Table of Contents

A Year After Russia’s Invasion of Ukraine, Tough Sanctions Linger


Russia’s invasion of Ukraine a year ago prompted a volley of tough sanctions from the U.S. and its allies, a historic use of economic measures that will likely have lasting implications for businesses.

Financial crime experts widely agree that the imposition of large sanctions packages by the U.S. and other countries on Russia marks a watershed moment in the use of economic measures as a tool of foreign policy. The U.S. and allies spearheaded a new kind of sanctions strategy: targeted, coordinated and aimed at causing maximum pain to a globally significant economy.

“We’ve never had such a significant economy have such significant sanctions placed upon it with such speed,” said

Daniel Tannebaum,

a former U.S. Treasury Department official who is a partner at the consulting firm Oliver Wyman LLC. 

More than 1,000 businesses curtailed operations in Russia following the invasion on Feb. 24, 2022, according to data compiled by researchers at Yale School of Management.

Daniel Tannebaum, a partner at Oliver Wyman.


Oliver Wyman

Businesses have found that the government’s approach of leaning on economic levers rather than other government tools, such as direct military intervention, has put them on the forefront of the Western foreign policy push. 

The sanctions weren’t comprehensive, and left many businesses with avenues to continue their operations. Hundreds of companies, though, decamped, calculating that the looming threat of sanctions ratcheting up and reputational risk warranted an exit.

“The tectonic plates have really shifted here,” said

Jeffrey Sonnenfeld,

a Yale researcher who has tracked companies’ exodus from Russia, on the widespread decision by businesses to depart. “There’s nothing like it, not just in recent history, or in our lifetime.”

Prof. Sonnenfeld said about six times as many major businesses have cut operations in Russia as did in South Africa during the apartheid-era collective boycotts of the 1980s, a response to the economic measures and the accompanying reputational risks of staying in the country, he said.

Prof. Sonnenfeld and Mr. Tannebaum both have been personally sanctioned by Russia, which has accused critics of engaging in a “Russophobic” campaign.

Jeffrey Sonnenfeld, professor at Yale School of Management.


Christopher Capozziello

A debate persists over whether the sanctions are effective. Deputy Treasury Secretary

Wally Adeyemo

said earlier this week that the U.S. had succeeded in undercutting Russia’s military industrial complex, pointing to a range of economic and other metrics. Regardless, the increase in sanctions volume compared with past conflicts is undeniable. Compliance staff at businesses have faced what many see as an unprecedented expansion of their sanctions-related workload.

The weeks following Russia’s invasion saw nearly 2,400 entities hit with Russia-related sanctions by authorities in the U.S., European Union and U.K., according to data from information company LexisNexis. The same period in 2021 saw about 150 entities added across all sanctions categories.

The numbers have steadily grown. The Biden administration is expected to add about 200 individuals and entities to U.S. sanctions watch lists this week, further tightening the economic net around Russia. The Russian Embassy in Washington didn’t respond to a request for comment.

Though the U.S. has a long history of applying sanctions that target geopolitical adversaries, including Cuba, Iran and Venezuela, the current measures are unique in having arguably exiled an economically potent country from the global economy. Russia was as recently as 2014 a member of the Group of Eight, a political forum for the world’s most important high-income countries. 

Russia since the sanctions push of 2022 has effectively been relegated to a much smaller role in the global economy, particularly as European companies realigned their supply chains, said

Lindsay Newman,

head of geopolitical thought leadership for S&P Global Market Intelligence. 

Lindsay Newman, head of geopolitical thought leadership for S&P Global Market Intelligence.


Vanessa Berberian

Sanctions have enjoyed widespread political backing, including bipartisan support in the U.S., in part because they allow countries to pursue their foreign policy goals relatively cheaply and without committing their armies to fight, Dr. Newman said.

“The defining feature of this geopolitical landscape is this increasing interdependence between economic and security spheres,” she said. “Countries continue to rely on those tools for foreign policy. Business is left having to navigate it.”

Though governments compile the sanctions lists, businesses and their advisers bear the brunt of the actual cost of implementation.

“I call sanctions a completely outsourced foreign policy tool, outsourced to the private sector,” said

Adam Smith,

who advised the U.S. Treasury Department’s Office of Foreign Assets Control during the Obama administration and now is a partner at the law firm Gibson Dunn & Crutcher LLP.

The Russia sanctions have functioned as a “wake-up call” to the C-suite, Mr. Smith said.

“Russia is just a new ballgame,” he said.

Compliance officers have become more prominent within their organizations as leadership works to cope with the toughened regulatory environment, he said. Some organizations have begun to thoroughly map out scenarios that could affect them in the future, with many turning an eye toward the tension between China and Taiwan, and any developments that could provoke future sanctions.

The use of coordinated sanctions, both in Russia and as a broader foreign policy tool, doesn’t seem to be going away, experts agreed.

“The direction of travel in those sanctions has been clear,” said

John Murphy,

senior vice president for international policy at the U.S. Chamber of Commerce, a lobbying group representing businesses. “It continues to be the case that further sanctions are entirely possible, if not likely.”

Oliver Wyman’s Mr. Tannebaum said he is working with several companies that are looking toward the future and “war-gaming potential scenarios on Chinese escalation in Taiwan.” 

“There were many companies caught flat-footed by the actual invasion [of Ukraine] on Feb. 24, who really didn’t think it would happen, and worse yet, didn’t have a plan,” he said. “Firms do need to be prepared and have a potential exit plan.”

Write to Richard Vanderford at

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8


Related Articles

Scroll to Top