tag:theconversation.com,2011:/africa/topics/economic-sanctions-43305/articlesEconomic sanctions – The Conversation2024-02-01T17:04:20Ztag:theconversation.com,2011:article/2212972024-02-01T17:04:20Z2024-02-01T17:04:20Z3 years on from coup, economic sanctions look unlikely to push Myanmar back to democracy<figure><img src="https://images.theconversation.com/files/572880/original/file-20240201-21-z6rg6j.jpg?ixlib=rb-1.1.0&rect=39%2C377%2C4427%2C2551&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Sanctions have failed to prevent Myanmar's military from obtaining hardware.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/military-hardware-is-displayed-during-a-parade-to-celebrate-news-photo/1249572841?adppopup=true">STR/AFP via Getty Images</a></span></figcaption></figure><p>When <a href="https://www.nytimes.com/article/myanmar-news-protests-coup.html">Myanmar’s military seized back control</a> of the country in February 2021 after a decade-long democratic interlude, the international community reached for a familiar tool: economic sanctions.</p>
<p>The coup led several countries, <a href="https://ofac.treasury.gov/sanctions-programs-and-country-information/burma">including the United States</a> and <a href="https://www.consilium.europa.eu/en/press/press-releases/2023/12/11/myanmar-burma-council-adds-4-persons-and-2-entities-to-eu-sanctions-list-in-eighth-round-of-sanctions/#:%7E:text=The%20Council%20has%20imposed%20restrictive,February%20and%2020%20July%202023.">European Union member states</a>, to impose or reinstate trade embargoes and other financial proscriptions against Myanmar’s military.</p>
<p>On Feb. 1, 2024 – coinciding with the third anniversary of the military coup – the U.S. <a href="https://www.voanews.com/a/us-marks-anniversary-of-myanmar-coup-with-new-sanctions/7465629.html">announced a fresh round of sanctions</a>. It comes as the Myanmar government continues to be embroiled in a <a href="https://theconversation.com/military-violence-in-myanmar-is-worsening-amid-fierce-resistance-and-international-ambivalence-203646">grinding civil war</a> with <a href="https://www.foreignaffairs.com/burma-myanmar/could-myanmar-come-apart">ethnic minority insurgent groups</a>. But to date, sanctions have not encouraged the ruling generals back toward a democratic path or tipped the war in favor of pro-democratic resistance groups.</p>
<p>Moreover, as experts on <a href="https://cnwillis.com/">East and Southeast Asia</a> and <a href="https://poliscikeith.com/">economic sanctions</a>, we know that the history of Myanmar – and our own research – suggests that economics sanctions are unlikely to have that impact any time soon.</p>
<h2>Current sanctions against Myanmar</h2>
<p>The current sanctions against Myanmar share much in common with those imposed prior to 2010, when the country began a <a href="https://www.eeas.europa.eu/eeas/battle-democracy-myanmar_en?s=110">process to restore democratic government</a>. The actions taken since 2021 by the U.S., EU and others – which include targeted and sector-specific sanctions – are aimed at undermining the military junta’s ability to <a href="https://www.state.gov/sanctions-against-the-myanma-oil-and-gas-enterprise-and-concerted-pressure-with-partners/">violently repress the country’s pro-democracy movement</a>.</p>
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<p>At the same time, those imposing sanctions appear to be more cognizant than in previous periods of the <a href="https://doi.org/10.1080/10357718.2013.764581">potential negative impacts on the Burmese people</a>.</p>
<p>The sanctions imposed after the 2021 coup are more targeted and designed to affect the military government and its enterprises. In earlier periods, the <a href="https://poliscikeith.com/">financial measures were broader</a> and affected the entire Myanmar economy.</p>
<p>This is by design. The legal basis for post-2021 U.S. economic sanctions on Myanmar, <a href="https://www.federalregister.gov/documents/2021/02/12/2021-03139/blocking-property-with-respect-to-the-situation-in-burma">Executive Order 14014</a>, serves as the foundation for a multitude of targeted measures, which include restrictions on individuals and businesses connected to supplying Myanmar’s air force with jet fuel. </p>
<p>Signed on Feb. 11, 2023, the new U.S. sanctions regime reflects changes in how the <a href="https://home.treasury.gov/system/files/136/Treasury-2021-sanctions-review.pdf">Biden Administration intends</a> to use financial penalties to target Myanmar’s generals, not its people. </p>
<p>The U.S. has also made it a priority to work collaboratively with international partners on imposing complementary rather than competing sanctions.</p>
<p>Evidence of this coordination emerged <a href="https://www.state.gov/the-united-states-promotes-accountability-for-human-rights-violations-and-abuses/">on Dec. 10, 2021</a>, coinciding with <a href="https://www.un.org/en/observances/human-rights-day">Human Rights Day</a>, with the U.S. rolling out a package of measures in conjunction with the United Kingdom, Canada and the European Union. For example, the EU’s “<a href="https://finance.ec.europa.eu/eu-and-world/sanctions-restrictive-measures_en">restrictive measures</a>” – the bloc’s parlance for economic sanctions – include many of the same sanctions imposed by the U.S., such as restrictions on the export of military and dual-use equipment, asset freezes, visa and travel restrictions, and restrictions on the export of telecommunications equipment.</p>
<p>The U.S. has also imposed targeted sanctions via the <a href="https://ofac.treasury.gov/faqs/topic/1631">Specially Designated Nationals list</a>, a blacklist of people with whom U.S. citizens and firms are banned from doing business. Listed entities in Myanmar include military leaders, business people and their families. The idea is to focus the economic pain on individuals and entities involved in the coup and subsequent repression of democracy campaigners, rather than on the country as a whole.</p>
<h2>Past sanctions against Myanmar</h2>
