Experts on whether sanctions should remain the main tool of Washington’s foreign policy towards Moscow?
The Kennan Institute in Washington hosted an online roundtable this week on the effectiveness of US sanctions on Russia. Since 2014, sanctions have become the main instrument of US foreign policy in response to the Kremlin’s actions, but there is still debate about their effectiveness. If supporters of sanctions, for example, believe that they helped stop Moscow’s aggression in eastern Ukraine, then opponents note that, in general, they have not changed the course of Russian foreign policy..
Panellists in this week’s panel noted that from an economic point of view, the sanctions work, but without traditional diplomatic efforts, they cannot change the Kremlin’s position. Also, the increased participation of the US Congress in the development, compliance and lifting of sanctions not only increases Washington’s dependence on the use of sanctions as a means of foreign policy, but also deprives the sanctions policy of flexibility. US lawmakers should also think more carefully about the impact of sanctions on the business environment.
American diplomat Thomas Pickering (Thomas Pickering), who also held the posts of the US ambassador to Russia and the UN, believes that sanctions against Moscow are not effective, since the country’s economy is not so weak, and the Kremlin’s opposition to sanctions pressure turned out to be more successful than one might expect.
“The Russian economy is weak, but not so weak that this weakness and public concern overcome Putin’s tough political line and his strong enough control over most aspects of Russian life, but especially Russian political life,” the American diplomat said..
One of the problems is that the goals of the West, such as ensuring democratic freedoms, human rights or the return of Crimea to Ukraine, are in themselves elusive. If, in this case, sanctions replace diplomatic efforts, then their effectiveness is significantly reduced. Also, in general, it is not always possible to achieve complete concessions from the country on which the sanctions are directed, emphasizes Thomas Pickering..
With regard to Russia, sanctions have become the “favorite weapon of the American Congress”, which may be guided by the desire to play a more significant role in US foreign policy, the desire to gain more political points among voters, or influenced by lobbyists, the American diplomat said. The widespread use of sanctions without a flexible mechanism for lifting them and the fact that the US Congress is unlikely to agree to partial concessions from Moscow also reduces the effectiveness of the US sanctions policy, Pickering adds..
Economist at the financial conglomerate BNP Paribas and visiting expert at the Kennan Institute Daniel Ahn (Daniel Ahn), who also previously served as chief economist at the US State Department, notes that it is difficult from an economic point of view to measure the effectiveness of sanctions imposed on Russia, as they are imposed on certain segments of the economy..
Until the 1990s, most of the sanctions imposed by both the US and the UN were macroeconomic, and economists used macroeconomic data to assess the impact of the sanctions, the economist explains. However, in recent decades, there has been an increase in targeted or microeconomic sanctions that are not aimed at the entire economy, but at specific individuals, companies, or even specific transactions, making it difficult to assess their effectiveness..
However, according to the economist, the sanctions against Russia resulted in the loss of about a quarter of the operating revenues of the companies affected by the sanctions, which totaled about $ 95 billion since 2014. This is approximately 4.2% of the level of Russia’s GDP in 2013 before the imposition of sanctions.
Taking into account the actions of the Russian government to mitigate the sanctions impact on a number of enterprises and individuals in the form of tax breaks, government contracts or direct financial injections of capital, this figure reaches 8% of GDP, which is a “significant figure”, notes Daniel Ahn. Since state funds are spent on supporting companies that have come under sanctions, the economic damage is largely transferred to Russian taxpayers, he emphasizes..
“I think there was some hope that these sanctions would somehow drive a wedge between the Putin regime and the Russian oligarchs. But this did not happen, “the expert noted..
Executive Vice President, US-Russia Business Council Randy Levinas (Randi Levinas, U.S.-Russia Business Council) also believes that the sanctions determined by the US Congress do not provide sufficient flexibility for the executive branch, including for their lifting. US lawmakers also do not always think in detail about the impact these sanctions will have on a number of American companies and often pass bills without sufficient consultation..
Sanctions Against Russia: Three Things to Know
So, according to Levinas, the Countering America’s Adversaries Through Sanctions Act, or CAATSA, passed in 2017 by the US Congress, is a clear example of this. “Without preliminary hearings and discussions, we suddenly learned that a massive bill on sanctions against Russia is being promoted in Congress, and fast,” she says. “And he made Congress the final arbiter of the lifting of those sanctions.”.
“Russia has a choice for its commercial partners,” the expert adds. “They [the Russians] didn’t lose much when the United States sanctioned American companies from participating in Arctic, shale and deepwater projects, they just turned to China and other countries. Our companies may have better technologies, but other countries also have companies whose technologies are good enough. “.
Levinas also recalled that the US sanctions have led to the development of its national payment and settlement system by Russia, which is damaging American companies that previously successfully operated in this business segment at the international level..
US lawmakers should no doubt respond to the aggressive actions of the Kremlin, but more carefully consider both the sanctions policy itself and its consequences on the business environment, sums up the vice president of the American-Russian Business Council..
Journalist «Voices of America». Prior to that, she worked for international non-governmental organizations in Washington DC and London, in the Russian-language version of the Estonian daily newspaper “Postimees” and as a spokesman for the Estonian Interior Ministry. Interests – international relations, politics, economics