In July, the United States and the European Union finally bridged their differences and slammed Russia with severe sanctions in the wake of the shootdown of Malaysia Airlines Flight 17. The pincers and scalpels of the previous rounds were discarded; this time, it was whole industries—defense, finance, and energy—that were targeted, including Sberbank, Russia’s largest commercial bank.

If the first round of U.S. sanctions was met with ridicule among the Kremlin elite—Vladimir Putin’s gray cardinal Vladislav Surkov, sanctioned back in March, joked that what he likes in the United States is Tupac Shakur, dead since 1996—there’s not much bluster this time around. Now, Gennady Timchenko, who magically became a billionaire many times over since his old friend Putin came to power, is overcoming his allergy to the limelight to moan publicly about how he can’t go on vacation to southern France with his family or visit his 19-year-old son at university in Switzerland. “Our public opinion is given to underestimating them, but these sanctions are much more serious,” says Sergei Markov, a Putinist hawk who sits on the foreign affairs committee in the Russian Civic Chamber. “They’re not personal, they’re sectoral. So they’ll affect a fairly large number of people. Additionally, they will affect businesses that are most crucial to the Russian economy. And they’ll hit the population. Maybe it won’t be immediate, but it will happen.”

However, leaving aside the question of whether or not sanctions are necessary punishment for Putin’s reckless policy in eastern Ukraine, has the West really considered what will happen if they are successful? The reservations expressed on both sides of the Atlantic have mostly been about the impact on Western economies, rather than on what would happen inside Russia. Here’s a hint: “Russia’s economy would collapse faster and quicker” than Europe’s, says Chris Weafer, a prominent (and normally bullish) Russian market analyst and senior partner with Macro-Advisory.

And that brings with it a huge problem. Putin’s tacit social contract with the Russian people is based on a very basic exchange: Putin makes sure the Russian people become materially better off, and the Russian people leave the politics to Putin. So far, both sides have delivered. The crushing majority of Russians support the Kremlin’s line or avoid politics like the plague, and the GDP per capita has increased from $1,771 when Putin came to power in 2000, to more than $14,000 today. That’s a faster growth rate than China’s. “If there were a material change in the way people live in Russia,” says Weafer, “we’d see a change in the political dynamic like we’ve never seen before.”

Geopolitics and the economy are Putin’s two sources of strength, and both are failing him now. In eastern Ukraine, he is increasingly boxed-in, and the economy has been sputtering for about a year, thanks to corruption, inefficiency, and the Sochi Olympics. Capital flight has already reached $75 billion for the first half of 2014, according to the Russian government’s own data, and that’s before the real sanctions were introduced. (By comparison, capital flight for all of 2013 was $63 billion, and in 2012, it was $49 billion.) Russia is not technically in a recession, but that’s because growth has been hovering at zero all year. The Ministry of Economic Development has been using the term “stagnation” since December. Stagnation felled the Soviet Union, and, if the economy dips into recession, it could easily topple Putin, too.