A HISTORY OF SUCCESS
The critics are wrong. Russian sanctions have proved more effective, more quickly, than their advocates expected. Even if the administration and Congress do not take any further measures, the current sanctions will bite more severely over time. And the newest, most potent sanctions could prompt significant change within Russia.
Recall how we got here. The United States and the European Union first imposed sanctions on Russia in response to the 2014 occupation and annexation of Crimea. This was a turning point in the relationship. Until then, the West had sought to integrate post-Soviet Russia into the global economy. Now it began to exclude it.
This was also a landmark in sanctions history. No economy as big as Russia’s has been subject to major sanctions in recent times. Only the restrictions imposed by the League of Nations on Italy, and by the United States on Japan, before World War II bear comparison. But unlike Italy and Japan back then, Russia is a key supplier of oil and gas to the rest of the world. An embargo on its major exports—a traditional sanctions tool—is all but unthinkable. Designing effective sanctions against such a hard target was a new challenge.
How have the sanctions fared? Russia has not returned Crimea or withdrawn from Ukraine. Nor has its economy collapsed. But sanctions were never intended to achieve those things. Rather, they were designed for three goals: first, to deter Russia from escalating military aggression; second, to reaffirm international norms and condemn their violation; and third, to encourage Russia to reach a political settlement—specifically, to fully implement the Minsk agreements, which oblige it to observe a cease-fire, withdraw military equipment, and allow Ukraine to restore control over its borders—by increasing the costs of not doing so.
Judged against those goals, sanctions have largely worked. There is strong evidence that at moments of intense fighting in 2014–15, the prospect of significant further sanctions curbed Russian escalation on the ground and, together with Ukrainian resilience, forced Russia to scale back its ambitions.
Sanctions have also powerfully reaffirmed the principles of international order that Russia violated. Since sanctions create costs for the countries imposing them, they convey resolve better than verbal condemnation. The cohesion and purpose they instilled helped marshal an effective response to the Skripal poisoning. The unprecedented expulsion of 150 Russian intelligence officers from the United States and several Western allies was a diplomatic triumph that built on earlier coordination over sanctions.
Sanctions have failed only in their most ambitious goal, to nudge Russia toward fulfillment of the Minsk agreements. Russia’s routine violations of the agreements and its other actions, such as its recognition of identity documents issued by the Donetsk and Luhansk People’s Republics within Ukraine, make reaching this goal less likely than ever. Russia is prepared to incur large costs to maintain its influence in Ukraine.
Even so, Russian sanctions have worked much better than might have been expected. Indeed, it is rare for any foreign policy instrument to achieve all its goals. The most comprehensive study of sanctions, which draws on over 100 cases, finds they are most effective when imposed on democracies, on countries that can be isolated, and between states that previously enjoyed a close relationship. None of these correlates of success is present in the Russian case. Yet sanctions have been remarkably successful and have brought results over a shorter period than the years or even decades that sanctions usually require.
Nor have sanctions proved counterproductive. Some have argued that sanctions play into Russian President Vladimir Putin’s hands by stoking a “rally ’round the flag” mood in Russia. But the post-2014 spike in Putin’s personal ratings was the result of the annexation of Crimea, not a reaction to sanctions. Since Putin’s reelection in March, his ratings have fallen sharply to their pre-Crimea levels, even as sanctions have become more stringent.
Others claim that by pressuring oligarchs to return assets to Russia, sanctions help Putin achieve his long-sought goal of “de-offshorization.” But there is no sign that Russian oligarchs are repatriating large amounts of capital. Capital outflows from Russia are actually rising.
[caption id="attachment_55257464" align="alignleft" width="1024"]
Pedestrians walk through Red Square on March 4, 2017 in Moscow, Russia. (Getty)[/caption]FULL STEAM AHEAD
The most significant effects of sanctions lie ahead. By design, their impact will intensify. In particular, measures that deprive the energy sector of foreign technology and finance will bite more deeply the longer they are applied. Russia’s concerns are growing. In July, the government drew up its first comprehensive plan to combat sanctions. On August 3, Nikolai Patrushev, secretary of the Russian Security Council, noted that sanctions were creating “serious problems” in the energy sector. Not only economic liberals but siloviki,the security service officials who dominate key issues, are alarmed.