<p>Certainly, history suggests that the U.S. needed to update its sanctions policy. Myanmar observers have long debated the effectiveness of the old Myanmar sanctions regime, with <a href="https://www.newmandala.org/busting-myth-myanmar-sanctions-success-story/">many concluding</a> that it had little impact on the junta’s decision to return to democracy. Rather, Myanmar’s democratic elections <a href="https://doi.org/10.1080/10357718.2013.764581">were part of the military’s road map</a> and not the result of sanctions pressure.</p>
<p>One reason for this skepticism over earlier sanctions was that they targeted imports from key sectors of Myanmar’s economy, <a href="https://academic.oup.com/book/9797/chapter-abstract/157012800?redirectedFrom=fulltext">such as garments and textiles</a>, that were not connected to the junta. These economic sanctions harmed private enterprises in Myanmar.</p>
<p>The latest sanctions <a href="https://home.treasury.gov/news/press-releases/jy0078?_gl=1*1mmoid*_gcl_au*MTYyMjQ3ODI3OC4xNzA1MDgyMDky">target military-owned or -linked enterprises</a>, such as Myanma Economic Holdings Public Company, Myanmar Economic Corporation Limited, Myanma Gems Enterprise, Myanma Timber Enterprise and the Myanmar Pearl Enterprise. </p>
<p>The post-2021 sanctions, though, are still plagued by some of the same problems of their predecessors. </p>
<p>They lack the weight of the United Nations, which has not called for sanctions against Myanmar. This stands in contrast to sanctions against other countries flouting international norms, like <a href="https://armscontrolcenter.org/fact-sheet-north-korea-sanctions/">North Korea</a> and <a href="https://www.cfr.org/backgrounder/international-sanctions-iran">Iran</a>. </p>
<p>The U.N. Security Council is <a href="https://theconversation.com/sanctions-against-myanmars-junta-have-been-tried-before-can-they-work-this-time-158054">unlikely to sanction Myanmar</a> as permanent members <a href="https://apnews.com/article/un-myanmar-military-killing-rights-suu-kyi-029f8503bf1eb6ec0e97e8521775184a">China and Russia refuse to condemn</a>, let alone sanction, Myanmar’s military rulers.</p>
<p>As a result, the international community has been split in its response to Myanmar’s democratic backsliding and <a href="https://www.hrw.org/world-report/2023/country-chapters/myanmar">human rights violations</a>. While Western countries have decided to isolate Myanmar through targeted trade and financial sanctions, countries in East and Southeast Asia have <a href="https://doi.org/10.1080/02185370600832497">maintained diplomatic and trade ties</a> with the military government. </p>
<p>And there is an incentive for countries in Southeast Asia to not take part in any sanction regime. As we show in our forthcoming book, “<a href="https://poliscikeith.com/">Trading with Pariahs</a>,” Myanmar’s trade ties tend to be strongest within its region. </p>
<p>During the first sanctions regime from 1988 to 2015, Southeast Asian economic ties with Myanmar became stronger as the country’s trade with sanctions-imposing Western states declined. </p>
<p>For countries in East and Southeast Asia, maintaining ties with Myanmar provided not only economic opportunities but also a strategy for monitoring and perhaps ameliorating Myanmar’s internal situation. For example, the Association of Southeast Asian Nations, or ASEAN, <a href="https://asean.org/asean-10-meeting-the-challenges-by-termsak-chalermpalanupap/">admitted Myanmar</a> in 1997 despite the refusal of the junta to allow democratic elections and address human rights abuses. The approach favored by Myanmar’s neighbors was to try and bring Myanmar’s generals in from the cold rather than ostracizing them internationally.</p>
<p>And despite Singapore’s recent declaration that it <a href="https://eastasiaforum.org/2023/06/22/whats-next-for-sanctions-on-myanmar/">will stop arms transfers to Myanmar</a>, ASEAN member countries and those in East Asia continue to refrain from sanctioning Myanmar, preferring engagement to isolation.</p>
<h2>Can sanctions work?</h2>
<p>While U.S. sanctions have the potential to hurt the military, there are reasons to believe that they won’t be able to bring the government to its knees. It is likely that the <a href="https://doi.org/10.1177/00223433221087080">uneven termination of the United States’ earlier sanctions</a> provided insufficient time for American firms to fully engage and invest in Myanmar’s market, limiting the potential for future leverage now.</p>
<figure class="align-center ">
<img alt="Men in uniform take part in a military parade." src="https://images.theconversation.com/files/572854/original/file-20240201-23-vx77gs.jpg?ixlib=rb-1.1.0&rect=23%2C276%2C5241%2C3228&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/572854/original/file-20240201-23-vx77gs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/572854/original/file-20240201-23-vx77gs.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/572854/original/file-20240201-23-vx77gs.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/572854/original/file-20240201-23-vx77gs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/572854/original/file-20240201-23-vx77gs.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/572854/original/file-20240201-23-vx77gs.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Myanmar’s military are bogged down in civil war, but not yielding to sanctions pressure.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/MyanmarUSSanctions/8798420feac44ad88a7359ff1e70a23f/photo?Query=myanmar%20sanctions&mediaType=photo&sortBy=creationdatetime:desc&dateRange=Anytime&totalCount=346&currentItemNo=1">AP Photo/Aung Shine Oo</a></span>
</figcaption>
</figure>
<p>Those countries that do have significant leverage are unlikely to sanction Myanmar. And this undermines efforts by the U.S. or the West to isolate the country. </p>
<p>The challenge for the West can be seen in its sanctions on jet fuel trade. Amnesty International’s “<a href="https://www.amnesty.org/en/latest/news/2023/03/myanmar-new-shipments-of-aviation-fuel-revealed-despite-the-militarys-war-crimes/">Deadly Cargo” report in 2023</a> highlighted how Myanmar’s military can still secure reliable shipments of jet fuel despite the U.S. sanctions on the product.</p>
<p>The reason is more than 95% of Myanmar’s refined petroleum oils – needed for jet fuel – come from regional trading partners. Since 2021, China, Thailand, Singapore and Russia have <a href="https://www.amnesty.org/en/latest/news/2022/11/myanmar-amnesty-aviation-fuel/">provided much of the Myanmar’s military’s jet fuel</a>, enabling it to continue bombing campaigns throughout the country.</p>
