On the effectiveness of Western sanctions against Russia
Western sanctions against what Russia still claims to be a “special military operation” in Ukraine have been some of the most comprehensive sanctions directed against a country since the Second World War. Such a response by the West is no surprise given sanctions are often perceived as a form of deterrence or punishment. In 2014 the Russian annexation of Crimea saw the West impose sanctions that targeted the supply of goods and technology at Russia’s defence industry, energy sector, and financial industry. Its intended goal looked to deter Russia from any further expansion into Ukraine. The war in Ukraine currently stands as a marker for the failure of those 2014 sanctions to deter Russia from any further aggression. The sanctions at present however significantly differ to those in 2014. For example, Germany’s decision for the cancellation of the Nord Stream 2 gas pipeline presents a symbolic blow to Russia which relies heavily on its energy industry. In 2020, oil and gas produced more than half of Russia’s exports, and overseas trade made up 46% of Russia’s GDP. Yet the Nord Stream 1 pipeline which has been transferring Russian gas to Germany since 2011 remains operational. Pumping some 200 million euros every day into the Russian economy today - indirectly financing the Russian war machine. Some may argue that Germany ought to have a moral obligation given its chequered past during the Second World War to stop ‘financing’ the war in Ukraine. While the cancellation of the Nord Stream 2 pipeline represents this symbolic shift in German foreign policy, further disrupting the flow of the Nord Stream 1 pipeline would be almost financially unsustainable, given the reliance of Germany’s heavy industry on Russian gas. Indeed the economic fallout would be disastrous. The Nord Stream pipeline hence exemplifies the difficulties of enacting sanctions in the 21st century - simply that no sanctions exist in a vacuum.
The cost of peace:
In our globalised world where trade and commerce have existed for mutual benefit, sanctions provide what we might perhaps call a double-edged sword. Whilst intended to deter or punish a targeted country rarely does the host-country enacting sanctions ever escape damage. Therefore it is worth examining the use of sanctions overall and the effectiveness of Western sanctions against Russia. A United Nations Security Council (UNSC) meeting in November 2014 highlighted the effectiveness of sanctions regimes as a “valuable tool for maintenance of international peace and security” and that it had made a significant differences in countries like Afghanistan, Angola, Yugoslavia, or Sierra Leone to name a few. Indeed the use of sanctions that have been previously applied by the UNSC can be viewed as a tool to support various goals such as peaceful transitions, deter non-constitutional change, counter-terrorism, and even protect human rights. Yet despite its widespread acceptance, especially as a convenient substitute for the use of force, understanding the limits to sanctions can be an immensely powerful indicator for policy-makers to identify where sustained diplomacy may be needed instead.
This also leads us to face the uncomfortable reality, that it can be incredibly difficult to measure the success of sanctions. Especially due to the quasi-dimensional nature of sanctions which rarely operate on their own. In conflict zones such as Ukraine, it is hard to accurately or fully measure the proportion of success via sanctions versus military strategy. Examining historic precedent however may offer a glimpse into measuring the effectiveness and success of sanctions. Historic precedent often has shown little success when it comes to sanctions. Sanctions for example by the US against Libya during the 90s and 2000s under Qaddafi led to the successful disarmament and abandonment of its WMD programme and a commitment to shattering its links to terrorism. It is today heralded as a success for non-proliferation. However, harsher sanctions against Iran for example under what the US called “maximum pressure” sanctions failed to force out the Mullahs running the country nor its financing of proxy wars within the Middle East. Iran today has developed a complicated system by smuggling out its oil in the busy shipping lanes of the gulf either by concealing the origin of its oil, on sea ship-to-ship transfers or by changing the names of its vessels. Such tactics enable Iran to sell its oil elsewhere around the world to willing buyers and blunt the effect of US sanctions.
Lessons from Iran:
We can draw out a couple of lessons from Iran towards the Western-imposed sanctions against Russia. First, is the issue of time/duration, the matter of the fact is that sanctions actually take time before their effects can be felt. Therefore, it ought to be viewed most effectively as a long-term strategy, not a short-term one. While nobody in the West believes sanctions by any stretch will be the sole cause for victory for the war in Ukraine nor even dissuade Russia completely to abandon its “special military operation” it can however bring Russia to the negotiating table and therefore provides a useful exit strategy. It can also mark Russia in what many have already witnessed as a social pariah which means countries in the future may be cautious as to how closely it wishes to align themselves or become associated with Russian relations. A mass exodus of some 300 firms mostly Western for example, is the starting point of Russia’s social pariah status. Where most firms did so willingly on grounds that the war in Ukraine is morally objectionable. However, the use of sanctions as a long-term strategy unfortunately also means that as the war drags on, or intensifies, a reliance on sanctions will only continue to be paid for with the blood of Ukrainians. It also means that the time or the duration of sanctions provides the opportunity for relevant actors to soften the blow. In fact, aside from the banning of Russian coal, and exempting the sales of fossil fuels some of the most effective Western sanctions against Russia have been aimed at its central bank. Actions to freeze most of the central bank's assets outside of Russia caused the rouble to collapse, economists have forecasted inflation to reach 20% and GDP to decline by 8%. But time has also enabled the Russian central bank to enact counter-measures such as raising the interest rate from 9.5% to 20% or preventing foreign clients from liquidating Russian securities. The end result was an aversion of financial catastrophe with the rouble eventually rebounding. Loopholes too may persist as sanctions become incorporated as a long-term strategy. Like those capitalised upon by Iran to smuggle its oil out of the country using the gulf’s busy shipping lanes into the hands of willing buyers. Likewise, the decision by the West to cut some Russian banks off from SWIFT (which is the main international payment system) too has loopholes. Whilst it appears to be a huge blow for a Russia heavily reliant on SWIFT for its key oil and gas exports, Russia’s largest bank Sberbank has not been cut off from SWIFT. One reason could be because it is one of the main ways Europe pays for its gas. Sanctions therefore at the surface may seem harsher than reality, or the longer it carries on cracks may finally begin to show.
