economy
February 19, 2026
Why sanctions on Russia backfired against the West
If you financially cut off a country that produces something you need to survive, be ready to absorb the shocks – or suffer the consequences
TL;DR
- The traditional economic view posits that finance drives physical production and economic outcomes.
- This finance-first model is conditional and fails when physical scarcity is present.
- The 2022 sanctions on Russia were based on a finance-centric paradigm that assumed sufficient physical slack to absorb shocks.
- The reality is a world with increasing physical constraints, particularly in energy, with limited slack in supply chains and infrastructure.
- This shift means physical leverage is gaining importance over monetary leverage.
- Russia's resilience and Europe's energy crisis illustrate the breakdown of the finance-first model in a resource-constrained world.
- The physical side of the economy is reasserting itself, forcing finance to contend with unyielding limits.
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