<p>Even though the U.S. Treasury <a href="https://home.treasury.gov/news/press-releases/jy1701?_gl=1*nc1bho*_gcl_au*MTYyMjQ3ODI3OC4xNzA1MDgyMDky">has expanded its sanctions on jet fuel</a> to include both military and commercial, the impact of these sector-wide sanctions remains unclear. </p>
<p>While the nature of the current U.S. sanctions is starkly different from prior efforts to pressure Myanmar’s generals, the effectiveness and potential for success appear quite similar. Given the dearth of economic ties between Myanmar and countries outside its region, the potential for change in Myanmar seems unlikely without significant efforts by those countries with an ability to weaponize their extensive economic interdependence: China, Japan and ASEAN member states. </p>
<p>ASEAN is not blind to the erosion of human rights, and it has signaled its awareness of the regime’s atrocities and support for civilians by <a href="https://www.cnbc.com/2023/09/06/myanmar-wont-be-allowed-to-lead-asean-in-2026-in-blow-to-generals.html">denying Myanmar its turn as ASEAN’s chair in 2026</a>. </p>
<p>However, the regional bloc is unlikely to impose economic sanctions on Myanmar in the foreseeable future, casting further doubt on the ability of Western sanctions to improve human rights and democracy meaningfully.</p><img src="https://counter.theconversation.com/content/221297/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Economic proscriptions by the US and EU are hampered by lack of support among Myanmar’s major trading partners in the region.Charmaine N. Willis, Visiting Assistant Professor of Political Science, Skidmore CollegeKeith A. Preble, Visiting Assistant Professor of Political Science, Miami UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2209852024-01-24T17:36:48Z2024-01-24T17:36:48ZEconomic crisis in Cuba: government missteps and tightening US sanctions are to blame<figure><img src="https://images.theconversation.com/files/571144/original/file-20240124-21-r3zh27.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C3840%2C2160&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/villa-clara-cuba-april-25-2021-1969845346">Domitille P/Shutterstock</a></span></figcaption></figure><p>Cuba is going through its worst economic crisis in 30 years. Since 2020, Cubans have suffered falling wages, <a href="https://www.theguardian.com/world/2023/dec/06/cuba-health-education-workers-leaving">deteriorating public services</a>, regular power outages, severe shortages and a growing black market. Hundreds of thousands of people have <a href="https://www.cbp.gov/newsroom/stats/nationwide-encounters">fled the country</a>. </p>
<p>Some place the blame for this desperate situation at the door of the Cuban government and its mismanagement of the economy. Others point to the damage caused by longstanding US economic sanctions that, to varying degrees, have been in place since 1962.</p>
<p>But which of these is more true? Both have inflicted economic damage. The US has done so deliberately, while the Cuban government’s flawed policies spring from inertia and miscalculation.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/571140/original/file-20240124-17-80nggi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A chart showing Cuban annual GDP growing until 2019 before dramatically dropping." src="https://images.theconversation.com/files/571140/original/file-20240124-17-80nggi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/571140/original/file-20240124-17-80nggi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=362&fit=crop&dpr=1 600w, https://images.theconversation.com/files/571140/original/file-20240124-17-80nggi.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=362&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/571140/original/file-20240124-17-80nggi.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=362&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/571140/original/file-20240124-17-80nggi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=455&fit=crop&dpr=1 754w, https://images.theconversation.com/files/571140/original/file-20240124-17-80nggi.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=455&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/571140/original/file-20240124-17-80nggi.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=455&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Cuban annual GDP growth, 2017–2023.</span>
<span class="attribution"><span class="source">Oficina Nacional de Estadísticas e Información</span>, <a class="license" href="http://creativecommons.org/licenses/by-nc-sa/4.0/">CC BY-NC-SA</a></span>
</figcaption>
</figure>
<h2>The case against the government</h2>
<p>In January 2021, the Cuban government introduced <a href="https://www.reuters.com/article/idUSKBN28L0AA/">major currency and price reforms</a>. The reforms, which involved devaluing the Cuban peso from one to the US dollar to 24 per dollar, were supposed to begin a process of aligning Cuban prices with international markets. </p>
<p>The hope was that the move would incentivise economic restructuring and innovation to improve efficiency, reduce dependence on imported goods, and eventually stimulate exports.</p>
<p>But things did not turn out as planned. State sector salaries had been more than trebled in December 2020 to protect living standards in anticipation of price rises that would result from the higher cost of imports. However, this salary increase was quickly overtaken as higher costs and consumer spending power pushed up prices and started an inflationary spiral.</p>
<p>The rate of inflation has eased since then. But the official annual rate is still alarmingly high, at <a href="https://www.reuters.com/world/americas/cubas-economy-still-shrinking-minister-says-2023-12-20/">around 30%</a> (more than twice the Latin American regional average). </p>
<p>The Caribbean has generally experienced strong <a href="https://www.imf.org/external/datamapper/profile/CBQ">post-pandemic economic recovery</a>. But Cuba’s national income remains well below its pre-COVID level and, with export earnings still depressed and import dependency unchecked, there is little sign that any restructuring has occurred. </p>
