The IMF, OECD and the Russians themselves have substantially downgraded their Russian economic growth forecasts for 2015. The fall in the oil price is partly responsible. However, heightened 'geopolitical risk' was also mentioned as a drag on activity, along with the effect of sanctions. But just how much have the sanctions affected the Russian economy thus far?

Construction in central Moscow, 2012 (Flickr/Mariano Mantel)

It's hard to tell. It seems to me the financial sanctions are most important, although they may have had little effect initially. Back of the envelope calculations suggest that the Government's foreign currency reserves could last two years. Much has been made of a collapse in investment in Russia, although the falling rouble, and not sanctions, may be an important driving force.

There certainly are those that believe that the sanctions, at the moment, are of little consequence. Yuri Gorodnichenko, an up and coming superstar academic economist, believes that most sanctions will have little effect in the short run. In their recent Economic Outlook, the OECD noted that, 'sanctions had only a small impact on stock exchange valuations of Russian enterprises', although it is fair to say that the OECD does believe they are having an effect. But they don't say how much, and neither does the IMF.

In any case, the effect on the economy is only the means to an end – the end being to change Mr. Putin's behaviour. One study found that sanctions are at least partially successful around one third of the time. That might seem quite a low strike rate. Dan Drezner, a sanctions guru, has argued that countries will be most likely to use sanctions when they are ineffective. And speaking of Drezner, he has written the best piece on the Russian sanctions that I have come across. Here is a snippet:

The only case of economic coercion succeeding in a similar case in history was the 1956 Suez crisis. In that case, Britain, France, and Israel withdrew their forces from the Suez Canal following a U.S.-inspired run on the pound sterling. Except that the Suez case is not at all similar to Russia/Crimea. Britain was a treaty ally of the United States; not so much with Vladimir Putin's Russia. The Suez was far away from British soil; Crimea is just across the Sea of Azov. And, perhaps most importantly, Britain was in a fragile economic state trying to protect a fixed exchange rate. Russia's economy has its problems, but a shortage of hard currency reserves ain't one of them.