By Christodoulos Mavroudis
Since the start of Russia's war on Ukraine, there’s been an ongoing debate over the impact of Western-imposed sanctions on the economies of both Russia and the European Union. A recent iteration of this debate emerged during a podcast between Greek Minister of Health, Adonis Georgiades, and Cypriot Member of the European Parliament (MEP) Fidias Panayiotou.
During this discussion, Panayiotou claimed that Western sanctions on Russia were in fact affecting the EU and not Moscow.
The Cyprus Investigative Reporting Network (CIReN) looked into this claim, analysing historical and current economic data, sector-level impacts and the broader macroeconomic context in order to assess its accuracy.
The Claim
On 8 October 2025, MEP Fidias Panayiotou published a podcast with Greek Minister of Health, Adonis Georgiades where he reiterated the known trope of Western-imposed sanctions on Russia having had no impact.
“They actually just hurt us! And Russia, (not) at all! We are on the 19th sanctions package now,” Panayiotou claimed.
The Facts
European Union
Before the war, Russia supplied roughly 40 percent of the EU's pipeline gas imports. Prices spiked overnight[1] and industries from Germany to Italy scrambled for alternatives. By the end of 2022, the EU's annual inflation rate had hit 9.2 percent, the highest on record according to Eurostat.
Crucially, energy costs are fed into everything -from supermarket shelves to home heating. Growth slowed sharply. Eurostat data shows that the EU's economy had rebounded from the pandemic in 2021, expanding by 6.3 percent, but by 2022, growth had fallen to 3.5 percent. In 2023 it nearly flatlined, rising only 0.5 percent and in 2024 grew by 1 percent.
Still, the EU adapted. In the space of two years it had nearly eliminated its dependence on Russian pipeline gas - from 40% down to around 11 per cent in 2024. Inflation has largely receded. As of September 2025 the euro area annual inflation rate was 2.2 percent. In 2025, the economy is expected to grow by about 1.2 percent, reflecting a modest rebound after years of stagnation according to OECD.
OECD analysts note however that “the energy crisis and geopolitical tension have weighed on growth” impeding investment, exports and productivity.
Russia
For three decades after the collapse of the Soviet Union, Russia’s civilian economy depended heavily on three pillars: energy exports to Europe, foreign investment and access to Western technologies. When the Kremlin launched its full-scale invasion of Ukraine in February 2022, Russia was forced to rapidly restructure its economy to sustain prolonged warfare.
Crucially, Western-imposed sanctions reshaped what Russia could build, buy, import, and export as sweeping restrictions were placed on key goods, technologies, and financial transactions.
The first wave of sanctions, imposed almost immediately after the invasion, removed key Russian banks from the SWIFT, the global inter-bank messaging network used for payments. At the same time, heavy export controls hit technology, machinery and dual-use goods items with both civilian and military applications, headed to Russia.
Russia's trade with the sanctioning economies was reduced by 25 percent on average, according to the Center for Economic Policy Research, an independent pan European non-profit organization.
Significantly, while imports have been replaced in many cases by non-sanctioning countries and have not prevented Russia from purchasing strategic products, they have made them harder and more expensive to obtain. According to the Center for Prospective Studies and International Information (CEPII), a French center for research and expertise on the world economy, the main economic impact of sanctions is therefore not a reduction in imports, but higher import costs.
Overall, these measures raised the cost of doing business internationally for Russia, made financing and trade more difficult, and began to limit access to foreign technology.
In addition, large portions of the Russian Central Bank's foreign reserves were frozen along with the assets of sanctioned individuals and firms. As of today, according to various estimations published by Reuters, Carnegie Politika, The Russian Elites Proxies and Oligarchs (REPO) Task Force, UK’s Foreign Commonwealth & Development Office and the European Parliamentary Research Service,the amount is estimated between 250 to 335 billion dollars.
Blocking reserves removed a key fiscal/foreign exchange buffer that Russia could otherwise use to stabilise the rouble, finance imports or pre-finance procurement.
By late 2022 into early 2023, another critical package came: the oil and energy related sanctions. The EU introduced a phased embargo on Russian seaborne crude oil, and the G7 agreed a price cap of USD 60/barrel for Russian crude. Because Russia’s budget and foreign-exchange earnings heavily depend on oil and gas, these measures had a significant impact. In 2022, high global energy prices largely offset early restrictions, giving Russia record oil and gas income of about USD 168 billion[2] according to the Russian state-owned TASS news agency. In 2023, however, Russia was forced to sell oil at steep discounts reducing the revenues to roughly USD 99 billion. By 2024, Moscow partially adapted by using a “shadow fleet” and rerouting exports to Asia. Combined with higher global prices, this lifted revenues back to about USD 108 billion, Reuters reported.
