Why America Just Got Serious about Sanctioning Russia

Like any other restriction, sanctions cause discomfort. If the restriction is mild, it is easy to adapt or tolerate the pain. But if the constraint is tighter, then the desire to overcome it becomes very strong. Sanctions are an acceptable diplomatic tool—but this tool works only if those imposing sanctions clearly and consistently articulate their goals. In order for sanctions to work, it is necessary to adjust their rigidity depending on the behavior of those against whom sanctions are applied.

In early 2014, Russia annexed the Crimean Peninsula, part of Ukraine’s sovereign territory. Since April 2014, Russian authorities have supported the actions of illegal armed groups in eastern Ukraine, resulting in the deaths of more than ten thousand people. In response to Russia’s aggression, Western countries imposed coordinated sanctions against Russian individuals, banks and companies. The announced intent was to get Russia to abandon its aggressive policy, and the main mechanism of sanctions was to increase the economic costs of aggression. However, the following four years showed that the West could not achieve its goal of setting a high enough price for the Kremlin to desist.

The hot phase of the conflict in the Donbas region had ended by March 2015, after Russian troops helped rebels to gain control of the strategically important city of Debaltseve. European countries’ efforts to push Russia toward an end to the conflict within the framework of the Minsk process was met with resistance by Moscow. U.S. attempts to help seek a path out of conflict, in the framework of negotiations between Victoria Nuland (and later Kurt Volker) and Vladislav Surkov, were unsuccessful, breaking down from the Kremlin’s unconstructive position. A part of Ukrainian territory that is more than twice the size of Israel remains outside central government control. Despite the cease-fire, people continue to die.

In late 2014 and early 2015, many thought that the imposed economic sanctions had put considerable pressure on Russia: the ruble rapidly lost value, financial markets were falling and the economy teetered toward recession. However, it soon became clear that this assessment was exaggerated. Besides sanctions on the Russian economy, a rapid decline in world oil prices and a peak in payments for corporate external debt, which also occurred during this period, had a much greater impact. By the spring of 2016, the impact of sanctions on the Russian economy was no longer felt, and an increase in oil prices and growth in global demand for commodities helped the Russian economy avoid continued recession. Experts discuss the “invisible” impact of sanctions, which cannot be measured by statistics: in this case, the political risks of doing business in Russia made investments in this country unacceptable to most Western businesses, which served as a barrier to the transfer of modern technology to Russia. In the long term, this will certainly lead to a degradation of the Russian economy, but today the Kremlin does not take this challenge into consideration.

The obvious ineffectiveness of sanctions against Russia, on the one hand, is due to their obvious weakness—the degree of their pressure did not exceed a fraction of that imposed against Iran in 2012. On the other hand, it has been clear since at least 2015—when, after the signing of the Minsk agreements, the West did not react at all to Russia’s military support for the offensive in Debaltseve—that there is little desire for any further pressure on Russia. Ukraine was not a priority for President Obama, and he sought to avoid an aggravation of relations with Russia. And for the European Union, the economic effects of sanctions were much more strongly felt than for the United States, and met strong resistance in key countries including Germany, France and Italy.