Historically, sanctions have rarely if ever worked. US history of sanctions is an eye-opener and shows that most have never achieved their intended goal. Countries hit by sanctions have always found roundabout ways to mitigate sanctions or even cancel their impact with clever countermoves. And, unsurprisingly, it’s beginning to look like this umpteenth round of sanctions against Russia – we are up to round number five of EU sanctions now, the latest target being coal imports from Russia – is unlikely to help stop the war.
Bloomberg Economics experts have found that, as they put it, despite multiple rounds of sanctions, there are “plenty of signs that Russia is finding ways to prop up its economy”. Russia, they have calculated, will earn about $320 billion from energy exports this year, up by more than a third from 2021. Russian oil is snapped up in Asia and the ruble is back to the level it was before the start of the war in Ukraine.
At the same time, Russian coal exports banned in Europe are finding their way in China: Reportedly there are several Chinese firms buying Russian coal with local currency.
In other words, from an economic standpoint, Russia is the great beneficiary of the war, having earned an extra $100 billion in just one month, enough to carry on with the invasion. At least, so far but things could change if the West changes its policies and reviews its approach to sanctions. Because the evidence is now in: Sanctions do not work.
Putin’s wily war plans: A clever way to finance the war regardless of sanctions
One may well wonder what exactly were Putin’s real aims when he invaded the whole of Ukraine six weeks ago.
In all logic, from the start, he should have confined himself to the Donbas, and maybe, as an additional move, focused on taking the port town on the sea of Azov, Mariupol, thus ensuring an alternate sea outlet for the Donbas coal mines, independent from Odessa that remains, as I have argued in a recent article with Richard Seifman, Ukraine’s main outlet for its exports.
Instead, his blitzkrieg failed miserably (presumably that was something Putin didn’t expect, clearly his generals misinformed him).
Within a week, his famous 40-mile military convoy that had been sent from the border with Belarus to enter Kyiv got stuck. And stayed stuck. Like a stupid sitting duck, it got bombarded by the Ukrainian forces and it was forced to turn back. Leaving behind atrocities, like the Butcha massacre, that have filled our screens and shaken us with horror.
Why did the massacres happen? We don’t know yet. The Russian armed forces, probably not controlled by officers or by anyone with a minimum of moral standards, were left roaming freely on their own as they withdrew, leaving behind a tragic trail of theft, rape, murder and destruction.
Horrendous war crimes, the extent of which can only be determined by an independent investigation of the kind the UN Secretary-General Guterres has called for. The latest is the bombing of a train station in the eastern city of Kramatorsk which is a major point of evacuation in the region, killing at least 50 civilians as thousands flee the Donbas.
True, as was argued at the UN yesterday by the Ambassador from India and other delegates from countries that chose to abstain from suspending Russia from the Human Rights Council, the probe into war crimes is about to be launched but has not yet been carried out and resulted in confirmed findings – and because of that, the resolution to suspend Russia from the Human Rights Council did not do as well as previous resolutions at the UN General Assembly that condemned Russia for its aggression.
But the resolution did nevertheless succeed, 93 countries voted in favor, well over the two-thirds majority required to pass the resolution. That’s because, regardless of the precise extent of war crimes perpetrated by Russian troops, the very notion of aggression and the killing and destruction that such aggression necessarily entails, is, by definition, incompatible with the aims of the UN in general and the Human Rights Council in particular.
The next step would be to suspend Russia from the UN altogether. Let us note here that suspension is not equivalent to expulsion.
Russia should not be expelled from the UN, it is a nation in its own right, it should remain as part of the concert of nations. But it should be suspended for violating a basic rule: If the United Nations is not called the Society of Nations (as its predecessor, founded after World War I, was called) and it carries in its name the word “united”, this is deliberate: It reflects the UN’s basic aim and raison d’etre: The maintaining of world peace, as per its charter and the will of its founding fathers.
