Sanctions against Russia: How far will they go?

Posted by / 24th March 2014 / Categories: Analysis / Tags: , , , / -

Talk about sanctions on Russia has been tough this week. Both the United States and the European Union have been tightening screws on Russia in an attempt to reverse Russia´s annexation of Crimea. EU sanctions now include 33 highly placed individuals with close relations to Vladimir Putin and that were involved in the takeover of the Crimean peninsula after the ousting of the Ukrainian ex-president Yanukovych. The list now largely overlaps with the American list, which also includes three very close figures from Putin´s inner circle, something which the EU had not been willing to do so far. Both the EU and US have also opened doors to allow for economic sanctions against core parts of the Russian economy, such as the oil and gas industry. This would hurt Russian exports, but will surely also affect gas supplies to Europe, and potentially the global economy in general.

The efforts to bring Crimea back to the Ukraine are almost certainly in vain, but at least the sanctions send out a strong message of disapproval, and they hit Putin and the Russian political and economical elite where it hurts…or do they? What are the EU and US trying to achieve? Which sanctions have been imposed so far? And will they put their money where their mouth is?

Choose your objectives wisely

Sanctions have been imposed in the past for various reasons. They have been imposed to reverse the policies of targeted countries, be they acts of territorial aggression, coup d´état´s, or human rights abuses. But they can also be imposed simply to signal disapproval and outrage, or to deter other potential wrongdoers from breaking the law, and to deter the target at hand from going further down the road. Russia unlikely to be compelled to give up Crimea, but the US and EU sanctions can at least put the bear back in its cage.

When sanctions were instituted in the League of Nations, Woodrow Wilson proclaimed that comprehensive economic sanctions would bring ´a type of pressure upon targets that no modern nation would be able to resist´. Territorial aggression would be reversed without the use of a single soldier. Of course reality turned out to be much different; sometimes they were poorly implemented and hopelessly ineffective. In cases such as Iraq and Haiti on the other hand, they were disproportionally harsh on innocent civilians, who starved to death as results of food shortages. Since the late 1990s the strategy thus shifted towards targeting individuals and banks, in order to disturb only the interests of those in power.

Reversing the policies of targeted countries through the sole means of individual sanctions is difficult, especially when the target is a superpower like Russia. Putin is unlikely to be sufficiently impressed by asset freezes and travel sanctions to suddenly give up Crimea, even if the sanctions target people in his inner circle like deputy prime minister Dimitry Rogozin and presidential advisors. The Ukraine has lost the peninsula and they will most likely not get it back. It seems like a shut and closed case. But can the sanctions at least serve other purposes?

In the past, sanctions have also been used simply to express disapproval or outrage about certain practices. Sanctions stand between statements and soldiers. The first two sanctions regimes imposed by the United Nations on white minority regimes in Southern Rhodesia and South Africa were hardly impressive economically, but at least they signalled a strong message of disapproval. White Africans certainly felt this pariah-status heavily on their shoulders. The European and American sanctions on Russia are likely to have a similar effect. They also stand between words and wars, to use a different alliteration. They might not change the status of Crimea, but at least Russia will feel that a large part of the (western) world disapproves of their actions.

A third and arguably the most important reason to impose sanctions is to warn other countries that certain actions don´t go unpunished. Punishing one target can deter others from behaving outside of international law or outside of international public opinion. For example, the sanctions on Iran and North Korea might not talk them out of continuing their nuclear programmes, but at least it can scare off other states. In a similar vein, generals plotting a coup d´état might think twice before taking action. In the Crimea crisis, the sanctions also signal that Russia should not try to further destabilize the Ukraine or to embark on other geopolitical adventures. NATO officials are concerned that Putin has also put his eye on Transnistria, a Russian speaking secessionist region of Moldova that borders the south-west of Ukraine.

Will the EU and US put their money where their mouth is?

So far, the European and American lists include highly placed government officials, army-sector figures, and the owners of Russia´s biggest industries. Sanctioned politicians include Russian deputy prime minister Rogozin, presidential advisors Glazyev and Surkov, Duma-chairman Slutsky, Crimean ´prime-minister´ Aksyonov, and Ukrainian ex-president Yanukovych. The asset freezes have also hit Bank Rossiya, assumed to be Putin´s bank, and Arkadi Rotenberg and Gennady Timchenko, two of Russia´s most powerful businessmen.

The screws can be drawn even tighter on Russia if it doesn´t back down. So far the measures have included exclusion from the G8 talks that were supposed to be organized in Sochi this summer and a failed resolution at the UN Security Council. A next step would be to isolate Russia economically through the imposition of sanctions on oil and gas from Russia. However, Europe would certainly feel the measures of this double edged sword. Putin is already looking to the East for alternative trading partners, and China seems eager to sign a deal to buy more natural gas from Russia. The warming relationship between Russia and its eastern neighbours could also facilitate military contracts.

In the short run, a gas-embargo would definitely hurt the Russian economy though. Almost all of Russia´s natural gas go to Europe (89%), most notably Eastern Europe (24%) and Germany (24%). A sudden stop would most certainly disrupt the Russian economy, but it would also threaten global economic stability, primarily in Europe itself. Europe is equally dependent on Russia. Denmark, Norway, the UK, and the Netherlands produce some small amounts of natural gas, and they import LNG from countries such as Algeria, Quatar, and Nigeria, but the biggest supplier of gas remains Russia, especially in Eastern Europe and Germany. Would Europe be willing to go that far? It´s not likely. The Spanish have already complained that a Russian travel embargo would hurt the tourism sector. Other ´dove countries´ (Italy, Cyprus) even had trouble with the targeted sanctions on some individuals close to Putin, favouring a diplomatic solution. Hawk countries in the European such as the UK, Poland, and the Baltic states favour a tougher stand, but even they are likely to back down when it comes to economic sanctions.

For now, both the US and the EU can keep on tightening the screws on Russia by freezing the assets of more individuals and by prohibiting European and American citizens from doing business with Russian oligarchs. As long as such actions prove sufficient to keep Russia from further destabilizing the Ukraine, the western sanctions should be regarded a success. Russia chooses its battles carefully, and so should the EU and the US.

You may also be interested in reading the ReSeT Working Paper: Power and UN Sanctions by the same author.


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About the author
Thomas Kruiper is a core team member at ReSeT. He specialises in conflict resolution, international development cooperation and governance.

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