Mar 16, 2022 - Economy
Axios Explains: Ukraine

Russia is testing the West's favorite weapon

Illustration of roadwork cone with a dollar sign on it next to an army tank

Illustration: Sarah Grillo/Axios

The unprecedented sanctions the West imposed on Russia have hobbled its economy and are hurting the global system, too. But their primary purpose, arguably, is to stop the fighting. And that's not yet happening.

Why it matters: Sanctions are increasingly one of the go-to tools in American foreign policy, all over the world — that doesn't mean they always work.

  • "Have sanctions given Putin a powerful incentive to cut a deal? Yes. But is that incentive strong enough for Putin to actually end the war? That's doubtful," said Edward Fishman, a former sanctions policy official during the Obama administration and now a Fellow at Columbia's Center on Global Energy Policy.

Driving the news: The EU imposed a fourth round of sanctions on Russia yesterday, prohibiting investments in the country's energy sector, adding more trade restrictions and oligarch punishments. Later in the day, the U.S. sanctioned 11 Russian military leaders; and Russia sanctioned President Biden, too.

  • "The aim of the sanctions is that President Putin stops this inhuman and senseless war," EU official Josep Borrell said in a statement.

How it works: Ideally, sanctions are a negotiation tool, part of a carrot-stick strategy that gets your opponent to the bargaining table. The best known example of this working is in the negotiations by the U.S. leading up to the first Iran nuclear deal. But these measures serve other, less obvious purposes:

  • To express moral outrage. Some sanctions signal that certain behaviors are not tolerated and are outside established norms. Measured simply along these lines, the Russia sanctions worked. Loads of companies, for example, "self-sanctioned," or pulled out of the country voluntarily.
  • To inflict economic pain. This is part of getting Russia to the negotiating table, of course. Make it hard for the country to operate. That's happening. Russia is at risk of defaulting on its bond payments, the ruble is shot, the stock market is still closed, etc etc.

Yes, but: The point really is to stop the bad behavior. And as any parent knows, punishments often backfire  they just create resentment and distrust.

  • Sanctions have been "effective" as a tool only about a third of the time in the 20th century, according to Nicholas Mulder, author of a new, well-timed book on the history of sanctions.
  • Often, they fuel animosity, strengthening the resolve of the target country.
  • They also inflict horrendous damage on a country's population, leading to starvation in extreme cases — punishing those most likely to dissent.

"Sanctions allow you to feel like you’re doing something. It doesn’t necessarily accomplish what you want to accomplish in practical terms,"said Elena Chachko, a fellow at Harvard Law School who's written extensively about this strategy.

Zoom out: The U.S. increasingly relies on the dollar to fight its battles.

  • A law enabling presidents to levy sanctions passed in 1977, but was only used seven times until the 1990s, according to Chachko's research.
  • The use of "the economic weapon," (the term Mulder used in his book title), grew alongside globalization and the rise of non-state bad actors — after 9/11, for example, the U.S. increasingly sanctioned individuals acting outside the purview of any country.
  • Since the 90s, sanctions have been levied against thousands of individuals because of terrorism, cybercrime and nuclear proliferation, as well as many countries, including Syria, Lebanon, Sudan, Somalia, Iraq, Venezuela and Zimbabwe.

The bottom line: Short of going to war with devastating consequences —something President Joe Biden ruled out — sanctions are the "least worst of very bad options the U.S. now faces," said Chachko.

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