This leads us to the second issue, the prospect of collateral damage which does not draw much attention to sanctions imposed against Iran but does today in the case of Russia. The twofold consequence of Western sanctions and the war in Ukraine have caused disruptions to critical supplies. The spillover effect are the rapidly increasing energy prices and increasing food companies’ costs. Both Russia and Ukraine account for 29% of international wheat sales and almost 80% of sunflower oil sales. Whilst Western sanctions were aimed at Putin’s inner circle and the Russian war machine, the rising costs of energy and food prices goes to show how sanctions can sometimes misdirect from their intended effect. The reality is that the Russian middle class, most of Europe, and even the global economy as a whole suffer as a result of collateral damage. The UNSC has already expressed concern that sanctions and war are threatening the future of global food security as production capacity shrinks, food pricing and availability become a huge concern especially for the poorest and working class who always bear the burden in times of economic struggle. Countries such as Yemen, Egypt and Lebanon for instance also depend on Ukrainian grain. Furthermore, as collateral damage leads to unforeseen consequences, cracks may also form in regards to the initial unified response shown by the West. Eastern European countries like Poland are more likely to take a hardline suggesting to the EU a total ban of trade against Russia. France, Germany and Italy on the other hand have been more hesitant given their greater reliance on Russian energy. Most disagreements however, are about money which are made worse by the worsening economic prospects of the global economy. France for example has proposed a joint fund like the one raised by the EU to deal with COVID-19. The joint fund of course would attempt to limit the economic fallout of sanctions and improve EU sovereignty. Lastly, as collateral damage not only fractures the unity of sanctions, they must also be adequately enforced to be effective, lest the targeted country blunt the impact. Turkey is an interesting case in point, despite its status as a NATO member it has supplied the Ukrainian army with highly efficient drones proven to destroying Russian armour and light infantry vehicles. Yet it also refuses to join its NATO allies in sanctions against Russia and in fact continues in trade. Whilst Turkey has previously played as a mediator between Russia and Ukraine, it reveals the politics of imposing sanctions in a unified manner can actually deafen its effectiveness. Indeed one of the reasons why the 2014 sanctions failed could be linked partly to the lack of participation amongst major industrial countries like Turkey. Just like in 2014, Turkey once again has chosen not to participate in sanctions with its allies. Sanctions, therefore, are neither foolproof nor perfect, but if applied comprehensively it can cause some real damage.
The current trajectory:
Where we currently stand is the uncertainty of whether Western sanctions will have their desired effect or achieve their long-term objectives. The true lesson to be drawn from the 2014 sanctions is that it encouraged Russia to return to a sort of self-sufficiency within its defence and energy industries, it led it to search for alternative trading partners like China and eventual closer relations. The 2014 sanctions counter-intuitively shaped a more independent, daring and provocative Russia. On the other hand, the EU especially Germany in the wake of the 2014 sanctions continued to rely upon Russia for its energy. The war in Ukraine however, is causing a massive rethink within the EU, not just against Russian gas but even in regards to its own green policies and whether they can be adequately met as they seek greater sovereignty from Russian energy. Finally, it helps remembering that sanctions are ultimately a form of soft power which can be further escalated or rolled back. For example, a proper embargo on Russian oil and gas or the possibility of secondary sanctions against countries and third parties who trade with Russia are yet to be brought out. But they can also be scaled back to bring Russia to the drawing table. If current sanctions are to be properly effective their limits must be understood so that they can be balanced with skillful diplomacy. While wars that are won with pure military strategy are often gained via total victory. In Ukraine, it remains to be seen whether Western sanctions, Western-supplied weapons, the Ukrainian spirit of resistance, or some combination are stalling the Russian advance, but for how long? The only certainty is that a diplomatic approach is the only means to ending the conflict in Ukraine.