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Serious Sanctions on Russia: To Be Imposed or Threatened?

by | March 24th, 2014 | 02:30 pm
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How quickly should the West ratchet up sanctions on Russia following its annexation of Crimea? This debate is dividing experts in Europe and the United States. Some commentators and observers, such as my colleague Anders Åslund and the columnist Charles Krauthammer, argue that because Vladimir Putin has effectively been channeling Adolf Hitler and is planning an imminent invasion of eastern Ukraine, if not of Russian-speaking areas all over Europe, the strongest possible sanctions should be imposed immediately. Since everyone agrees that war between two nuclear-armed superpowers is out of the question, this line of argumentation holds that only the toughest measures, imposed now, will dissuade Putin from dismembering Ukraine and annexing eastern portions of that unfortunate country.

The compass of such serious sanctions would extend far beyond the light reprisals already in force against a selective list of Russian officials and oligarchs. The United States and the European Union would halt virtually all exports to Russia (some $250 billion in 2013); they would selectively ban “non-essential” imports from Russia; they would break financial ties; and they would freeze all Russian assets that could be found on American and European soil (around $400 billion at the end of 2013).

Of course Russia would reciprocate, possibly by cutting oil and gas exports to Europe, and certainly by taking over US and EU companies doing business in Russia (direct investment amounts to about $500 billion). The toll of mutual sanctions would be very harsh on Russia, perhaps slashing GDP by 5 percent, and would push Europe back into recession. Stock markets worldwide would dive, and economic shock waves would reach America and Asia. In the geopolitical sphere, any Russian cooperation in the Syrian and Iranian theaters would likely disappear.

Preemptive military action against Saddam Hussein in 2003, to terminate his weapons of mass destruction (WMD) program, did not turn out very well, especially as the country turned out not to have WMD, and the US occupation proved costly and unable to prevent an eruption of sectarian violence. Preemptive economic action against Vladimir Putin in 2014, to stop his imperial ambitions, may turn out no better. No doubt, as the weapons inspector Charles Duelfer has documented,1. Saddam had been seeking WMD, but when the second Iraq war was launched, Saddam was spending his treasure on palaces and the Revolutionary Guard, not WMD. No doubt today, as Anders Åslund argues, Putin has dreams of building a “Greater Russia” encompassing Eastern Ukraine and Russian-speaking territories elsewhere. But Putin has other concerns, most importantly retaining the affection of the Russian oligarchy which, alongside the Federal Security Service (FSB, successor to the KGB), keeps Putin power.

If preemptive economic sanctions are launched, Putin’s power base will face a stark choice: in Benjamin Franklin’s words, “Hang together or hang separately.” Across Russia, the “rally around the flag effect” will likely be tremendous. Putin may even improve upon the defiant declaration delivered by Benito Mussolini when the League of Nations imposed sanctions in 1935: “To sanctions of an economic character we will reply with our discipline, with our sobriety, and with our spirit of sacrifice.” It should be remembered, as well, that US sanctions against Japan in 1940 and 1941, were used by Japanese military hawks as an argument to invade southeast Asia and attack Pearl Harbor.

These considerations dictate a more sensible course of allied action. At the US-EU Summit on March 26 in Brussels, the assembled leaders should agree on a menu of serious sanctions, to be delivered in a single massive course, not dish by dish, if Russia promotes breakaway tendencies in Eastern Ukraine or other border countries. This threat, conveyed quietly but persuasively to Putin and his oligarchy, would be more effective in interrupting imperial dreams with nightmares of financial ruin.

Alongside the threat of sanctions, the Western allies must immediately deliver tens of billions of dollars to rebuild the Ukrainian economy, especially the vulnerable Eastern half.

The best argument against this strategy of threatening rather than imposing sanctions is that, in the wake of his failed “red line” against Syrian President Bashar Assad’s use of chemical warfare in Syria, President Obama retains little credibility in the eyes of President Vladimir Putin. The second best argument is that the European Union has no stomach for economic pain. But it seems unlikely that Putin has forgotten everything he learned in the KGB. If Obama, Chancellor Angela Merkel, Prime Minister David Cameron and President François Hollande agree on a serious course of action, their collective backs will be against the wall. If they flinch in the face of further Russian expansion, the domestic opponents of Western leaders will have a field day. Republican strategists will post Ukraine right up with Obamacare. Much the same will happen in Europe. Putin must know that Western leaders do not want to join Neville Chamberlain in the annals of history. That knowledge will turn serious threats into serious deterrents.

Note

1. Hide and Seek: The Search for Truth in Iraq, PublicAffairs, 2009.