No Aims, No Plan, No Success

I am one of those people who regards targeted economic sanctions imposed under clearly defined conditions as an important and effective tool in international policymaking. Right now, this also applies to Russia, since economic sanctions could be a peaceful alternative to supplying weapons and put pressure on the Kremlin to finally enter into serious peace negotiations.

They could — if we wanted them to. The nine packages of sanctions the EU has thus far announced cannot achieve this goal, because they haven’t even tried and because they do not articulate clear aims against which they can be measured. It has all been done utterly half-heartedly, with concessions made to special requests from various nations seeking to protect their own economies. But first things first.

Are the sanctions working?

The first question is how to even define the “success” of sanctions. Sanctions take effect in at least two stages: they first pursue concrete (economic) aims, and only then do they target the intended political change. The economic aims are merely a means to an end. The only relevant yardstick by which to assess the success or failure of sanctions is their political aims.

On an economic level, the current EU sanctions against Russia seem to be having a certain impact, although the data available is scarce. Many indicators are no longer published by the Russian government, and the parties involved in the sanctions are acting on the basis of wishful thinking rather than facts. For example, the websites of the EU and the German government display a number of graphs showing the Russian economy in free fall. On closer inspection, it becomes apparent that these are often only “predictions”. The question of how or whether these figures, which are largely based on guesswork, will become reality is left completely open.

The few real figures available do not present a clear picture. Russian retail sales slumped by just 12.6 percent in spring 2022 and the Russian state budget is still not in the red (as of November 2022), but Russian imports have collapsed in dramatic fashion.

Russian sociologist Ilya Matveev put forward an interesting analysis during a discussion at the Rosa Luxemburg Foundation in October 2022, distinguishing between the long- and short-term effects of sanctions: until now, only limited effects have been observed, although some sectors, such as the car industry, have already had to close numerous factories due to a lack of supplies.

There is no single, realistic, concrete aim in the EU sanctions resolutions that targets political change in Russia.

Still, according to Matveev, this is not reflected in unemployment figures. In the long term, however, the war and the accompanying sanctions will have a drastic effect, because, among other reasons, they will leave Russia even further behind in terms of technology.

Lutz Brangsch of the Rosa Luxemburg Foundation reached a similar conclusion: many sectors of the Russian economy are suffering from a shortage of spare parts or will suffer in the near future. The general public has primarily seen the effects of sanctions in the form of rising prices, products disappearing from shelves, and, in some cases, falling incomes. A decline in the standard of living is expected for the middle class in particular, whereas, according to Brangsch, low earners will hardly feel the effects of the deteriorating situation, since they were already unable to afford the goods that are now sanctioned.

What Is the Goal?

Even if everything is still a guessing game and we assume that the Russian economy will be hard-hit by EU sanctions in future, these estimates still tell us nothing about the success or efficacy of the sanctions, because the real objective should not be economic damage, but rather an end to the war.

In theory, at least. On a purely practical level, the EU sanctions are aimless in the literal sense of the word. Neither the EU nor the German government have specified clearly defined, concrete goals for the sanctions against Russia. As a rule, they are justified as a “response to the military aggression against Ukraine”. Although they have since been updated on the European Council’s website, originally, the aims of the sanctions were defined simply as:

• to impede the Kremlin’s financing of the war; and
• to impose tangible economic and political costs on the Russian political elite that is responsible for the invasion.

“Impeding” the financing of the war would count as a political aim, but it remains vague. The idea that the Russian elite should feel “tangible” effects is no longer a political aim, but rather a punishment (for military aggression). This means that these sanctions are not a peaceful means for enforcing international law. Furthermore, their efficacy cannot be practically measured or assessed.

There is a broad consensus in the academic literature that economic sanctions can only offer the prospect of success if very concrete aims are set out and the lifting of sanctions is coupled with the achievement of specific targets. Such a specific coupling of EU sanctions with concrete actions taken by the Russian state only exists in one phrase from the preamble to the sanctions imposed after 24 February 2022. The text states that the EU will only change its position if and when Russia complies with “the full implementation of the Minsk Agreements”. However, this formulation dates from summer 2021, before the full-scale Russian invasion, and it makes no mention of Russian aggression after 24 February 2022.

The only remaining concretely defined political aim is impeding the financing of the war. Since the war is financed by the Russian state, the main sources of the Kremlin’s revenue should be targeted. This brings us straight to gas and oil, because these exports in recent years have financed around 40 percent of the Russian government’s revenue.

If the EU had taken the aims it declared seriously, it would have immediately opted for a gas and oil embargo. However, this is precisely the opposite of what actually happened — the EU sanctions initially targeted exports to Russia. Due to the skyrocketing price of gas and oil, Russia in all likelihood increased its state revenue in 2022, although the Russian government unfortunately no longer publishes exact figures.

