International Ice Hockey Federation (IIHF) has stripped Belarus of the right to hold the World Championship this year
Russian opposition activist Alexei Navalny arrested on arrival as he returns home
LONG READ: The oligarch problem
COVID-19 and Trump’s indifference helped human rights abusers in 2020
Jailed Russian opposition activist Navalny drops Putin corruption investigation bomb on his second day home
Russian opposition activist Navalny calls for supporters to take to the streets this weekend
Western Balkans and Ukraine urged to scrutinise coal subsidies
Oligarchs trying to derail Ukraine’s privatisation programme, warns the head of Ukraine’s State Property Fund
VISEGRAD BLOG: Central Europe's populists need a new strategy for Biden
OUTLOOK 2021 Lithuania
EBRD says loan to Estonia’s controversial Porto Franco project was never disbursed
Czech Pirates and Mayors approve final coalition agreement for 2021 elections
OUTLOOK 2021 Czechia
OUTLOOK 2021 Hungary
BRICKS & MORTAR: Rosier future beckons for CEE retailers after year of change and disruption
OUTLOOK 2021 Slovakia
FDI inflows to CEE down 58% in 1H20 but rebound expected
BALKAN BLOG: US approach to switch from quick-fix dealmaking to experience and cooperation
Corona-induced slump in global clothing sector dragged down Albania’s 2020 exports
BALKAN BLOG: The controversial recipe for building up Albania
Heavy flooding causes chaos in parts of Southeast Europe
Turnover rose on Bosnia's two stock exchanges in 2020 while prices fell
Bulgaria’s government considers gradual easing of COVID-related restrictions
Sofia-based LAUNCHub Ventures holds first close of new fund on €44mn
ING THINK: Growth in the Balkans: from zero to hero again?
Spring lockdown caused spike in online transactions in Croatia
Labour demand down 28% y/y in Croatia in 2020
OUTLOOK 2021 Kosovo
OUTLOOK 2021 Moldova
Storming parliaments: New Europe's greatest hits
World Bank revises projection for Moldova’s 2020 GDP decline to 7.2%
Moldova’s PM resigns to prepare the ground for early elections
Montenegrins say state administration is most corrupt institution
75% of Montenegrins want EU membership
North Macedonia's manufacturing confidence indicator down by 8.5 pp y/y in December
OUTLOOK 2021 North Macedonia
OUTLOOK 2021 Romania
Romania’s central bank cuts monetary policy rate by 25bp to 1.25%
Romanian construction companies' activity slows in November after intense 2020
OUTLOOK 2021 Serbia
Slovenia’s opposition files no-confidence motion against Jansa cabinet
Slovenia’s government to release funds to news agency STA after EU pressure
UK Moneyhub picks Slovenia for post-Brexit European base
Slovenia’s dire COVID-19 situation in 4Q20 caused second economic dip
ISTANBUL BLOG: Biden must find a way to work with Trump’s strongman pal Erdogan
Turkcell denies any affiliation with $1.6bn loan in default extended by Ziraat Bank to Virgin Islands company
BEYOND THE BOSPORUS: Let’s tentatively pencil in a date for Turkey’s hot money outflow
CAUCASUS BLOG : What can Biden offer the Caucasus and Stans, all but forgotten about by Trump?
Armenia ‘to extend life of its 1970s Metsamor nuclear power plant after 2026’
OUTLOOK 2021 Armenia
COMMENT: Record high debt levels will slow post-coronavirus recovery, threaten some countries' financial stability, says IIF
OUTLOOK 2021 Georgia
Georgia’s political kingpin Bidzina Ivanishvili quits politics
TEHRAN BLOG: Will Biden bet on a quick return to the Iran nuclear deal?