<h2>The effect of US sanctions</h2>
<p>The effect of US economic coercion is less obvious, but no less significant. Cuba has been under a US trade embargo for the past 60 years, but a new <a href="https://www.nytimes.com/2020/09/24/travel/trump-cuba-travel-restrictions.html">stream of measures</a> was introduced under the presidency of Donald Trump (2017–21). Trump’s policies cut earnings from services, interrupted fuel supplies, <a href="https://www.nbcnews.com/news/latino/because-trump-sanctions-western-union-remittances-come-end-cuba-n1248790">blocked remittances</a> and deterred foreign investment. </p>
<p>Growth was subdued and shortages were already starting to emerge in 2019. But the most devastating action came in January 2021. One of Trump’s final acts in office – occurring just days after the currency reform – was to <a href="https://theglobalamericans.org/2021/03/part-2-the-unlawful-basis-for-cubas-designation-as-a-state-sponsor-of-terrorism/">add Cuba</a> to the US list of “state sponsors of terrorism”.</p>
<p>The effect of this has been huge. Interviews that I conducted with representatives of foreign companies doing business with Cuba and with Cuban officials responsible for managing international trade confirm that foreign businesses delayed payments and abruptly cancelled shipments of imports, export contracts and investment plans in the months that followed. </p>
<p>The resultant supply bottlenecks and loss of foreign exchange supercharged inflation, adding to frustration and uncertainty, and preventing recovery.</p>
<p>But perhaps Cuba’s greatest error was to give credence to Joe Biden’s rhetoric in his 2020 US election campaign. Biden spoke about Trump’s “failed Cuba policy” and <a href="https://www.democracyinamericas.org/timelineonbidenharriscubapolicy#:%7E:text=July%20%2D%20November%202020%3A%20As%20election,families.%E2%80%9D%20With%20regards%20to%20human">vowed</a> to reverse his “harmful” policies. If that had happened, a less tight foreign exchange constraint would have allowed some possibility of a positive supply response to the monetary reforms.</p>
<p>Despite his campaign promises, Biden has left Cuban sanctions in place. This has obstructed Cuba’s access to foreign exchange, putting the investment required for restructuring out of reach.</p>
<figure class="align-center ">
<img alt="Donald Trump with his arms outstretched addressing a crowd at a rally." src="https://images.theconversation.com/files/571156/original/file-20240124-25-eg3y7j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/571156/original/file-20240124-25-eg3y7j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/571156/original/file-20240124-25-eg3y7j.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/571156/original/file-20240124-25-eg3y7j.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/571156/original/file-20240124-25-eg3y7j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/571156/original/file-20240124-25-eg3y7j.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/571156/original/file-20240124-25-eg3y7j.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Trump introduced a swathe of tough sanctions on Cuba.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/louisville-kentucky-march-20-2017-president-605507732">jctabb/Shutterstock</a></span>
</figcaption>
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<h2>Bad timing</h2>
<p>The pandemic has also contributed to Cuba’s economic turmoil. Cuba responded to COVID by closing its borders and imposing strict lockdowns. This resulted in a sharp economic contraction and a severe depletion of its foreign currency reserves.</p>
<p>The pandemic also had a dramatic impact on the world economy. High <a href="https://ourworldindata.org/grapher/crude-oil-prices?time=2016..latest">fuel</a> and <a href="https://www.fao.org/worldfoodsituation/foodpricesindex/en/">food</a> prices served to worsen Cuba’s foreign exchange shortage, and supplies were further disrupted by logistical bottlenecks and inflated shipping costs.</p>
<p>Cuba had actually performed <a href="https://theconversation.com/the-scene-from-cuba-how-its-getting-so-much-right-on-covid-19-155699">exceptionally well</a> in containing the virus throughout <a href="https://theconversation.com/coronavirus-response-why-cuba-is-such-an-interesting-case-135749">2020</a>. But a major shock came in 2021 when Cuba grappled with a <a href="https://ourworldindata.org/covid-cases">surge in cases</a> of a new COVID variant.</p>
<p>US sanctions blocked access to sources of COVID support that helped to ease hardships in other nations. As a result, the government had no choice but to cut investment and was unable to prevent the decline in real salaries. </p>
<h2>Looking for a way out of crisis</h2>
<p>Discontent fuelled by COVID restrictions and widespread shortages resulted in <a href="https://www.american.edu/centers/latin-american-latino-studies/cuba-after-the-july-11-protests-leogrande.cfm">protests</a>, revealing dissatisfaction with how Cuba’s leaders had responded to these challenges. Officials are seen as having been slow to fully acknowledge the government’s miscalculations or the <a href="https://www.reuters.com/world/americas/cuban-communists-under-pressure-accelerate-economic-reforms-2021-04-14/">degree of hardship</a> that is being experienced by Cuban households.</p>
<p>As the rate of inflation gradually eases, the government is <a href="http://www.cubadebate.cu/noticias/2023/12/27/proyecciones-del-gobierno-para-corregir-distorsiones-y-reimpulsar-la-economia-video/">starting to outline</a> a recovery strategy. With no end to US sanctions in sight, the focus is on reforming the economic system. </p>
<p>The reforms are wide-ranging, aimed at tackling the economic distortions and inertia inherited from decades of strict centralised control. They include a gradual reduction in price subsidies, more targeted welfare, improving the efficiency and responsiveness of state bureaucracy, and opening up to private businesses. </p>
<p>The aim is to stimulate innovation, boost investment and improve public services, which should eventually lift growth and boost living standards. </p>
