Importance Once Crimea and the city of Sevastopol joined the Russian Federation, the USA and EU unleashed a hybrid war against Russia, using the Western sanctions to influence it. It is critical to conduct an in-depth economic and theoretical analysis of their adverse effect mechanism. Objectives The research is to prove close relationship of adverse effects of the sanctions and strategic defects of the budgetary, fiscal and monetary policies of the Russian Federation, thus fueling the sanctions and their consequences. Methods The research employs a variety of methodological approaches to studying the content and tools of the hybrid warfare, focusing on the systems approach. Conclusions and Relevance We conduct a comparative analysis of the cold war against the USSR and hybrid war against Russia, unravelling multiple tools used. As for the profound reasons for the hybrid warfare, the USA attempts to compensate for its geoeconomic lag behind China by preventing its economic alliance with Russia. We also reveal the role of color revolutions and the Overton window in the hybrid warfare mechanism. The article traces the direct and inverse relationship of the Western technological and financial sanctions and the current economic situation in Russia. The severe Dutch disease, reluctance of authorities to dramatically change the resource-based model, rigid monetary and fiscal policies engendered endogenous causes intensifying the negative socio-economic effect of the sanction-driven war against Russia.
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