Tehran Stock Exchange chief quits amid “Black Monday” fury
Durov rejects Western funds’ offer to buy 5%-10% of Telegram with $30bn valuation
Central Asia vaccination plans underwhelm, but governments look unruffled
Fears of authoritarianism as Kyrgyz populist wins landslide and backing for ‘Khanstitution’
Mongolia's winter dzud set to be one of most extreme on record says Red Cross
Mongolian coal exports to China paralysed as Beijing demands virus testing of truck drivers
Mongolia fears economic damage as country faces up to its first local transmissions of coronavirus
Mongolia in lockdown after suffering first local coronavirus transmissions
OUTLOOK 2021 Tajikistan
OUTLOOK 2021 Turkmenistan
Turkmenistan: How the Grinch stole New Year
COMMENT: Uzbekistan is being transformed, but where are the democratic reforms?
Download the pdf version
More...
On October 23 the United States imposed sanctions on a Russian government research institute for its links to malware used to target critical infrastructure.
“The Russian Government continues to engage in dangerous cyber-activities aimed at the United States and our allies”, Treasury Secretary Steven Mnuchin said in a statement.
The announcement came only days after the State Department revealed plans to extend sanctions against the Russia-led Nord Stream 2 gas pipeline. The US has said it is prepared to use a range of sanctions to halt the project which has around 150km left to go in Danish and German waters.
Calls for broader sanctions on Nord Stream 2 have grown louder since Russian opposition figure and anti-corruption campaigner Alexei Navalny was poisoned in August with a nerve agent from the Novichok family. In September German Chancellor Angela Merkel signalled the project was a potential target for retaliation. So far, the European Union has sanctioned six Russian government officials with asset freezes and travel bans instead. Announced on October 15, the EU said the attack on Navalny would only have been possible with the consent and involvement of the Russian Presidential Executive Office and Federal Security Service.
This flurry of sanctions is not surprising. They have become one of the most commonly used instruments in the foreign policy and diplomatic toolkit and an inevitable part of responding to a host of international crises. They’ve also become the cornerstone of the West’s Russia strategy, and have been used to counter Kremlin belligerence since Moscow’s 2014 annexation of Crimea and invasion of eastern Ukraine. The problem however, is that they don’t work very well.
Theory and practice
The theory behind sanctions is relatively simple; apply enough economic pressure and the target will change its political behaviour. It’s essentially about carrots and sticks, using a combination of coercion, deterrence, selective punishment and condemnation. They can be introduced by governments or through institutions, and can target countries as well as complicit companies and individuals. Before 1990 they were rarely used. Now the EU alone has over forty different sanction regimes in place.
But their effectiveness is questionable. History is littered with examples of sanctions bolstering the targeted government, or even inadvertently harming a population while those in power evade the consequences. These risks have abated as sanctions have become smarter and more targeted, but their record of making a difference where it matters most remains unremarkable. Even where they appear to have been successful, it’s not always easy to disentangle the sanctions from other pressures.
As for Western sanctions on Russia, they have expanded in scope over the years to respond to not just events in Ukraine but a host of ‘malign activity’; from cyber attacks and democratic subversion to money laundering. Sanctions target individuals, companies and whole sections of the Russian economy. There is no doubt they have had an economic impact. The business environment has deteriorated and become more unpredictable. Targeted individuals shut out from the West have faced financial frustration. Russia’s energy, defence and finance sectors, which had relied heavily on Western capital and technology before being cut off, have been hit particularly hard. The long term consequences for something like advanced oil exploration could be significant.
Yet the political impact has been minimal. The initial introduction of sanctions back in 2014 did little to loosen Moscow’s grip on Crimea or hamper its desire to stir conflict in eastern Ukraine. Six years on and the war continues to simmer just enough to avoid becoming frozen. Some analysts credit sanctions with deterring further military escalation into Ukraine, but this ignores that Moscow’s priority has been political leverage not physical land. Despite various attempts to re-charge the peace process the Kremlin has remained stubbornly unwilling to compromise.
In the meantime Moscow has felt comfortable enough to play spoiler, flexing its military power and continuing a political war against the West. Its actions, like the use of a military grade nerve agent in Salisbury UK, have often offered little in the way of plausible deniability. That Moscow seems to have been behind targeting Navalny with a similar toxin in Tomsk is especially brazen.