The newest sanctions are the most potent. In April, the U.S. Treasury released a list of Russians it was cutting off from much of the global financial system. This has created unease among Russia’s oligarchs, who wonder which of them will be next. Complementing this, the United Kingdom is now scrutinizing oligarchs and their wealth more stringently and raising transparency standards in its Overseas Territories, popular havens for anonymous Russian wealth.
These new sanctions and standards are set to disrupt the Russian elite’s ability to make money in Russia and send it abroad for safekeeping. By protecting oligarchs from a rapacious state, the West’s financial and legal systems make it easier for Russia’s economic elite to reconcile itself to the way power works in Russia. In this way, the West has helped stabilize Putin’s rule.
If a critical mass of oligarchs feels its core interests are harmed by Western responses to the Kremlin’s behavior, it may begin to view Putin in a different light. The interests of political power and wealth in Russia will become less aligned than at any time since Putin asserted dominance over oligarchs in his first term, from 2000 to 2004. This will not lead to change today or tomorrow. But as the “2024 question” looms—will Putin leave office as the constitution mandates, and if so, who will succeed him?—tensions between power and money could create an important new force for change, not only on Russia’s actions but also on its governance.
Finally, some critics worry that sanctions are overused. If the West turns to sanctions too often, they fear, countries will figure out how to evade them. This is a legitimate concern in other cases, but not here, for three reasons.
First, the sanctions have escalated for good reason, as Russia’s behavior has only deteriorated from annexing Crimea to intervening in the Donbas, downing Malaysian Airlines flight MH17, interfering in Western elections, and using Novichok to carry out a political assassination abroad. Failing to match new outrages with new sanctions would undermine perceptions of Western resolve. Readiness to expand sanctions is also what makes them effective deterrents. It was the prospect of more costly measures, such as sanctions on Russian government debt or exclusion from international payment systems, that helped curb Russian ambitions in Ukraine. There is evidence, for example, that they deterred Russian forces from taking the strategic city of Mariupol in September 2014 and from pressing their advantage after their victory in Debaltseve five months later. Had the initial sanctions been more severe, and Western governments signaled their intent to escalate more clearly, the deterrent effects would likely have proved stronger. If anything, sanctions have been used too little, not too much.
Second, Russia has struggled to find new ways to evade sanctions. If anything, its efforts to adapt have created new problems. Retaliatory import bans have failed to weaken Western political resolve and merely benefited Russia’s domestic producers at the expense of Russian consumers by driving up food prices. Government rescues of sanctions-hit companies have expanded the state’s importance (it now owns around 50 percent of the economy), exacerbating existing problems of inefficiency and corruption. And although Russia has hastened its search for new partners, it has found itself with fewer options and a weak hand. China, in particular, is now in a stronger position to shape the Sino-Russian relationship to serve its interests.
Finally, critics of sanctions must explain how the United States and its allies can better achieve their security goals. No instrument is perfect. But sanctions are smart, low-cost, and nonlethal and play to the West’s natural strengths. In the past decade, Russia has carried out impressive military reform and waged effective information warfare. Its resurgent power has surprised and disconcerted the West. But Russia remains, as it has always been, economically weaker than its rivals. The West’s biggest advantage lies in economic power. Sanctions exploit that fact.
Not all sanctions are good sanctions. Like any tool, they must be carefully designed to achieve defined goals while preserving unity among allies and limiting unintended consequences. To this end, restoring the U.S. State Department’s Coordinator of Sanctions Policy Office,which was abolished in 2017, would be a sensible move.
Sanctions on Russia are working better and faster than predicted against a difficult target. They harness the West’s biggest strength. The longer they are applied, the more effective they will be. And as a new era of geoeconomiccompetition dawns, they offer valuable experience for future contests. Judge them properly, use them wisely, but don’t abandon them.
This article was originally published on ForeignAffairs.com.
