Who’s winning the sanctions war?

Your economy will face "devasting" consequences, US President Joe Biden warned Russian President Vladimir Putin about the sanctions the United States and its allies would impose if Russia invaded Ukraine. When Putin invaded Ukraine anyway, the sanctions did hit hard. Yet Putin hasn't withdrawn. And he's jiujitsu-ed with Russia's own countersanctions. Close to six months in and now into its third phase—first deterrence, then compellence, now attrition—who's winning the sanctions war?

The first phase, sanctions as a major element of deterrence, did not succeed. Putin's Greater Rossiya vision and belief that victory was at close hand—recall that Russian soldiers carried dress parade uniforms in their packs—may have made him undeterrable. But even if he were not fully set to invade, we know from other cases that while threats of sanctions have had some success for limited policy change objectives, they have not been able to deter a determined aggressor from going to war. Not former Italian dictator Benito Mussolini from invading Ethiopia-Abyssinia in 1935, not former Iraqi leader Saddam Hussein from invading Kuwait in 1990, and not the Soviet Union from invading Afghanistan in 1979.

Phase two, the sweeping sanctions imposed once Russia invaded, sought to inflict sufficient costs that—along with NATO support for the Ukrainian resistance—would compel Putin to withdraw. Financial sanctions cut Russia off from much of the international financial system, including freezing close to half of the $640 billion held externally in hard currency reserves. Technologies like semiconductors, vital both for military equipment and commercial products like cellphones and cars, were embargoed. In contrast to the end-arounds pursued in many other sanctions cases, more than 1,000 multinational companies ended—or at least reduced—business in or with Russia. Over 600 Russian oligarchs and siloviki elites, including Putin and his family, have been individually sanctioned. Sports and cultural bans—the FIFA World Cup (both men's and women's), International Ice Hockey Federation, Formula 1, and Eurovision Song Contest—tried to foster a sense of isolation for the average Russian. Although oil and natural gas are particularly strategic to the Russian economy, with prewar production providing about half of the federal budget and one-third of the country's GDP, sanctions have been slower at coming into effect and more limited given the energy dependence of those issuing the sanctions.

The overall sanctions package did have a substantial economic impact. Russian GDP projections saw the worst contractions since the chaotic 1990s. In March, the ruble lost close to half of its value, from 84 rubles to 154 rubles to the dollar. In mid-April, Moscow's mayor warned that 200,000 jobs were at risk. Economy-wide inflation approached 18 percent, even higher in sectors most dependent on international supply chains. With the Ukrainian resistance destroying so much combat equipment and sanctions impeding resupply efforts, Russian front-line forces were facing shortages.

But as sanctioned countries so often do, Russia has resorted to three main sanctions defense strategies to contain those costs: alternative trade partners, sanctions busting, and domestic offsets.

Although many countries joined the sanctions, some key ones did not. China has increased its Russian oil imports, provided some military goods, and chimed in with supportive statements, though it has not been as fully supportive as the Russia-China pre-invasion "no limits" partnership implied. Prompted by price discounts as well as bilateral military ties, India increased Russian oil imports from 1 percent to 20 percent. With Saudi Arabia and the United Arab Emirates refusing to significantly increase production, world price rises more than offset even the discounts Russia resorted to, keeping earnings by some estimates higher than the year before.

And those oil revenue numbers don't even include the tripling of oil tankers "going dark" to avoid being detected and shippers and refiners hiding Russian oil blended in with others. Hundreds of thousands of metric tons of Ukrainian grain were stolen and shipped out to Russian allies. There's been plenty of other sanctions-busting, including oligarchs and Putin cronies finding offshore tax and banking havens and safe harbors for their superyachts.

For the costs still coming through, the Kremlin has resorted to a mix of economic compensatory measures and political repression. Hikes in central bank interest rates and capital controls helped bring the ruble back from its early sharp decline to a seven-year high in late June. Retiree pension increases and company bailouts have helped cushion the average Russian. Arrests and other political repression subdued the initial wave of internal protests. The few oligarchs who have dared to speak out have paid a price.

Phase three, the one we are now in, is the attrition phase. Who will get ground down first?

Russian countersanctions, most significantly cutting natural gas supplies to the European Union, are having a bite of their own. As of July 31, pipeline volumes—more than 400 million cubic meters a day (mcm/day) a year earlier—were down to close to 100 mcm/day. German electrical power costs almost doubled from January to June, from 140 to 260 euros per megawatt-hour. Gas shortages are already causing major industries to cut back production. Conservation as well as fuel- and supplier-switching measures have helped but only somewhat. The EU's recent gas-sharing agreement has enough loopholes to still leave the specter of winter rationing looming. Indeed, some rationing has already started. Amid one of the hottest summers on record, Spain is requiring commercial air conditioning to be set no lower than 27 degrees Celsius (or 80 degrees Fahrenheit), the Netherlands is encouraging 5-minute limits on showers, and in France, "urban guerrillas" are shutting off storefront lights.

Bruce W. Jentleson, a Duke University professor and Wilson Center and Chicago Council on Global Affairs fellow.