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Commentary | 9 April 2015

The Impact of Sanctions on Russian policy

Image of Sergei Guriev

Sergei Guriev |Professor of Economics at Sciences Po, former Rector of the New Economic School in Moscow

Russia Russia-West Relations Sanctions Ukraine Euro-Atlantic Security

I am a Russian citizen; therefore I do not find it appropriate to advise Western governments on the introduction of sanctions against Russia. However, I believe it is important to discuss the impact the sanctions have already had and will have on Russia’s policymaking. My analysis is positive rather than normative. I do not want to write about what should be done. I can only analyze – based on the facts and the trends we have observed – what has happened and what is likely to happen.

I believe that the argument that “sanctions have not worked” is wrong. This argument is not based on a realistic counterfactual. The best way to understand the events of 2014 is to compare the developments in Crimea to those in Eastern Ukraine. As we have recently learned from Mr. Putin himself, the annexation of Crimea started weeks before the so-called referendum (March 16, 2014). The West observed – stunned and speechless – the appearance of unidentified soldiers in Crimea, the capture of the Crimean legislature, Russia’s decision to use troops in Ukraine, the announcement of a referendum and finally the merger of Crimea with Russia on March 18, 2014. All this time, the Russian government reassured itself that there would be no tangible reaction to these events. Serious sanctions followed, however, and Eastern Ukraine’s fate was very different.

Clearly, sanctions have ruled out the Crimean scenario for Eastern Ukraine. Mr. Putin was initially talking about Novorossia, which would include six Ukrainian regions, and on May 11 a referendum on “self-rule” was held in parts of these regions – Donetsk and Luhansk. But, unlike in Crimea, Moscow simply ignored the results. Ever since sanctions were introduced, Russia’s government has been confirming that it recognizes that Donetsk and Luhansk are part of Ukraine. Notably, when “elections” were held in Donetsk and Luhansk in November 2014, Russia said it “respected but did not recognize” them.

Another important debate around the sanctions is whether the sanctions should punish the average Russian or those individuals who contribute to the aggression against Ukraine. While the US and EU sanctions target the individuals and companies that are allegedly connected to violating international law and order, it is clear that the Russian regime is successful in redistributing the burden of the sanctions towards other Russian citizens. Everything we know about regimes like the one in Russia suggests that this is inevitable: as long as the regime remains in power, it will continue to protect the economic interest of its friends – at the expense of everybody else. Western countries can do very little about this, but they can and should pursue an active communication strategy explaining the logic and the actual substance of their actions. This message will not be easy to deliver – the regime is already committing substantial resources to propaganda and will continue to do so. It has no choice: the stakes for the leading members of the ruling elite are too high. They can afford neither withdrawing from Ukraine nor stepping down from power. This is why the West should not expect a quick return to the pre-2014 status quo. Yet, if history is of any guide, democracy, market economy and rule of law will eventually prevail.

 

The opinions articulated above represent the views of the author(s), and do not necessarily reflect the position of the European Leadership Network or any of its members. The ELN’s aim is to encourage debates that will help develop Europe’s capacity to address the pressing foreign, defence, and security challenges of our time.