If you thought the sanctions imposed on Russia would bring its economy to a grinding halt, you’re not alone. That’s what a lot of people expected back in 2022 when the West hit Russia hard after the invasion of Ukraine. From freezing assets to cutting off access to global financial systems like SWIFT, the sanctions seemed like a knockout punch. But Russia didn’t collapse. In fact, here we are in 2023, and Russia’s economy is still standing—and in some cases, even growing.
So, how did Russia manage to stay afloat? The short answer: adaptation. The long answer is a bit more complex. The sanctions have forced Russia to shift its focus, cut old ties, and build new ones, especially with countries like China and India. This has led to a complete redefinition of Russia’s trade relationships, and it’s not just about survival anymore—it’s about finding new ways to thrive.

The Initial Impact of Sanctions
Let’s start with the basics. When sanctions first hit, they targeted some of the biggest sectors of Russia’s economy—energy, finance, and defense. Russian banks were booted from the SWIFT system, making international trade and finance incredibly difficult. Western businesses pulled out of Russia, leaving gaps in key industries. On top of that, many Russian assets abroad were frozen, and exports of high-tech goods and critical materials to Russia were banned.
At first glance, this looked like a death blow. How could Russia continue to operate without access to Western financial markets or key technologies? But instead of throwing in the towel, Russia pivoted, fast. And here’s the key: they didn’t do it alone. Countries like China and India saw an opportunity to step in and take advantage of Russia’s isolation from the West.

Turning East: Russia’s Trade with China and India
Russia’s pivot to the East has been one of the biggest shifts in its economic landscape. Before the sanctions, Europe was Russia’s largest trading partner, especially when it came to oil and gas. But with Europe turning its back on Russian energy, Moscow had to look elsewhere. Enter China and India.
China has been Russia’s lifeline, buying up vast amounts of oil, gas, and coal that would’ve otherwise gone to Europe. In 2023, China became Russia’s most significant trading partner. It’s a mutually beneficial relationship—Russia gets a market for its energy exports, and China gets energy at discounted prices. You could say China is making the most of Russia’s situation, securing resources it needs while helping Russia keep its economy ticking.
India, too, has ramped up its trade with Russia, particularly in the energy sector. India’s energy needs are massive, and like China, it’s taking advantage of the discounted prices on Russian crude oil. These trade deals have allowed India to reduce its dependence on oil from the Middle East and diversify its supply, while Russia gets to maintain its energy revenues, despite sanctions cutting off access to Europe.

The Energy Shift: Russia’s New Customers
For years, Russia was the go-to energy supplier for Europe. But those days are over. Now, Moscow has to find new buyers for its oil and natural gas, and it’s not always easy. Europe used to account for nearly half of Russia’s gas exports, and replacing that market overnight is a monumental task.
However, Russia has been quick to adapt. Instead of pipelines to Europe, Moscow is now focusing on building pipelines to China. Projects like Power of Siberia—a natural gas pipeline connecting Russia to China—are just the start. Russia is also using shadow fleets (private tankers that try to avoid detection) to sell its oil to buyers in Asia, especially India and Turkey. These ships allow Russia to get around sanctions, keeping its energy business alive, though at reduced profits.
But while these new trade routes keep Russia’s energy exports flowing, they’re not a perfect replacement for Europe. The deals with China and India are largely transactional—Russia is selling at a discount, meaning it’s making less money than it would’ve if it were selling to European markets. Still, something is better than nothing, and for now, it’s keeping Russia afloat.

Import Substitution: Russia’s Strategy for Self-Reliance
With Western companies exiting the Russian market, Russia has had to rely more on itself. This shift is called import substitution, and the goal is simple—replace foreign goods and services with Russian-made alternatives. It sounds good in theory, but in practice, it’s a huge challenge.
Take technology, for example. Russia is now working to develop its own versions of tech products that it used to import from the West. Whether it’s smartphones, software, or even basic machinery, Russia is trying to manufacture more at home. The same goes for food and agriculture—Russian farmers are being encouraged to grow more wheat and other staples to reduce reliance on foreign imports.
The problem? Russia doesn’t have the same level of expertise or resources as the West, particularly when it comes to high-tech industries. Sure, they can produce some alternatives, but in the long run, these products may not be able to compete with their Western counterparts. Import substitution helps in the short term, but it’s not a complete solution.

The Role of the Ruble and Financial Maneuvering
Another way Russia has kept its economy running is through some clever financial maneuvering. After sanctions caused the ruble to plummet in 2022, Russia implemented capital controls to stabilize the currency. These controls limited how much money could leave the country and required companies to convert a percentage of their foreign earnings into rubles.
This move helped prevent a full-blown collapse of the ruble, though it hasn’t fixed everything. Being cut off from the SWIFT system and Western banks means Russian companies are struggling to conduct international trade. Russia has tried to work around this by using alternative payment systems with China and India, but it’s far from seamless.

What’s Next for Russia?
So, what does the future hold for Russia’s economy? In 2023, Russia is still standing, but it’s not out of the woods yet. The country is more isolated than ever, and while China and India have helped fill some of the gaps left by Europe, these relationships are mostly driven by convenience, not loyalty. Neither China nor India is likely to back Russia politically, and if global market conditions shift, Russia could find itself in a precarious position.
Long-term, the sanctions will continue to squeeze Russia’s access to advanced technology and financial markets. Without major changes, Russia’s economy could face stagnation as it becomes more cut off from Western innovations and markets. For now, though, Russia is doing what it can to survive, adapting its trade relationships and relying on its remaining allies to keep the economy running.

Wrapping it Up
In 2023, Russia’s economic shift is one of adaptation and resilience. The sanctions have forced the country to rebuild its trade relationships, focusing on new partners like China and India. While this has allowed Russia to avoid the worst impacts of the sanctions, the long-term outlook remains uncertain. The energy shift towards Asia, the push for import substitution, and Russia’s financial maneuvering are keeping the country going for now, but only time will tell if this strategy will be sustainable in the years to come.