Learning lessons
There are several lessons here. The first is that sanctions don’t happen in a vacuum and targeted countries can adapt their behaviour to mitigate them. For Russia, this has meant diversifying its economy away from Western markets towards Asia, rolling out a programme of import substitutions to drive self sufficiency, and triggering huge amounts of state intervention to support areas like banking. Add to that a well-managed central bank, currency devaluation, and attempts to financially shelter members of the Russian elite. The results have been mixed.
Another, perhaps more fundamental, lesson is that some countries, particularly more autocratic ones, are simply willing to endure the fallout and stigma of sanctions. They see little benefit in restraining their behaviour and essentially factor their cost into decision-making. So while there may be economic consequences, political ones don’t necessarily follow – especially in the short- to medium-term.
Why then, are sanctions so popular? While they can certainly help pile on a degree of economic pressure, much of it comes from their ability to communicate a sense of united action and solidarity. There is real value here. Sanctions can reaffirm norms and standards. They can create a platform to stigmatise and rally international pressure. There’s an element of performance too, especially for those who wish to be seen doing ‘something’. Of course, doing ‘something’ is sometimes all there is. When those wishing to take a stand against an aggressor feel they have few realistic options sanctions can be a powerful signal of moral outrage. For the West, they have provided a surprisingly consistent and public rallying point against Moscow despite other bubbling disagreements.
But sanctions are not a throwaway policy shortcut. They are a reactive tactic rather than strategic, and inflating their utility breeds unrealistic expectations of what they can achieve. The problem is not so much sanctions themselves. For the West, they can, and should be, part of a creative, wide-ranging approach towards Moscow. The problem is that they now dominate the West’s response.
Indeed, sanctions have become so sweeping and predictable that they risk undermining messaging in three ways. First is that by using them to deal with a shopping list of very different behaviours they muddy Western policy goals and reduce sanctions to a blunt, catch-all punishment rather than anything selectively coercive.
Second is that instead of providing a platform for unity, they also amplify alliance tensions and cause distraction – Berlin’s public dismay at Washington's continued targeting of Nord Stream 2 being an example.
And third, despite claims that sanction are a long term policy tool, the more they are used in the short-term without tangible political impact the more they weaken Western attempts to display authority and credibility. One individual targeted in the recent Navalny sanctioning, FSB director Alexander Bortnikov, has already been under EU sanctions for six years.
Sanctions have a role in responding to Russia but they cannot replace the hard work of diplomacy or strategy. The West will eventually run out of things, and people, to target. What will it do then?
Register here to continue reading this article and 5 more for free or purchase 12 months full website access including the bne Magazine for just $250/year.
Register to read the bne monthly magazine for free:
Already registered
Password could contain only a-z0-9\+*?[^]$(){}=!<>|:-_ characters and have 8-20 symbols length.
Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.
Forgotten password?
Email field can't be empty.
No user with this email address.
Access recovery request has expired, or you are using the wrong recovery token. Please, try again.
Access recover request has expired. Please, try again.
To continue viewing our content you need to complete the registration process.
Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.
If you have any questions please contact us at sales@intellinews.com
Sorry, but you have used all your free articles fro this month for bne IntelliNews. Subscribe to continue reading for only $119 per year.
Your subscription includes:
For the meantime we are also offering a free subscription to bne's digital weekly newspaper to subscribers to the online package.
Click here for more subscription options, including to the print version of our flagship monthly magazine:
More subscription options
Take a trial to our premium daily news service aimed at professional investors that covers the 30 countries of emerging Europe:
Get IntelliNews PRO
For any other enquiries about our products or corporate discounts please contact us at sales@intellinews.com
If you no longer wish to receive our emails, unsubscribe here.
Magazine annual electronic subscription
Magazine annual print subscription
Website & Archive annual subscription
Combined package: web access & magazine print annual subscription