WASHINGTON, D.C. – The effectiveness of sanctions on Russia – the West’s collective response to the Kremlin’s aggression against Ukraine – has been the topic of a series of meetings and lectures held over the last few weeks in the U.S. capital.
The events, with more to come this month, coinciding with the fifth anniversary of the Euromaidan Revolution, which chased from power Moscow-backed Ukrainian President Viktor Yanukovych and tilted the country toward the West.
That sparked the wrath of Russian dictator Vladimir Putin, who wants Ukraine within Moscow’s orbit. Even before Yanukovych fled Ukraine, the Kremlin launched an invasion and occupation of Ukraine’s Crimea and later a war that has resulted in the occupation of a large part of eastern Ukraine’s Donbas region. Fighting in the Donbas continues daily, and around 13,000 have died since 2014.
Western countries responded to the Russian aggression by providing diplomatic and financial support to Ukraine, NATO members have trained Ukrainian military and sent non-lethal equipment such as communications and medical gear. America is the only country to have supplied lethal weapons so far – in the form of sophisticated Javelin tank-destroying missiles.
But sanctions have been the mainstay of the Western reaction to Moscow. They have been imposed against senior Kremlin figures and others close to Russian dictator Vladimir Putin; against state enterprises and those who run them; against political and military officials connected to the occupation of Ukrainian territories; and from last year against private companies and their oligarchic bosses, all of whom are connected to Putin.
The Kyiv Post has identified key points from several events at which experts with experience as diplomats, government officials, and academics, talked about various aspects of sanctions.
Sanctions under Obama
In the United States, it is the Treasury Department which designs the sanctions the government applies. Jacob Lew was the treasury secretary when President Barack Obama decided to impose sanctions on Russia following its 2014 aggression in Ukraine.
Lew told an audience at the Atlantic Council think tank on Feb. 19 that the key to effective sanctions was that Washington acted jointly with the European Union to tell Moscow its invasion of Ukraine would not be tolerated, and was seen by the West as an attempt to smash a peaceful world order where altering borders by force was supposed to be a thing of the past.
Lew said the United States in 2014 did not have as many trade or other relations with Russia as the EU, and that diminishing them would have not have a drastic effect on Moscow. The EU’s more intense level of economic relations with Russia gave it strong leverage.
He said it was easy to dismiss the sanctions imposed against Russia as ineffective. Massive penalties were not slapped on Russia straight away because the plan was always to allow room for negotiations, while retaining the ability to keep toughening the sanctions if necessary.
He said that arguably, the measures imposed during the Obama era were effective. The Minsk Accords, which were intended to resolve the conflict and return Russian-controlled Crimea and Donbas to Kyiv, may not have happened without them, he said.
“We don’t yet know the end of the story of where the Minsk Accords end up.,” Lew said. “It certainly stopped the advance and the continued ratcheting up of the violations.”
“Was it a complete success? No… (but) I think it’s easy to say the Russia sanctions didn’t work because the whole world didn’t change. But (the conflict in Ukraine) reached a stabilized level, it didn’t worsen and in some ways got better.”
Supported by allies
Lew said that precise, finely-honed sanctions, even though they sometimes needed years to achieve their aims, were vital as an alternative to the blunt instrument of force.
“I can’t count the number of times I was in a room where, if we didn’t have sanctions as a meaningful way to respond, the conversation almost immediately would have gone down a path of do you or do you not need to use force,” he said.
He said that sanctions are only effective when they are widely supported by allies around the world, and the target government knows that they will be rewarded for complying with them – as well as punished for ignoring them.
But another vital element is that the policy has to be consistent – something that in the last two years, after U.S. President Donald Trump entered the White House, has not been the case.
Lew, in common with other experts, said that the effect of sanctions is being diluted because Trump’s positive attitude toward Putin is in stark contrast to the signals that sanctions were supposed to send.
Trump has lavished praise on Putin, despite the incontrovertible evidence that Moscow interfered in the 2016 U.S. presidential election. He has publicly stated that he believes the Russian leader’s denials about interference over the conclusions of all of America’s security agencies.
An investigation by Special Prosecutor Robert Mueller is looking into whether there was collusion between the Kremlin and Trump’s election campaign. It has shown that Moscow secretly discussed ditching of the sanctions with some of Trump’s associates.
Lew said: “I think it was notable that Congress passed a law taking away presidential discretion in terms of how to implement and withdraw from Russia sanctions, because there was a distrust of the administration and its willingness (and) ability to (implement sanctions) in an appropriate way.”
Speaking at the same event, David Mortlock, who worked in many capacities at the U.S. State Department and was director of international economic affairs at National Security Council, said sanctions on Crimea and Russian interference in Ukraine received the highest level of coordination with Europe.
But he said Trump’s own words diminished the effect of the sanctions. “The impact on Putin’s behavior and the impact of the sanctions is essentially nullified when the president of the United States dismisses Russia’s actions. Sanctions cannot compensate for such a strong message from the U.S. leader,” said Mortlock.
Ripple effect
Nigel Gould-Davies, an associate fellow of the London think tank Chatham House, taught at Oxford University before joining the British Foreign Office, where his roles included head of the Economic Department in Moscow and Ambassador to Belarus.
Speaking at the Wilson Center, a D.C. think tank, and at Washington’s Georgetown University, he contends that sanctions may eventually trigger Russia’s oligarchic “elite” to oppose Putin.
Importantly, he concluded that “the ripple effect” of sanctions on Russia’s elites may have amplified the sanctions’ consequences, as disrupting the Russian elite’s access to Western financial and legal services undermines Putin’s political economy.
Gould-Davies said Putin is facing his most difficult period since coming to power in 2000 with his popularity falling back to the levels seen before his invasion of Crimea boosted his poll figures to astronomical heights. Gould-Davies attributes much of that fall to the effect of sanctions, which have frozen ordinary Russians’ living standards since the Kremlin’s aggression against Ukraine began.
He believes that sanctions need a long time to achieve their aims, but has no doubt they have helped Ukraine immensely. He said the threat of sterner measures, such as barring Moscow from the SWIFT banking system for international financial transfers, probably discouraged Russia from attempting to capture Mariupol in 2015.
Sanctions have recently been more directly focused against individuals and oligarchs who own large private businesses, and this section of the elite has found itself vulnerable and many of them, he believes, blame Putin – although few openly – for their predicament.
“An important section of the Russian elites are disproportionately dependent on access to western financial, legal property and public relation systems,” Gould-Davies said. “That’s a very interesting paradox.”
Depriving the elite of their ability to access and enjoy asset protection sows discontent, and many could be considering what should happen when Putin’s current term ends in 2024, he added.
Gould-Davies pointed out that in the1990s Russian oligarchs occupied senior political positions, which enabled them to advance and protect their businesses and dictate politics.
Putin curbed their political power but allowed them to hang onto their wealth as long as they were obedient. “It’s very unusual to be wealthy but powerless; very unusual for the elites to have their core interests systematically override or ignored by power,” Gould-Davies said.
The refusal by many oligarchs to heed Putin’s demands to repatriate the billions of dollars they have taken overseas is a sign that his control over them has its limits, he said, and as sanctions increasingly bite, the measures are demonstrating to the oligarchs that their interests and those of Putin are increasingly divergent.
“Political change takes place from within rather than from below,” Gould-Davies said.
“Major change always takes place, or certainly is initiated, by elites themselves.”
