Russian economist calculates Kremlin's losses caused by sanctions

The Kremlin fears personal sanctions personally targeting representatives of their political elite, as well as against their family members, as this prevents them from traveling to Europe and the U.S., using the western banking system, and owning property in the west.

As for countering the Kremlin’s aggressive foreign policy, sectoral sanctions in the financial, banking and energy sectors are the most effective, Russian economist Andrei Illarionov believes, according to Glavred.

According to the International Monetary Fund (IMF) estimates two years ago, this kind of sanctions reduced Russia's potential economic growth rate by about 1.5% of GDP annually.

"Since the number of sanctions and the scale of their use have increased since then, using the same approach, we can assume that the sanctions imposed on Russian subjects reduce Russia's potential economic growth, obviously, by no less than 2 percentage points of GDP annually. This is quite a tangible effect," said the Russian economist.

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Given the additional costs of Crimea and Donbas, and a military campaign in Syria, the total costs of Russia's aggressive policy are probably no less than 2.5% of GDP, says Illarionov.

"The average annual rate of economic growth in Russia in the previous decade (1998–2008) was 7%. In the last ten years (2008–2018), it dropped to 0.4%. That is, the average annual growth rate has decreased by 6.6 percentage points (pp) of GDP annually. Of these 6.6 pp, about 2.5 pp are attributable to the effect of sanctions and additional costs as a result of military actions in Donbas and Crimea, and in Syria, " economist.

In other words, the aggressive foreign policy the Kremlin has been vigorously pursuing since 2008 was one of the important factors of a sharp decline in Russia's economic growth and its transition to a state of stagnation, Illarionov added.