Impact of Sanctions on Russia

Despite the collapse of the Eastern Bloc in the early 90s, for much of the 21st century Putin’s Russia has been belligerent as ever. Beginning with the Crimean annexation in 2014 Putin has engaged in a series of extremely concentrated international propaganda and military campaigns designed to destabilize the west and weaken long standing democratic institutions. Given how widespread this effort is, one would expect the West’s response to be devastating. And certainly, if things had been going according to plan, it would have been. Unfortunately, despite multiple rounds of sanctions since the catalyst of Crime and a theoretically heavy-handed response, Russia has not slowed their international aggression. Due to the US and EU’s various institutional problems sanctions are barely being enforced. The failure of these sanctions is undeniable, and even when given multiple possible angles under which they could succeed, they fail under all of them. They have not stopped Russia’s aggression militarily and they have not stopped Russia from meddling in the domestic political affairs of foreign nations. Many factors went into their failure, but one major reason they failed was lack of proper administration by both parties. The Trump Administration has problems enforcing any sanctions, and the EU can’t stop its members from violating them.

Before analyzing the individual sanction goals, it is important to make a distinction between surface level economic damage, and appreciable damage. In the Russian case, that line is more blurred than one would think. Indeed, if one were to peer into Russia’s economy alone they would assume the sanctions were working. As of the time of writing the currency exchange rate between cents and rubles is 1.4 cents to 1 ruble. Before Ukraine, it was 3 cents per ruble. Additionally, uncertainty in the market and heavy sanctions caused many long-term investors to pull out; the lowered FDI also causing their economy to take a hit (Kissi, 2018). But this surface level argument would fail to consider both real world applications and the point of sanctions. In theory a damaged economy would cause the public to respond negatively to the Russian government, but Putin still has an apparently high approval rating. And while one can question the validity of such polls, it makes sense when considering that despite this apparent damage, unemployment rates have remained steady and inflation has plummeted since their worst economic years, 2015-2016 (Trading Economic Charts, 2019). Russia has somehow done an excellent job of making sure this damage doesn’t reach the masses. Those were the years, if any, that somebody could reasonably claim that these sanctions were working. And yet, that is when the second “theatre” of the Russian sanction war opened. Before then the west was merely focused on aggression. After, they had to expand their focus to include propaganda and espionage.

Looking then at one specific sanction goal, has Russia stopped interfering in foreign affairs? We know this is at least one stated goal, as the 2016 presidential election being hacked and influenced in various ways was a constant discussion point as post-election sanctions were drafted and signed into law. The evidence suggests they have not. Despite more sanctions being tossed onto the ever-growing pile, Russia was caught trying to interfere in the 2017 French election, although their efforts were much less successful as their preferred candidate lost (Conley, 2017). Similarly, back in the United States, for the 2018 midterms Russia tried their second round of US election interference, thankfully to less favorable results than 2016 (Barnes, Goldman, 2019). This speaks to the West having better tools to counter interference, but also speaks to their failure in influencing policy change. Putin’s Russia continues to cause schisms in Western Society, and seemingly any efforts to stop or slow him have little to no effect. Arguably the mere introduction of this second problem speaks to that truth as well. For 2016 was in the depths of their economic woes, and still they decided election interference was in their best interest. For the sake of brevity this paper won’t cover Russia’s other international law violations (which include, for example, violating international energy sale agreements), but a pattern of utter disregard is clear. If Russia didn’t stop in 2016 when their inflation rate was 17%, they’re unlikely to stop when it’s 4%. On this front, for now, sanctions have failed.