In response, Western governments began directly sanctioning vessels, owners, and insurers involved in this network -tightening port inspections and cutting off access to Western services. By 2025, over 440 tankers linked to Russian oil exports had been blacklisted, slowing the fleet’s growth and increasing transport and insurance costs. While evasion still remains possible, it is costlier, signalling the evolution of sanctions from broad embargoes to sharper, targeted enforcement that closes loopholes.
In 2025, softer global oil prices, improved Western enforcement, and a stronger ruble again pushed revenues down. In October alone, oil and gas income fell 27 percent year-on-year, to about USD 9.7 billion according to Moscow Times.
Overall, the energy clampdown has proved partially effective: they curtailed revenues sharply at first, were blunted by Russian adaptations in 2024 and regained impact in 2025. Their ultimate effectiveness depends on both market prices and the consistency of international enforcement.
On paper, Russia’s GDP has shown steady growth over the past three years. After contracting by 1.4 percent in 2022, real GDP rebounded by 4.1 percent in 2023 and 4.3 percent in 2024 according to the IMF. However, this apparent recovery masks a fundamental shift from a civilian to wartime economy. For example, defense spending nearly doubled as a share of GDP -climbing from 3.6 percent in 2021 to just over 7 percent in 2024- according to data from Statista and the World Bank.
Economist and Dean of the London Business School Sergei Guriev points out that while government purchases of military equipment boost GDP by billions, these expenditures create little lasting value, since the goods are ultimately destroyed in combat. He also notes that government payments to fallen or wounded soldiers, along with war-driven industries outside traditional defense spending, further inflate economic output without strengthening the broader economy.
“If you identify industries related to the war as some analysts are doing, eventually the story is all the growth is concentrated in the military sector,” Guriev said.
This shift comes at a cost.
"The inevitable consequence is that the civilian economy will shrink, while the military-industrial complex grows. Eventually, inflation will also lower the incomes of the population. How bad it becomes is dependent on how sanctions and the oil price develop," Janis Kluge, a senior associate at the German Institute for International and Security Affairs told Euronews.
While inflation has slowed in most major economies Russia continues to face persistently high price growth. According to Rosstat, Russia's official statistics agency, consumer prices rose 10.3 percent year-on-year in March 2025, far above the Central Bank of Russia's 4 percent target.
Food prices have risen sharply: overall food inflation averaged 12.4 percent, according to The Moscow Times, while fruit and vegetable prices climbed by more than 20 percent on average over the past year as reported by The Economist. Potato prices nearly doubled climbing about 173 percent year-on-year by May 2025 and butter prices jumped roughly 25.7 percent, according to The Moscow Times citing Rosstat. The surge has even changed retail practices, with Novaya Gazeta reporting that some retailers have begun locking butter packs in plastic boxes to prevent theft.
Meanwhile, Russia’s GDP growth slowed significantly, expanding just 1.2 percent in the first half of 2025, according to TASS News Agency, signalling a risk of recession. Guriev notes that the economic-policy debate in Russia has now “shifted from celebrating war-driven growth to arguing over whether the economy is stagnating or has entered a recession.”
Verdict: false
Panayiotou’s claim is false. While Western sanctions did cause short-term economic pain for the European Union, the notion that they “did not hurt Russia at all” is demonstrably inaccurate. The evidence clearly shows that the EU faced an immediate but temporary shock, whereas Russia is suffering from a deeper, structural damage that will undermine its economy for years to come.
For the EU, the impact was visible and immediate - soaring energy prices, record inflation, and slower growth as the continent gradually began cutting itself off from Russian energy supplies. However it adapted. Within two years, it is gradually eliminating its dependence on Russian gas, inflation has largely receded and economic stability is returning.
Russia on the other hand, faces a very different trajectory. Though headline GDP figures suggest resilience, this growth is almost entirely driven by a war economy- with defense spending nearly doubling since 2021 as a share of GDP according to estimates and industries reoriented toward weapons production rather than civilian goods. This shift has drained labour and resources from the broader economy, leading to shortages, high inflation and declining living standards.
In this context, sanctions have isolated Russia financially and technologically. The freezing of central bank reserves, restrictions on oil exports and curbs on access to Western technology have eroded the country’s productive capacity. While Russia has managed to reroute some trade through Asia and use a “shadow fleet” to bypass oil caps, these workarounds are costly and unsustainable.
CIReN’s project “Countering Falsehoods and Propaganda in Island States” is supported by the European Media and Information Fund (EMIF). The sole responsibility for any content lies with the authors and it may not necessarily reflect the positions of the EMIF and the Fund Partners, the Calouste Gulbenkian Foundation and the European University Institute.