Russia and the Sanctions Puzzle
It’s been more than 16 weeks since U.S. sanctions meant to “impose severe costs” on Russia’s economy came into effect, and those hoping that an economic collapse might change Putin’s mind on his invasion of Ukraine are still waiting.
Even as it shuts down some of its economic reporting, the Russian government announced a budget surplus for the first five months of this year of roughly $26 billion, spurred in part by high oil prices. First quarter GDP figures out today are expected to show a 3.5 percent increase on the same time last year—although a decrease of as much as 10 percent of GDP is likely by year’s end.
“The scale of international sanctions would have caused economic collapse if they’d come out of nowhere,” Chris Weafer of Macro Advisory in Moscow, told the BBC.
“But Russia’s been experiencing sanctions on an incremental basis since 2014. There’s been an enormous ratcheting up, but there’s also an element of this being something they’ve already been dealing with.
Elsewhere others under U.S. sanctions go about their business: North Korea is reportedly preparing a new nuclear test, its seventh overall; Venezuelan President Nicolas Maduro is finishing a Middle East tour; Iran is once again ramping up its uranium enrichment.
And at the White House, officials are getting spooked that the economic measures they unleashed at the beginning of the war are having a boomerang effect. According to Bloomberg, Biden administration officials “are now privately expressing concern that rather than dissuading the Kremlin as intended, the penalties are instead exacerbating inflation, worsening food insecurity and punishing ordinary Russians more than Putin or his allies.”
That the sanctions aren’t having the desired effect shouldn’t be a surprise, Gary Hufbauer, an expert on sanctions policy and a senior fellow at the Peterson Institute for International Economics, told Foreign Policy: “It is quite unrealistic to expect that economic sanctions against a great power—and that would be Russia today—will substantially deter a policy course that the leadership has set upon. There is no experience that validates that expectation.”
Hufbauer’s research finds that when sanctions have worked, they tend to be on smaller, weaker nations. Sierra Leone, the Dominican Republic, and Nepal are all examples of when sanctions have achieved their desired outcome for the countries imposing them.
So why do they persist as a tool of diplomacy? In part sanctions can be a useful way of placating a domestic audience, especially when a government doesn’t want to appear weak.
“When you have a big offense like this invasion, I would say sanctions are almost inescapable just to answer the potential domestic criticism, and then the tendency of the government will be to exaggerate the impact of the sanctions imposed,” Hufbauer said.
Perhaps that’s part of why they continue to be popular for U.S. policymakers. As Cornell University’s Nicholas Mulder found in his book, The Economic Weapon: The Rise of Sanctions as a Tool of Modern War: “Sanctions use doubled in the 1990s and 2000s from its level in the period from 1950 to 1985; by the 2010s it had doubled again.” Nevertheless, he argued, “while the use of sanctions has surged, their odds of success have plummeted.”
Even if they don’t lead to the intended outcome, don’t expect Russia sanctions to come off any time soon. Just ask Cuba, or Iran, as powerful constituencies within U.S. politics continue to keep pressure on, even if changes aren’t in sight. “I think these are going to be in place for a long time,” Hufbauer said. “As long as Putin is in place, I think it’ll be very difficult to lift the sanctions.”
Ghosts of sanctions past. In the case of North Korea, it might be time to give up altogether and, as FP columnist Howard French writes, “consider what has never been tried before: ending the state of hostility between Washington and Pyongyang that has fueled North Korea’s push for nuclear armament.”
French proposes ending the north’s economic isolation, with the understanding that decades of sanctions have not stopped it from pursuing its nuclear goals. “The best hope for peace may lie instead in convincing the North that it has little to fear from the outside world and can thus afford to incrementally relax its own posture and perhaps even normalize its relations with foreign nations,” French writes.