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The question then turns to the original Russian act of aggression, the annexation of Crimea. Even if their intelligence efforts haven’t slowed, has their military? In short, no. Russia has continued to place pressure on Eastern Europe since 2014. In 2018 Russia built a bridge connecting Mainland Russia and Crimea, despite the body of water it was being built over, the Kerch Strait, being international waters. The west did nothing, and barely even reported on it, at least in America. In November of the same year Russia opened fire on and seized several Ukrainian ships, as the prime minister declared martial law noting that “the tanks on our border have increased threefold” (Russia-Ukraine BBC, 2019). The strait is now in defacto Russian control, another violation of international law. Further, Russia has even begun talks to absorb an entire nation; Belarus. In December during a meeting between the Russian Prime Minister and President of Belarus an ultimatum was given. The Prime Minister implied that if Belarus did not join Russia they would be crushed under a change in Russia’s oil policy (Ball, 2019). Both Kerch and Belarus tell the same story already seen with the west’s other goal. For Russia to continue to engage in such bold initiatives, again, despite sanctions, in the very country that landed them in this mess shows an utter disregard for anything the west does to stop it. But perhaps it is not Putin’s resilience that allows him to continue unabated, but rather the weakness of sanction enforcement.

Sanctions are rarely seen as a positive measure, with most in the public believing they are a waste of time and effort. Certainly, as a policy influencer, it is questionable how successful they have been historically, but rarely do they fail as badly as in Russia’s case. On the US side of things, this is unfortunately par for the course for the Trump Administration. The Office of Foreign Assets Control has been notoriously lax in their lack of willingness to follow through on imposed penalties, especially given that sanctions have only increased, in theory, under Trump (Berthelsen, Schoenberg, 2018). He has even neglected to enforce sanctions that passed both houses of Congress overwhelmingly. He signed the Countering America’s Adversaries Through Sanctions Act in August 2017 and has not enforced it (Wellemeyer, 2018). The ability of the executive branch to willfully ignore the legislature can make it difficult to enact punishment if they have different goals. In this case specifically, as it has been all but confirmed that Russia helped elect Trump (whether he colluded or not), there is an incentive for him to ignore Congress and toss Putin an olive branch. It is important to discuss this point, as well as the forthcoming failure of the EU, to establish that this is not a case of sanctions failing when applied perfectly.  There are several confounding variables which make any claim as to why they failed difficult to isolate. But again, the US’s structural failures seem to be across the board, whereas the EU has a Russian specific problem.

If the United States has administrative problems, the European Union has institutional ones. Due to lack of an enforcement mechanism for its member states, divergent economic interests cause some member states to go behind their “mother’s back” and make trades which would benefit their own country. This matters because Russia’s main economic strength is in its natural resources. It has the largest natural gas reserves on earth, the second largest coal reserves, and the eight largest oil reserves (Energy Information Agency, 2019). As a result, in 2016, two years after sanctions had supposedly began, one third of the EU’s natural gas was still purchased from Russia, with smaller percentages still in other energy sectors (Saravalle, 2017). Eastern Europe is also heavily reliant, unnaturally so compared to the western half. Overall the picture that’s painted here is one of modern dependence on key resources, not totally unlike how western countries often give oil-rich middle east countries a pass. The difference is here the EU tried projecting its condemnation and got undermined by itself. And in a project which only compounds this issue, Germany, the largest EU member state, is currently building a natural gas pipeline directly from Russia to Germany called Nord Stream 2 (Saravalle, 2017). By agreeing to this Germany is both crippling the policies of its supranational administration it’s supposed to have ceded sovereignty to, and indirectly condoning Russia’s international aggression. After completion the Russian share of German gas will rise to over 50%, with a similar uptick expected in surrounding countries as it will be easier and faster to distribute directly from Germany.  The United States’ problems could in theory be fixed by a change in exact policy, or by electing a new president. The EU’s problem appears to be more deeply rooted, which is perhaps why the sanctions failed as badly as they did.

In truth, Russia’s full story has yet to be told. As some of the events written about here are still ongoing and some factors (such as the US presidency) keep changing, it’s impossible to entirely predict the final outcome of Russia’s meddling. However, in the short term it’s clear the West’s response isn’t enough. Analyzing possible successes under the lens of why they were placed to begin with, they didn’t meet their goals anywhere. To the present day Russia continues interfering in foreign domestic affairs and violating international law. And while it is impossible to predict what will eventually happen, it seems unlikely that anything will change unless both the US and EU start enforcing the punishment that they placed upon Russia themselves.

Bibliography

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