<p>But the process of restructuring <a href="https://www.nbcnews.com/news/latino/cuba-announces-tough-economic-measures-cubans-brace-hardship-rcna130861">will be difficult</a>. There will be both winners and losers, and resistance to change is inevitable. The reform and recovery process also hinges on rebuilding the shaken confidence of the public and investors, as well as avoiding further external shocks – or deliberate blows from the US.</p><img src="https://counter.theconversation.com/content/220985/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Emily Morris has received funding from the British Embassy, Havana, and the Ford Foundation, and is Director of Caribbean Research and Innovation Collaboration for Knowledge Exchange and Transfer (CRICKET) Community Interest Company. </span></em></p>Cuba’s economy – saddled by US sanctions and ill-timed reforms – is in dire straits.Emily Morris, Research Associate, Institute of the Americas, UCLLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2194842023-12-11T20:44:46Z2023-12-11T20:44:46ZWhy Russians still support Vladimir Putin and the war in Ukraine<iframe style="width: 100%; height: 100px; border: none; position: relative; z-index: 1;" allowtransparency="" allow="clipboard-read; clipboard-write" src="https://narrations.ad-auris.com/widget/the-conversation-canada/why-russians-still-support-vladimir-putin-and-the-war-in-ukraine" width="100%" height="400"></iframe>
<p>Russian president Vladimir Putin has <a href="https://www.aljazeera.com/news/2023/12/8/putin-announces-run-for-russian-presidency-in-2024-election">announced he intends to run</a> in the 2024 presidential election. Putin is almost certain to win what would be his fifth term as Russian president. </p>
<p>The news comes as little surprise. Putin has led Russia for 24 years and polls suggest Russia’s ongoing military campaign in Ukraine has bolstered support for him. </p>
<h2>Opinion polls</h2>
<p>In September, Russian pollsters the Levada Center conducted a survey of <a href="https://www.levada.ru/en/2023/11/17/conflict-with-ukraine-assessments-for-september-2023/">Russian attitudes toward the war in Ukraine</a>. When asked whether they supported the Russian military’s actions in Ukraine, 73 per cent of respondents said “yes” or “definitely yes.” In February 2022, the month of Russia’s invasion, that number was 68 per cent. </p>
<p>Some might be skeptical of polls coming out of Russia, but it should be noted these figures are from an organization that has been deemed a <a href="https://www.bbc.com/news/world-europe-37278649">“foreign agent”</a> by the Russian government. <a href="https://www.voanews.com/a/russia-s-shifting-public-opinion-on-the-war-in-ukraine-/7255792.html">It doesn’t matter who does the polling</a> — the data suggests a majority of Russians support the war effort.</p>
<p>At the same time, Putin’s <a href="https://www.levada.ru/en/ratings/">personal approval rating</a> has remained high, running at around 80 per cent for some time, according to Levada. A more recent poll by Russia’s Public Opinion Foundation indicates around <a href="https://en.sputniknews.africa/20231124/over-three-quarters-of-russians-trust-putin-78-approve-of-his-work-poll-shows-1063767161.html">78 per cent of Russians approve of Putin’s work</a>.</p>
<p>However, there was a drop in support for both the war and Putin in late 2022. <a href="https://jmss.org/article/view/76586">In the fall of 2022</a>, the Russian government launched a major mobilization of reservists for the armed forces in response to Ukrainian battlefield successes, first near Kyiv and then Kharkhiv. This led to many young men <a href="https://www.cbc.ca/news/world/russia-ukraine-new-draft-legislation-1.6810401">leaving the country to avoid being drafted into the military</a>.</p>
<p>Russian forces also pulled back from their foothold on the western bank of the Dnipro River at Kherson. Unease with the situation among Russians was reflected in polling numbers during that period, and was tangible on the ground when I visited Moscow and Murmansk in October 2022.</p>
<p>The Russian government’s <a href="https://www.npr.org/2022/03/05/1084729579/russian-law-bans-journalists-from-calling-ukraine-conflict-a-war-or-an-invasion">zero tolerance for public opposition to the war or Putin</a> undoubtedly has some bearing on improved polling. Russia’s <a href="https://theconversation.com/why-ukraine-has-been-unable-to-capitalize-on-the-wagner-group-rebellion-207487">defeat of Ukraine’s summer counteroffensive</a> also certainly boosted Russian confidence. Furthermore, the number of Russian soldiers killed in Ukraine remains <a href="https://www.nytimes.com/2023/08/18/us/politics/ukraine-russia-war-casualties.html">a closely guarded secret</a>.</p>
<p>However, as I found during time spent in both Moscow and Ryazan in November 2023, many older Russians in particular — from different walks of life — express genuine support for both the war and their president. Why?</p>
<h2>Backing Russia’s war narrative</h2>
<p>The answer to this question lies in part in a combination of Russian government policies and western reactions to the war. </p>
<p>Many Russians undoubtedly accept the government narrative explaining the reasons for the war. Those reasons are not the same as they were back in February 2022, but have morphed into something bigger and more existential.</p>
<p>Back in February 2022, <a href="https://jmss.org/article/view/76584">Russia went to war in Ukraine</a> with the justification of protecting the rights of those identifying as Russian in the Donbas, and to prevent further <a href="https://www.spiegel.de/international/world/nato-s-eastward-expansion-is-vladimir-putin-right-a-bf318d2c-7aeb-4b59-8d5f-1d8c94e1964d">NATO encroachment</a> into the former Soviet space. The “<a href="https://www.nbcnews.com/think/opinion/ukraine-has-nazi-problem-vladimir-putin-s-denazification-claim-war-ncna1290946">de-Nazification</a>” of eastern Ukraine was also tacked on to these aims. </p>
<p>Defending the rights of ethnic Russians in eastern Ukraine clearly resonated to some extent with the Russian population at the beginning of the war. However, the threat of NATO expansion was perhaps not as powerful an argument for the war back then as the more recent idea that a hypocritical West is out to <a href="https://www.rt.com/russia/587513-putin-russia-cancel/">“cancel” Russian</a> political and economic power. </p>
