The EU's 18th Sanctions Package Against Russia
The European Commission's proposed 18th sanctions package represents significant escalation against Russia, targeting critical energy infrastructure and financial systems.
The package includes lowering the oil price cap from $60 to $45 per barrel, banning Nord Stream infrastructure use, and disconnecting over 20 Russian banks from SWIFT. Additional trade restrictions worth €2.5 billion will further constrain revenue streams. This timing is strategic given Russia's deteriorating conditions. Russian inflation reached 10.2% in April 2025 while interest rates hit 21%.
Defense spending will consume 41% of the 2025 federal budget, while the National Wealth Fund has been depleted by two-thirds. Existing sanctions have already deprived Russia of more than $500 billion in potential war funding.
Forecast Scenarios (GCHQ)
Likely (55-75%): Gradual Economic Deterioration
Russia experiences prolonged stagflation through 2025-2026, with inflation above 8% and GDP growth below 1.5%. 21% interest rates and continued defense spending create corporate bankruptcies while National Wealth Fund depletion forces domestic borrowing.
Realistic Possibility (45-55%): Coordinated Pressure Forces Negotiation
Combined EU-US measures create sufficient economic pressure for meaningful negotiations by late 2025. Budget deficits worsen beyond planned 0.5% of GDP due to overly optimistic revenue forecasts while public discontent grows among core supporters.
Unlikely (30-45%): Economic Collapse
Additional sanctions plus oil price decline below $50 triggers severe recession with 3-5% GDP contraction. With frozen central bank reserves, Russia cannot prevent rapid ruble devaluation, creating cascading inflation and potential social unrest.
