Despite repeated assurances from President Biden and other Western leaders that “the toughest economic sanctions in history” would cripple Russia’s economy and starve its war machine, that hasn’t happened. Russia’s current account, which measures global trade in goods and services, was strong in the second quarter of this year when its trade surplus rose to a record $70.1 billion. The ruble, too, has exhibited remarkable resiliency, ranking as the strongest performing currency so far this year, rising to its highest level against the euro since 2015 and making major gains against the dollar.
What accounts for Putin’s bulging coffers? The simple answer: high commodity prices and Russia’s continued ability to export oil, gas, grain, and even gold to non-Western countries.
The economic picture isn’t as rosy for the countries sanctioning Russia. Europe is struggling to meet its energy needs, driving up inflation and forcing countries at the vanguard of the green movement to backpedal. Germany, for example, whose minister of economic affairs and climate action comes from the Green Party, was forced to reactivate seventeen coal-fired power plants it previously had shut down. President Biden, with inflation sitting at a forty-year high, recently begged Saudi Arabia’s leaders-a regime it had been shunning-to come to the rescue by pumping more crude to help bring down gas prices and ease the inflationary pressure high fuel prices are placing on other goods.
The combination of sanctions and war disrupted energy and grain supplies, creating an economic opportunity that Russia has exploited. Indeed, according to the Helsinki-based Center for Energy and Clean Air, Moscow earned $100 billion in revenue from oil, gas, and coal sales in the first three months of the war alone.
While the Biden administration was drawing down the Strategic Petroleum Reserve to increase available supplies and lower gasoline prices-plunging America’s emergency reserve to its lowest level since the mid-1980s-Russia’s oil exports had bounced back to pre-war levels by May.