<p>Money certainly plays a role in maintaining support. The Russian government has increased military wages to keep morale up. As of last September, the minimum monthly wage being offered to those signing up was <a href="https://www.aljazeera.com/news/2022/9/18/russia-turns-to-trucks-and-big-wages-to-woo-volunteer-soldiers">three times the national average</a>. In June, the government announced it would <a href="https://www.reuters.com/world/europe/russia-raise-salaries-military-by-105-decree-2023-06-30/">increase military salaries by 10.5 per cent</a>.</p>
<h2>Western hypocrisy plays into Russia’s hands</h2>
<p>Through their actions, western powers have made it easy for the Russian government to point to <a href="https://foreignpolicy.com/2023/11/02/israel-palestine-hamas-gaza-war-russia-ukraine-occupation-west-hypocrisy/">western hypocrisy</a>. Unwavering western support for <a href="https://www.reuters.com/world/middle-east/israel-advances-south-gaza-city-civilians-search-safety-2023-12-07/">Israel’s war in Gaza</a> has further highlighted that the <a href="https://www.reuters.com/world/middle-east/un-vote-delayed-demand-gaza-humanitarian-ceasefire-2023-12-08/">United States in particular</a> has one set of rules for its friends, and another for its enemies.</p>
<p>A U.S.-backed Israel has been <a href="https://www.aljazeera.com/news/2023/11/7/is-israels-gaza-war-the-deadliest-conflict-for-children-in-modern-times">slaughtering civilians at a rate far exceeding anything Russian forces have done in Ukraine</a>. And while western officials were quick to condemn Russian attacks on civilians, condemnations of Israel’s actions have been muted or non-existent.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1721657908369203677"}"></div></p>
<p>Moreover, western attempts to <a href="https://www.bbc.com/news/world-europe-60125659">isolate Russia economically</a> <a href="https://www.theguardian.com/world/2022/mar/25/putin-says-west-treating-russian-culture-like-cancelled-jk-rowling">and culturally</a> have made the Russian government’s narrative that the West is out to cancel Russia easier to sell to the public.</p>
<p>At the same time, blunders by some western governments have also made it easier for Russia to sell the narrative it is fighting fascism in Ukraine. The recent <a href="https://theconversation.com/canadas-house-speaker-quits-what-the-hunka-scandal-reveals-about-second-world-war-complexities-214339">Yaroslav Hunka debacle in the Canadian Parliament</a> was a propaganda gift for the Russian government. Western celebration of Ukrainian units with fascist ties like the <a href="https://www.reuters.com/world/europe/last-defenders-mariupol-what-is-ukraines-azov-regiment-2022-05-17/">Azov Battalion</a> only makes matters worse.</p>
<h2>New economic ties</h2>
<p><a href="https://theconversation.com/how-the-russian-economy-is-defying-and-withstanding-western-sanctions-194119">Unprecedented western sanctions</a> aimed at isolating the Russian economy from the world have not succeeded in changing Russian actions in Ukraine. </p>
<p>Instead, increased animosity with the West appears to have pushed Russia to deepen ties <a href="https://www.nytimes.com/2023/03/20/world/asia/china-russia-ties.html">with China</a> and other <a href="https://www.aljazeera.com/features/2023/8/22/can-brics-create-a-new-world-order">international partners</a>.</p>
<p>Early in the war, Putin touted what he called Russia’s ability to “<a href="https://tass.com/economy/1504227">fully provide itself with natural resources</a>.” While inflation is high, Russian stores remain full and <a href="https://www.reuters.com/markets/europe/russian-labour-shortage-laid-bare-unemployment-drops-record-low-2023-05-31/">unemployment remains low</a>. The International Monetary Fund did <a href="https://www.reuters.com/markets/europe/imf-lowers-russia-2024-gdp-growth-forecast-11-2023-10-10/">recently lower Russia’s economic growth forecast for 2024</a>, but that forecast still compares favourably to countries like <a href="https://www.oecd.org/newsroom/economic-outlook-a-mild-slowdown-in-2024-and-slightly-improved-growth-in-2025.htm">Canada, France, Italy and the United Kingdom</a>.</p>
<p>Palatable or not in the West, Russia’s ability to seemingly resist sanctions and <a href="https://www.cfr.org/article/how-much-aid-has-us-sent-ukraine-here-are-six-charts">fight off a Ukrainian NATO-backed</a> counteroffensive has contributed to rising public support for the war and for Putin.</p><img src="https://counter.theconversation.com/content/219484/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alexander Hill does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Polls suggest many Russians remain supportive of Putin and the war in Ukraine. Economic realities and western double standards likely play a big role.Alexander Hill, Professor of Military History, University of CalgaryLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2182242023-12-05T22:16:31Z2023-12-05T22:16:31ZSeizing Russian state assets to rebuild Ukraine: Will it prolong the war, or end it?<iframe style="width: 100%; height: 100px; border: none; position: relative; z-index: 1;" allowtransparency="" allow="clipboard-read; clipboard-write" src="https://narrations.ad-auris.com/widget/the-conversation-canada/seizing-russian-state-assets-to-rebuild-ukraine-will-it-prolong-the-war-or-end-it" width="100%" height="400"></iframe>
<p>International momentum is growing to <a href="https://www.pravda.com.ua/eng/news/2023/11/3/7427049/">seize Russian state assets</a>, including central bank reserves, to pay for rebuilding a post-war Ukraine <a href="https://www.cer.eu/insights/why-russia-must-pay-damage-ukraine">instead of expecting western taxpayers to foot the bill</a>.</p>
<p>Canada has moved beyond sanctions, freezes and seizure of <a href="https://www.canada.ca/en/global-affairs/news/2022/12/canada-starts-first-process-to-seize-and-pursue-the-forfeiture-of-assets-of-sanctioned-russian-oligarch.html#;%20https://www.canada.ca/en/global-affairs/news/2023/06/government-of-canada-orders-seizure-of-russian-registered-cargo-aircraft-at-toronto-pearson-airport.html">private assets</a> to pave the way to seizing state assets — and <a href="https://www.politico.eu/article/us-ukraine-war-antony-blinken-thinks-russia-should-pay-for-restoration-of-ukraine-you-broke-it-you-bought-it/">other countries</a> are poised to follow suit. </p>
