of Ukraine, the Russian economy has not suffered. NPR’s Ayesha Rascoe talks with Alexandra Prokopenko with the Carnegie Eurasia Center.

AYESHA RASCOE, HOST:

Russia has been hit with huge economic sanctions since it invaded Ukraine nearly two years ago. But the Russian economy has remained strong, defying many economists’ expectations. We wanted to understand why that’s happened, so we called Alexandra Prokopenko, a fellow at Carnegie Eurasia Center. She used to live in Moscow and advised the Russian central bank, but left the country after the invasion because of moral objections to the war. We started by asking her what she was hearing from friends and family back home about how life has changed.

ALEXANDRA PROKOPENKO: Life changed not so significantly as it was expected, but they see the differences and feel the differences. However, sanctions didn’t play their role to immediately put Russia on its knees, which was obvious at the beginning that it’s not possible. So I – when people are talking about sanctions, I always ask them to divide between sanctions narrative and sanctions regulation. In terms of regulation, sanctions are quite effective. In terms of narrative, well, it’s failed.

RASCOE: Well, talk to me about that. Like, what is the sanctions narrative? Is that the idea that sanctions, you know, hurt the economy and kind of make the government change its behavior? Is that the narrative?

PROKOPENKO: That’s the one part of the narrative – the Russian economy will collapse immediately. I mean, what do we see now? Economic growth in Russia in 2023 is likely to exceed 3%. It is – in terms of figures, I mean, it’s great. It’s more than economy of the United Kingdom or of Germans’ economy. So what’s behind these figures is that over a third of this growth is attributed to the war economy, where defense-related industries are flourishing at double-digit rates. This growth is not…