The European Union’s sanctions envoy, David O’Sullivan, has said Western sanctions are having a “significant impact” on the Russian economy, amid warnings that Moscow’s war-based economic model may be nearing a breaking point. Speaking ahead of the fourth anniversary of Russia’s full-scale invasion of Ukraine, O’Sullivan described himself as “fairly bullish” about the effects of the punitive measures.
“We may be, in the course of 2026, coming to a point where the whole thing becomes unsustainable, because so much of the Russian economy has been distorted by the building up of the war economy at the expense of the civil economy,” he told the Guardian. He added that defying “the laws of economic gravity” could only continue for so long.
O’Sullivan’s comments come as Russia’s oil revenues slump, with federal budget income from oil and gas halving in January to the lowest level since July 2020. Inflation is running at about 6 percent and interest rates stand at 16 percent, placing the economy under its greatest strain since the early stages of the war.
The EU has imposed 19 rounds of sanctions targeting over 2,700 individuals and entities. O’Sullivan acknowledged circumvention efforts, noting success in preventing re-exports of critical products via central Asia, the Caucasus, Turkey, Serbia and the UAE, though China continues to provide support. The EU has also tightened measures against Russia’s shadow fleet, with nearly 600 vessels now sanctioned.
Despite these efforts, the US has criticised the EU for not going far enough, with Treasury Secretary Scott Bessent accusing the bloc of “financing the war against themselves” over a trade deal with India that did not include additional sanctions on Russian oil purchases.