<p>But will seizing Russian state assets discourage Russia from ending the war? Or is it instead a new tool for peacemaking?</p>
<p>Canada <a href="https://wrmcouncil.org/publications/leading-by-example/">leads the world</a> with its <a href="https://publications.gc.ca/collections/collection_2023/sen/YB441-278-1.pdf">recent amendment</a> to the <a href="https://laws-lois.justice.gc.ca/eng/acts/s-14.5/page-1.html">Special Economic Measures Act (SEMA)</a> allowing the seizure of Russian state assets in addition to private assets to rebuild Ukraine. But there’s concern it could lead to a <a href="https://foreignpolicy.com/2023/11/27/russia-ukraine-war-central-bank-reserves-assets-seize-reparations-sanctions/;%20https://jp.reuters.com/article/us-russia-assets-breakingviews-idDEKCN2N30RL">loss of leverage with Russia</a> in terms of efforts to pressure it to end the war. </p>
<h2>Sanctions and leverage</h2>
<p>Current tools used to try to halt a warring state’s actions —sanctions, embargoes, asset freezes and international exclusion, for example — are <a href="https://www.lcil.cam.ac.uk/sites/www.law.cam.ac.uk/files/images/www.lcil.cam.ac.uk/ukraine/moret_sanctions_relief.pdf">designed to be reversible</a> so as to create leverage. The message, essentially, is this: stop the war, and you’ll get your trade, assets and access back.</p>
<p>While less than effective much of the time (which explains the ongoing nature of many sanctions against Russia), this is nonetheless the <a href="https://www.cfr.org/backgrounder/what-are-economic-sanctions">favoured logic of the international community</a>. </p>
<p>The current war in Ukraine is causing a reconsideration of this logic. With sanctions on Russia clearly not working — Russian officials seem to be assuming they’ll get their trade, assets and access back — the prolonged war is increasing the <a href="https://www.globalpolicywatch.com/2023/07/ukraines-reconstruction/">cost of reconstruction</a> enormously. </p>
<p>Western taxpayers are not keen to foot the bill for this, especially when the value of Russian state assets frozen by the West is <a href="https://thefinancialcrimenews.com/where-are-the-sanctioned-russian-assets-frozen-in-the-west-and-how-much-is-actually-frozen/">so large</a>.</p>
<p>The obvious alternative is to simply use the frozen Russian money instead of hard-earned western taxpayer funds to rebuild Ukraine. It’s an attractive logic, but <a href="https://www.washingtonpost.com/business/2023/07/18/russian-assets-can-pay-for-ukraine-s-reconstruction-the-question-is-how/d5cfae0a-2564-11ee-9201-826e5bb78fa1_story.html">has been criticized</a> for being non-reversible, thereby depriving the West of a way to pressure Russia to end the war. </p>
<p>Certain <a href="https://www.politico.eu/article/belgium-afraid-to-go-it-alone-on-seizing-russian-assets-profits/c">western countries</a> are concerned about this. But Canada draws a different conclusion. </p>
<h2>Different types of leverage</h2>
<p>Canadian Sen. Ratna Omidvar successfully pushed for the modification of SEMA to allow for the seizure of an aggressor state’s assets for use in reconstructing countries it invades.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1729546999022678032"}"></div></p>
<p><a href="https://news.err.ee/1608872648/in-confiscating-frozen-russian-assets-estonia-may-follow-canadian-example">While other states are keen to follow</a>, the concern about a loss of leverage persists. However, the way seizure happens can mean the difference between losing leverage and creating leverage — and the possible birth of a new tool.</p>
<p>Leverage in international relations is a curious thing. There is “reward leverage,” when states are rewarded for complying with international norms. Unfreezing assets falls into this category. </p>
<p>Then there is “threat leverage,” with the threat of progressively punishing countermeasures that can be put in place for non-compliance. There’s also “<a href="https://scholarship.law.columbia.edu/faculty_scholarship/1697/">reversible rewards</a>” that combine the two approaches.</p>
<p>While seizing Russian state assets may lessen the reward leverage associated with unfreezing assets, it can also, if done right, create significant threat leverage. </p>
<p>If the seizure of assets is explicitly and publicly linked to specific belligerent actions — like targeting civilians, refusing to return abducted children, destroying civilian infrastructure or failing to de-escalate — then the phased seizure becomes a tool that acts as a threat against further belligerent actions. It’s linked to specific asset seizures in the future. </p>
<p>The phased confiscation of assets therefore has three purposes: it serves <a href="http://www.qil-qdi.org/third-party-countermeasures-progressive-development-international-law/">as progressive punishment</a>, as money used to rebuild and as leverage against a state for further harms. </p>
<h2>Russia only the first target</h2>
<p>In the case of Russia, it’s not clear such actions would have a major impact on how it’s waging its war in Ukraine.</p>
<p>However, Omidvar’s <a href="https://youtu.be/6G1DFd8_9xQ?si=GKaTctM9lXtlOpyX">recent speech</a> outlining the SEMA amendment explicitly noted that the Ukraine war is just the first conflict that will be affected, with belligerent states in future wars very much a target. </p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/6G1DFd8_9xQ?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Sen. Ratna Omidvar explains the SEMA amendment in the Senate. (Omidvar’s YouTube channel)</span></figcaption>
</figure>
<p>That’s why Omidvar’s amendment introduces a new tool that can be used against aggressor states in cases where sanctions are ineffective, as in Sudan, Syria and Myanmar, to name just a few areas of conflict.</p>
<p>The tool has two components.</p>
<p>The first is that the seizure itself sends a message to potential aggressors that assets will be confiscated if armed aggression toward another state takes place, thereby encouraging belligerent nations to rethink their course of action.</p>
