THANKS, UR:

From 2008 to 2016, Russia increased its military expenditures from 3.3% of GDP - which roughly corresponds to the current US level - to 5.3%, according to the authoritative Stockholm International Peace Research Institute.

According to the Russian government's own fiscal statistics - which remain surprisingly open - its civilian expenditures in occupied Crimea come to around $2 billion per year. And while there are no public data on its presence in Eastern Ukraine, it is safe to assume that the costs there are roughly the same, in which case Russia is spending $4 billion per year - 0.3% of GDP - on these two operations alone.

Yet, beyond military expenditures, Russia is also incurring the costs of lost trade and investment, as well as escalating sanctions, which are more than enough to condemn the country to stagnation for as long as its wars last. In July 2014, the United States and the European Union imposed sanctions on Russia's finance, oil and gas, and defense technologies sectors, in response to its military aggression in Ukraine's Donbas region. So far, these measures have been effective. In global finance, the dollar is king. And because every dollar passes through US banks, dollar transactions are ultimately subject to the US Department of the Treasury's jurisdiction. Through financial sanctions, the US can thus starve Russia of foreign investment.

In August 2015, the International Monetary Fund estimated that Western sanctions would immediately reduce Russia's real (inflation-adjusted) GDP by 1-1.5%. In the medium term, however, the IMF concluded that sanctions "could lead to a cumulative output loss...of up to 9% of GDP, as lower capital accumulation and technological transfers weaken already declining productivity growth."

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