The UN is therefore to remain “united” and not divided by war. And Russia should be allowed to re-enter the UN and regain all its rights only after it stops its invasion in Ukraine and a peace settlement is reached whereby Russia shows full respect for Ukraine’s territorial integrity. Only then can the suspension be lifted.
But we’re not there yet, the war is far from over. Now we all know that Putin has retired the troops from the north and is concentrating them on the south: The next big battle already has a name, the “battle of the Donbas”. A battle the Ukrainians are not taking lightly, expect them to give it all their efforts and courage, they are fighting for the survival of their country and they know it:
So it would appear that Putin is perhaps, at last, going for the war objectives that, in all logic, he should have gone for in the first place.
This leaves open the question: Why did he do it? Did he really believe that story he told us that he was going to “denazify” Ukraine? That pretext for a war defies credibility. Denazification is entirely non-historical, going against reality a pipe dream coming from a demented, disconnected man and it is difficult to imagine Putin suddenly losing all contact with reality. In short, it is rather more likely that it was something he simply made up for his purposes. But then, what were his purposes?
We have to remember two major things about Putin that make him very different from the political leaders we are used to in the West.
First, he is an autocrat and therefore free from democratic shackles like recurring elections and the need to please his electorate; and second, he is a Russian who, like all Russians, loves a good game of chess. That means he’s a man who likes (and can) plan his moves over the medium and long term, never in the short-term like our leaders in the West do who are forced into short-termism by our democratic election processes that are scheduled every 3,4 or 5 years.
And leaders in the West love sanctions that allow them to look active and dynamic in the eyes of their electorate – regardless of whether the sanctions accomplish anything or not. By contrast, Putin doesn’t care about sanctions, his entourage may be unhappy but they all know that sanctions are just a momentary nuisance (they’ve experienced them after Crimea) and they all are sufficiently wealthy, able to have recourse to a variety of plans B to avoid the worst impact of sanctions.
So it is not entirely unreasonable to hypothesize that:
- Putin would have foreseen the sanctions, he knew that was the West’s preferred response, he’d experienced it already after taking over Crimea in 2014;
- He also knew that he would not have been able to settle the Donbas question the way he settled (and took over) Crimea without a battle: By now, a slow-moving insurgency had developed in the Donbas since 2014 with the Ukrainian forces engaged in fighting and becoming ever more battle-ready; the situation recently must have become critical, so he had to move out of the self-proclaimed separatist republics of Luhansk and Donetsk all the wives and children of Ukrainian separatists living in both these towns (and this was done a few days before launching the first attacks on Ukraine);
- He expected sanctions to hit the Russian economy but he also knew that starting a big war across Ukraine – and not a small circumscribed military operation in the Donbas – would shake the world and drive fuel prices way up, which is exactly what happened; it really doesn’t require an Einstein to figure this out;
- By driving up fuel prices, Putin has ensured that he has continuing means to finance the war: This is a virtuous circle, more sanctions, especially on fuels (gas and oil) mean higher prices.
So the more the West tries to sanction Putin, directly by banning fuel imports, or indirectly by unfurling the so-called Swift “bazooka” (i.e. suspending Russia from the Swift international payments system), it has the effect of driving fuel prices up and helps maintain them at a steady high level. And thus, it makes it easier for him to finance the war in Ukraine. This is not speculation, it’s happening right under our eyes.
Seriously, we need to revise our views on sanctions. Some sanctions aimed directly at the wealth holdings of Putin himself and his entourage might work (if they are truly comprehensive and well-aimed without the possibility of escape routes). But broader economic sanctions, because of the complexity and number of networks and resilience of economic systems, have never worked well and rarely achieved their intended objectives. Exactly the case here.
We need to ask ourselves whether oil and gas sanctions actually do the work they are meant to do.
Editor’s Note: The opinions expressed here by Impakter.com columnists are their own, not those of Impakter.com — In the Featured Photo: Looking for victims after a bombing – screenshot from France 24 video: War in Ukraine, courage and resilience amid Russian offensive, published today.