In March 2022, in the immediate aftermath of Russia’s invasion of Ukraine and the imposition of a Western-led sanctions package, some analysts became a little overexcited. Some went as far as to speculate whether Russia faced a ‘1998 style moment’ – referring to the country’s late 1990s default and economic crisis – or even a ‘1917 moment’, akin to the collapse of the old Tsarist regime.
More than three years later, whilst the Russian economy is showing more signs of strain (with inflation and interest rates both high), it has not come close to the kind of collapse once predicted.
While the sanctions regime (which has been continuously toughened and tweaked) has no doubt caused some economic headaches for the Kremlin, the extent to which it has harmed Russia’s war effort is debatable, and it has, evidently, failed to cause President Putin to withdraw his forces from Ukraine.
Perhaps this should be no surprise. A study published in 2007 by the Peterson Institute for International Economics examined 174 sanctions regimes applied worldwide between 1915 and 2000, of which 162 took place after 1945. That work found that only around one-third of such campaigns achieved their goals in full or in part. Two-thirds of such regimes failed to drive a change in behaviour of the targeted party.
This week, the Clark Center’s US and European Experts Panels turned their attention towards sanctions in general, and those imposed on Russia since 2022 in particular.
The two panels were first asked whether ‘The experience of the past 10 years suggests that Western-led economic sanctions do not substantially deter the target countries from their course of action’. Weighted by confidence 56% of US respondents either strongly agreed or agreed, as did 66% of European respondents. In both cases, uncertainty was high and outright disagreement was relatively low.
The panels were next asked whether ‘Had the G7 instituted a complete energy embargo in 2022, Russia’s current military and economic position would be substantially worse’. Here, there was broad agreement that an outright energy embargo would have hurt the Russian economy in a meaningful way. Again, weighted by confidence, some 75% of US respondents either agreed or strongly agreed together with 74% of European respondents.
Of course, such a strong response could have caused wider economic pain, not entirely confined to Russia’s war machine. The panels were also asked whether ‘had the G7 instituted a complete energy embargo in 2022, the world economy would have faced substantially higher oil prices’. This time around 45% of European respondents either agreed or strongly agreed (with another 45% uncertain), while 63% of US respondents either agreed or strongly agreed.
An even larger surge in global energy prices in 2022 than the already substantial one that played out would no doubt have pushed headline inflation even higher, slowed economies further, and squeezed living standards more deeply. The fiscal cost of protecting households and firms from high energy bills in 2022 and 2023 put European government public finances under pressure, and, presumably, that pressure would have been magnified further by an even larger energy price spike.
The broad consensus of the two panels then was that Western-led sanctions packages over the last decade have rarely achieved their goals and that, whilst tougher measures in the case of Russia in 2022 were available, that may well have resulted in more economic pain for other advanced economies too – especially in Europe.
It is perhaps worth stepping back and returning to the 2007 Peterson study of historical sanctions regimes. It found that success was more likely when goals were narrowly defined, the target state was already economically weak, and there was no history of previous antagonism with the enforcing party. The Russian case in 2022 does not fit well against these criteria.
Whilst sanctions can – in some cases – be a useful tool for policymakers seeking to change the behaviour of a state, they are, as often as not, really about something else. Sometimes they are best thought of as a signalling device, targeted at both an international audience and sometimes a domestic one too.
At other times, the aim is not so much to directly change the behaviour of the state subjected to sanctions as to raise the costs of such behaviour. The West’s sanctions on Russia may not have forced a reverse course on invading Ukraine, but they have almost certainly increased the economic pressure on the Kremlin.
Scholars in international political economy tend to note that sanctions alone are rarely sufficient to achieve their aims. A fuller approach, employing carrots as well as sticks, may, at times, be more useful.
The considered view of both panels on sanctions is clear; so far, the sanctions on Russia have not achieved their stated aims. Other, tougher options were and are available. But imposing an energy embargo would mean wider economic spillovers, which could impose more direct costs on Western households, firms, and governments.
