Russia Sanctions – Not an All-Purpose Tool

The EU’s current sanctions policy toward Russia can be summed up by an old adage: if at first you don’t succeed, try, try again. While this may be a good lesson for children to learn how to persevere through adversity, state actors must learn from their mistakes.

Yet, after two-and-a-half years of unsuccessful attempts to stop Russia’s destabilizing actions in Ukraine, EU officials earlier this year doubled-down on their diplomatic and economic sanctions on Russia, and recently agreed to extend them by another six months. Despite proven ineffectiveness with regard to Ukraine, some EU leaders still believe that sanctions might even help to convince Russia to change its course in Syria. The West should stop relying so heavily on sanctions, as they have already proved to have an opposite effect and are unlikely to change Russia’s policy in Ukraine or Syria.

Western sanctions, aimed at companies and individuals close to the Kremlin, are supposed to persuade Moscow to reconsider its adventurism in Ukraine. However, the sanctions have failed at least on three fronts.

First, President Vladimir Putin is now more popular with the Russian people. Putin’s approval rating increased from around 65 percent before the invasion of Crimea in February 2014 to 86 percent in November 2016. Despite economic slowdown, his party United Russia won more than 75 percent of the seats in the parliamentary elections in September. This suggests a growing nationalism among Russians and Putin’s tightening grip on power — the exact opposite of what the West was hoping to achieve.

Second, instead of inflicting economic pain on the Russian government and its cronies, the sanctions are harming ordinary Russians. Russian citizens have to face higher prices for goods and services and many have lost their savings as, according to the International Monetary Fund, average inflation reached 15.5 percent in 2015. While the economic downfall in Russia is mostly the result of plummeting oil prices and depreciating value of the ruble, fewer financing opportunities also contributed to the recent 10 percent expenditure cuts — further worsening the livelihood of Russians. The number of people living in poverty in Russia increased by 3.1 million in just one year, from 11.2 percent of the population in 2014 to 13.4 percent in 2015.

Third, Western approach to the Ukrainian crisis encouraged Moscow to impose its own countermeasures. Russian embargo combined with decreasing purchasing power slashed EU agricultural exports to Russia almost in half since 2013. The products that accounted for more than a third of the EU exports to Russia before the embargo can no longer be found among the top commodities, suggesting that the embargo significantly affected EU agricultural trade. Although the European Union remains Russia’s main agricultural supplier, its share has shrunk from 38 percent in 2013 to 24 percent in 2015, in favour of Belarus, China, and Turkey.

The consequences of the deteriorating trade relations are even more severe for EU members with a higher exposure to Russian markets. While the EU agricultural exports to Russia accounted for only 9 percent of the total EU agricultural exports before sanctions, in a country like Lithuania this share reached as high as 30 percent. And though most of the EU members managed to successfully redirect their exports, thus mitigating losses in trade, this does not include the costs associated with the search for the new markets.

Some argue that sanctions are merely a tool for politicians to show that they are working on solving a crisis. In reality they often keep countries from looking for solutions that could actually work. According to a study by the Peterson Institute for International Economics, sanctions “succeed” in only one-third of the cases. In the case of the EU sanctions, where the goal is to disrupt Russia’s military actions, the success rate is only 11 percent.

The sanctions over Ukraine did not succeed before, so why should they now? Moreover, the sanctions increased Putin’s popularity and strengthened the Kremlin with the average Russian and European people bearing the brunt of the adverse effects. Instead of provoking countermeasures and escalating the conflict, countries should seek a long-term engagement, without penalizing the people, Russian or European.

Renowned physicist Albert Einstein defined insanity as “doing the same thing over and over again and expecting different results.” It is time for the West to rethink how to mend relations with Russia and apply fresh ideas instead of using the same tried and untrue solutions.

Julija Simionenko-Kovacs is a policy analyst focusing on international investment and competitiveness. She graduated with a MSc in Economics from the University of Amsterdam in 2014, and is an incoming 2017 Fellow at Young Professionals in Foreign Policy (YPFP).

Image Credit: Thijs ter Haar/Flickr

Charged Affairs is a publication of Young Professionals in Foreign Policy, a non-partisan, non-profit organization. Views of the authors do not necessarily represent the views of the organization. All rights reserved.


Julija Simionenko-Kovacs

Posted in ,

Leave a Comment

%d bloggers like this: