Sanctions have been at the vanguard of the Western response to Russia’s invasion of Ukraine. The measures, we are told, are “unprecedented” and will have “devastating” consequences for the Russian economy. The broader message from Joe Biden and European leaders is that Vladimir Putin will bitterly regret his flouting of international norms.
Hope is a fine thing. In reality, sanctions will have negligible impact on the Kremlin’s decision-making. Hard as it is to acknowledge in the face of Moscow’s aggression, their importance is essentially symbolic.
There are several reasons why sanctions have proved such a disappointing instrument of Western policy towards Russia.
First, they often represent an unsatisfactory compromise between effective but risky courses of action, such as direct military assistance, and toothless censure (the infamous “strongly worded statement”). They reflect a political imperative to “do something”, even if that something has little practical effect. Unfortunately, this serves to discredit sanctions in the eyes of many.
Second, governments are acutely sensitive of the costs to themselves of imposing sanctions. Witness Berlin’s initial reluctance to abandon the Nord Stream 2 gas pipeline project, and London’s determination to protect the City (aka the ’“laundromat”, “Londongrad”) from action against Russian dirty money. The presence of such vested interests weakens the impact of sanctions. Over the years, Moscow has played on the venality of Western governments and institutions to considerable effect.
Third, it is notoriously difficult to reach consensus on sanctions policy. Aside their own vested interests, different European Union member-states diverge in their attitudes towards Putin and Russia – ranging from the open support of Viktor Orban in Hungary to the hostility of Poland and the Baltic states. Key countries such as Germany and Italy are inclined to prioritise engagement over confrontation. Berlin’s refusal to consider the expulsion of Russia from the SWIFT financial messaging system reflects this mindset.
Fourth, sanctions have become so commonplace, part of the regular furniture of Russia’s relations with the West. True, the latest sanctions targeting major Russian banks and certain high-profile individuals are more punitive than those in the wake of the shooting down of MH17 in 2014. But the Russian government and people have become so inured to sanctions that they are almost past caring.
Fifth, the Russian economy is large enough to absorb the impact of even the most severe sanctions. The central bank holds USD$630 billion ($878 billion) in foreign currency and gold reserves. The sovereign wealth fund accounts for another US$190 billion. Russia is a global strategic supplier of oil and gas. And public debt is a very modest 20 per cent of GDP. Fortified by this resilience, the Kremlin’s reaction to the threat of further and tougher sanctions is “bring it on”. It is especially confident that Russia can absorb more pain than the Europeans, some of whom remain heavily dependent on Russian energy imports.
Finally, and most crucially, sanctions are ineffective because Putin’s worldview is grounded in great power realism and geopolitics. The economy is secondary. Ultimately, it is there to support regime stability and the projection of Russian power abroad. So, even if fresh sanctions were to inflict serious economic harm, this would not weaken Putin’s resolve to impose Moscow’s authority over Ukraine, redraw the European security map, and promote Russia as a resurgent global force.
But if sanctions have minimal impact on Putin’s decision-making, what should the West do instead? The alternatives are not obvious. Military intervention is out, with some NATO member-states such as Germany even opposing the delivery of weapons to help the Ukrainians defend themselves.
It has been suggested that the United States might disrupt the Russian invasion by launching cyber-attacks against critical military infrastructure. But this is hugely risky, and the White House has denied that it is considering it. Another option is to refine sanctions; the latest round of European Union measures targets Putin’s inner circle as well as lawmakers and prominent oligarchs.
Yet there are no easy solutions. It is unrealistic to view sanctions as some kind of silver bullet that will transform Putin’s behaviour for the better. Sanctions are a tool, just one component in what needs to become a much more comprehensive and strategic approach towards Russia.