The Effects of Western Sanctions against Russia
Shortly after the start of the Russian invasion of Ukraine, many Western countries imposed harsh sanctions on the aggressor. Economic sanctions are an increasingly common approach for Western states to "coerce, deter, punish, or shame entities that endanger their interests or violate international norms of behavior", as the Council on Foreign Relations explains. How effective will these sanctions be in countering Russia's aggression in Ukraine?
Media reports showed the closure of several Western chains such as McDonalds, Coca-Cola, H&M and others. But these are not the kind of restrictions that force a state to change its policies. More important are the bans on the export of security-related equipment for the Russian army or spare parts for the industry. Since the introduction of Western sanctions, imports to Russia from the eight largest trading partners have fallen by 44 percent, the Economist estimates. Over the same period, however, exports from Russia have remained almost at the same level as before. One reason for this is the European countries' heavy dependence on Russian oil and gas, which will account for almost a quarter of the European Union's energy consumption in 2020. The EU's dependence is so great that it has explicitly exempted this sector from the sanctions, leading to the strange situation that Russia continues to earn around one billion US dollars a day from exporting oil to the EU alone. Although the EU is trying to reduce its dependence and wants to cut imports by two-thirds by the end of 2022, it could take a while for this to drop to zero. In particular, with Hungary's possible blockade against a complete ban on Russian energy imports into the EU. With high exports and low imports, the Russian economy is expected to run a record trade surplus this year, which will help to continue financing the war.
So how effective are the sanctions really? While it is debatable whether they will seriously harm Russia in the short term, they will have far-reaching effects in the distant future. For example, Russian industry will have great difficulty getting spare parts for machinery or importing new Western technology, losing efficiency and competitiveness vis-à-vis other manufacturers. China could be a country to turn to, but with the Chinese state reluctant to get caught in the crossfire between Russia and Western countries - especially the US - it seems unlikely that Russia should hope to do so. A first sign of this is that China does not seem to have sent "economic and military support" to Russia after the US threatened sanctions. Therefore, the Russian economy may be able to finance this war in the short term but will suffer great losses in the long term.