Moscow grossly underestimated the economic costs of launching its war in Ukraine. Lulled by the limited sanctions that greeted its invasions of Crimea and Donbas in 2014, and a false sense of security provided by its hundreds of billions of dollars in reserves, President Vladimir Putin appears to have believed that he could ride out any sanctions that a divided West could muster. He seems not to have understood the shock wave that a full invasion of a European state would produce in the West and the massive unity of the European Union’s economic response. He did not anticipate Germany’s about-face in its relations with Russia or the sudden attractiveness of NATO membership to Finland and Sweden. Russia’s invasion of Ukraine appears to be a catastrophic blunder by Putin, one that puts Russia and his regime in great peril.
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