The Economics Show Why Russia’s wartime economy is starting to crack, with Elina Ribakova
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Aug 18, 2025 Elina Ribakova, a non-resident senior fellow at the Peterson Institute and vice-president for foreign policy at the Kyiv School of Economics, joins to discuss the fragility of Russia's wartime economy. She unpacks how initial resilience has faded under growing sanctions. The chat dives into the implications of a potential end to the Ukraine war and explores the intricate relationship between Russia and China amidst these crises. Elina highlights the looming challenges of transitioning from a military-focused economy back to normalcy.
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Commodity Windfall Fueled A War Economy
- Western sanctions were initially too timid because Russia dominated energy markets and earned huge export revenues.
- Russia reinvested windfall commodity earnings into a wartime economy, boosting GDP and production temporarily.
Three-Track Sanctions And Their Limits
- Sanctions fall into three buckets: financial, oil price cap, and export controls.
- Financial sanctions have so far been most effective, while the oil cap and export controls face steep implementation challenges.
Oil Price Cap Was A Compromise That Weakened Impact
- The G7 oil price-cap aimed to limit Russian revenues while keeping oil flowing, but proved hard to implement.
- The dual objective of access plus revenue restraint created market frictions and diluted the cap's impact.