Russia spends $130 billion to circumvent sanctions over four years of war – intelligence

According to Ukrinform, this was reported by the Foreign Intelligence Service of Ukraine.

“The Security Service (SAB) of Latvia has disclosed internal estimates from Russian government agencies: despite Moscow’s high-profile public statements about ‘successful adaptation’, officials within the country acknowledge that sanctions have already inflicted – and continue to inflict – enormous losses on the economy,” the statement said.

Between 2022 and 2025 alone, Russia was forced to spend an extra $130 billion – about $32.5 billion annually – to circumvent sanctions and purchase banned Western goods that it had previously bought much cheaper directly from the Western markets.

According to internal forecasts by Russian institutions, losses from Western restrictions could reach at least another $136 billion by 2030. The total reduction in foreign trade due to accumulated risks may amount to $175.5 billion.

Latvian intelligence emphasized that these figures are likely understated and overly optimistic. The real impact of sanctions – taking into account indirect effects such as rising logistics costs, declining corporate profitability, lost budget revenues, and structural economic issues – could be several times higher. In the energy sector alone, potential losses over five years are estimated at $216.5 billion if the European Union imposes a full embargo and China, India, and Türkiye reduce purchases of Russian oil and gas.

“Exports of key commodities are already showing a catastrophic collapse. Iron ore exports have fallen by 40% (from 28 million tons in 2021 to significantly lower volumes). Ferrous metals are down by 20%. Chemical products are down by 35%. Timber and pulp have been hit the hardest – down by 50%. Russian analysts themselves admit that despite all the propaganda, it will not be possible to restore these markets over the next five years,” the report states.

Intelligence officials added that “the complete breakdown of trade with the EU has been especially painful, costing Russia about $70 billion. Western secondary sanctions are making Russia a ‘toxic’ partner even for countries in the Global South: China, India, and Türkiye are increasingly reluctant to risk falling under the sanctions and are avoiding a large-scale reorientation of trade.”

SAB directly states that sanctions are effectively limiting Moscow’s financial and technological capabilities, undermining its ability to fund the war in Ukraine and rearm. The Kremlin continues its aggressive policy because its internal system and propaganda do not allow it to acknowledge reality. Any easing of sanctions would only accelerate Russia’s remilitarization and strengthen support for anti-Western regimes, Ukraine’s Foreign Intelligence Service noted.

As previously reported by Ukrinform, Russia’s economy is showing systemic deterioration under pressure from its own monetary policy, structural industrial decline, and weakening consumer demand, with no key sector offering grounds for optimism.