Sanctions can only be successful if they are imposed quickly and harshly, thus producing the maximum possible effect on the target country’s economy. Baby steps achieve nothing.

Targeting war spending is also problematic for another reason: even if Russia’s budgetary revenues were to collapse, it is uncertain whether the Kremlin would allocate less money to the war or not. It is much more likely that spending on other budgetary items would be cut first, such as in the social sector or on pensions. The war budget would likely only be impacted if cuts to social services were so significant that the Kremlin was threatened with public unrest. Unfortunately, we are miles away from this scenario at the moment.

Thus, there is no single, realistic, concrete aim in the EU sanctions resolutions that targets political change in Russia. As in so many other cases, then, the EU sanctions should primarily be understood as demonstrative — an official record of the EU’s own conviction and a domestic political signal that “we are doing something”. The standard reference work on the effects of economic sanctions, Economic Sanctions Reconsidered by Gary Hufbauer, Jeffrey Schott, and Kimberley Ann Elliot calls such sanctions “expressive rather than instrumental”.

National Interests Trump International Solidarity

The EU sanctions are not only short on aims — they are also short on a plan. That is because national economic interests more than anything ultimately determine the EU’s decision-making on specific sanctions. Let us examine two concrete examples among many.

As of December 2022, 1,241 Russian individuals were on the EU’s sanction list. Notably absent, however, was Vladimir Potanin, despite the fact that he is the second-richest man in Russia and has been a loyal Putin supporter for 20 years, even playing ice hockey with the Russian president on occasion. Potanin should have been on the list in the very first round of sanctions.

The reason why he has thus far been spared is relatively simple: he controls Russian production of nickel and other important metals and built a major battery plant in Finland together with BASF. The fears of the multinational chemical company and several Western European car manufacturers that Potanin might refuse to replenish supplies of key metals were evidently too great — and they still are. The US finally added Potanin to its sanctions list on 15 December 2022 (!), but he remains a welcome guest in the EU. This is what happens when your own car is more important to you than your neighbour’s life.

The second example is a brilliant one. Antwerp is the diamond capital of the world and enjoys 36 billion US dollars per year in turnover from the precious stones. It is a major industry, which is why the Belgian government still refuses to allow Russian diamonds to be placed on the sanctions list. So far, they have succeeded. At the same time, diamond mining in Russia is partially state-owned, meaning that the profits flow directly into the Kremlin’s war chest.

There are plenty of similar examples showing that domestic (often national) economic interests are more important than solidarity with the people of Ukraine. Ultimately, this has led to a patchwork of poorly targeted sanctions.

As the crowning achievement of its haphazard approach, the EU inches forward in tiny steps with all its sanctions. Every sanction is publicly discussed at length before being enforced and comes with a long transition period, so that, as a rule, the Russian economy has several months to prepare for its introduction.

What’s more, there is a clear, distinct lesson to be learned from experience with other sanctioned regimes: sanctions can only be successful if they are imposed quickly and harshly, thus producing the maximum possible effect on the target country’s economy. Baby steps achieve nothing.

What should we do? What has been missing, at least since 24 February 2022, is an honest debate about which sanction aims could be meaningful and how they could be achieved.

Stopping the Russian war machine would certainly be a worthwhile aim. This would include sanctioning all dual-use goods, in other words things that can be used for both military and civilian purposes. So far, only a few specific dual-use goods (such as drones) have been covered by sanctions

There are two unanswered questions that the Left should finally get around to discussing: what would be the side effects — including for the poorer elements of the Russian population — of a total ban on all dual-use goods? And would such a ban be at all effective in limiting Russia’s ability to wage war?

At the same time, we also need a discussion on the conditions under which the sanctions could be lifted. This is another clear insight gained from analyzing previously sanctioned regimes: success is only possible when the target country knows exactly what it must do in order for sanctions to be lifted.

The Party Executive Committee of Die Linke recently made an interesting proposal in this regard. Russia should receive a guarantee “that all EU sanctions introduced after 24 February 2022 will be lifted the moment the Russian military withdraws to its positions of 23 February, thus complying with the UN resolutions.” This is a very concrete proposal with a concrete link to Russian aggression from 24 February onwards. The issue of Crimea and related sanctions is excluded for the time being.

The only way that sanctions can have any prospect of success is by formulating clear aims, targeting these aims with focused sanctions, and explicitly communicating to the target country when and how those sanctions will be lifted. Unfortunately, the current EU sanctions fail to deliver on all of these counts.