<p>The second is that with a war underway, seizures linked to specific belligerent actions or inactions constitute a progressive series of punishments that creates leverage against any state that continues its aggressive actions.</p>
<p>That new tool aligns with the recognition that <a href="https://www.lawfaremedia.org/article/countermeasures-and-the-confiscation-of-russian-central-bank-assets">new approaches are needed when it comes to dealing with aggressive states like Russia, and international law is open to evolving</a>.</p>
<p>The war in Ukraine is teaching the world many lessons, among them the ineffectiveness of conventionally applied sanctions. Additional tools are needed not just for the current war, but for future military conflicts. The international community would do well to emulate Canada’s approach.</p>
<hr>
<p><em>The authors would like to acknowledge Michael Cholod, executive director of <a href="https://www.thepeacecoalition.com/">The Peace Coalition</a>, for his contributions to this article.</em></p><img src="https://counter.theconversation.com/content/218224/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Geoffrey Goodell receives funding from the Peer Social Foundation, the Stellar Development Foundation, and the Bill and Melinda Gates Foundation (via the Alan Turing Institute). He is affiliated with the Bank of England CBDC Technology Forum, the British Standards Institution, the Whitechapel Think Tank, the Bloxberg Assocation (Germany), the Digital Token Identifier Foundation, the International Association of Trusted Blockchain Applications (Belgium), and the All-Party Parliamentary Group on Central Bank Digital Currency.</span></em></p><p class="fine-print"><em><span>Jon Unruh does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Who will pay to rebuild Ukraine? Canada is the first to pass a law allowing Russian state assets to be seized to rebuild Ukraine, but will it discourage Russia from ending the war?Jon Unruh, Professor, Geography Department, McGill UniversityGeoffrey Goodell, Lecturer in Financial Computing, UCLLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2104752023-08-10T15:13:41Z2023-08-10T15:13:41ZWestern firms still doing business in Russia finance the war – here’s how to recoup the huge cost to taxpayers<figure><img src="https://images.theconversation.com/files/541911/original/file-20230809-5449-jcu04a.jpg?ixlib=rb-1.1.0&rect=0%2C31%2C2914%2C1962&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-vector/world-economic-sanctions-force-country-obey-2120624531">eamesBot/Shutterstock</a></span></figcaption></figure><p>In Russia this summer, you can <a href="https://www.bbc.co.uk/news/business-66101852">still enjoy</a> a Cornetto, but you can forget about eating a <a href="https://www.bbc.co.uk/news/uk-scotland-scotland-business-60625374">Tunnock’s tea cake</a> or a <a href="https://www.theguardian.com/world/2022/jun/12/mcdonalds-restaurants-in-russia-reopen-under-new-brand">Big Mac</a>. This is because Cornetto’s UK-headquarted parent company, Unilever, is still operating in Russia after its invasion of Ukraine, alongside many other western firms such as <a href="https://www.bloomberg.com/news/articles/2023-07-07/pepsico-mars-see-business-boom-in-russia-after-staying-behind">PepsiCo</a>.</p>
<p>While lots of firms, including McDonald’s and the Scottish confectionery maker Tunnock’s, have <a href="https://som.yale.edu/story/2022/over-1000-companies-have-curtailed-operations-russia-some-remain#:%7E:text=Companies%20totally%20halting%20Russian%20engagements%20or%20completely%20exiting%20Russia...">cut business ties</a> with the country since the war started, the Kyiv School of Economics <a href="https://b4ukraine.org/pdf/BusinessOfStaying.pdf">estimates</a> western companies still operating in Russia made over US$213.9 billion (£168.2 billion) in revenues in 2022. </p>
<p>The resulting US$3.5 billion in taxes on profits paid to Russia is only a small part of their contribution to the war: the income taxes and social contributions of their employees, as well as the VAT on their sales, feed into the state’s budget. The sense of normality they give to Russian citizens also arguably <a href="https://www.bbc.co.uk/news/world-europe-64703768">fosters support</a> for the invasion of Ukraine. </p>
<p>Companies still doing business in Russia also hurt the citizens of the countries they come from. By essentially supporting the war, they share responsibility for <a href="https://www.theguardian.com/business/2023/feb/21/energy-crisis-ukraine-war-uk-cost-gas#:%7E:text=A%20study%20by%20the%20Energy,spent%20in%20a%20normal%20year.">higher energy prices</a>, for example. They also increase the cost on western taxpayers of supporting the defence of Ukraine.</p>
<p>Like many western companies that have stayed in Russia, <a href="https://contact.pepsico.com/pepsico/article/pepsico-suspends-production-sale-of-pepsi-in-russia-continues-to">PepsiCo</a> and Unilever (Cornetto’s parent company) have <a href="https://www.nytimes.com/2023/03/02/business/russia-companies-exit.html">defended the decision</a> by claiming they provide essentials and need to stay for humanitarian reasons. </p>
<p>In addition to detailing donations made to Ukrainian refugees, the statement from PepsiCo said the company “must stay true to the humanitarian aspect” of its business as a food and beverage company by continuing to offer “daily essentials” in Russia “such as milk and other dairy offerings, baby formula and baby food”. PepsiCo pointed out it also continues “to support the livelihoods of our 20,000 Russian associates and the 40,000 Russian agricultural workers in our supply chain”.</p>
<p>Unilever said <a href="https://www.unilever.com/news/press-and-media/press-releases/2023/unilever-statement-on-the-war-in-ukraine/">in a statement</a> earlier this year that, while it’s still selling products in Russia, it stopped imports and exports, all media and advertising spend and other capital flows into and out of Russia in March 2022. It’s not “trying to protect or manage” its business in Russia, the company said, but “exiting is not straightforward”.</p>
<p>Indeed, many of those who provide non-necessary items say they cannot leave because the Russian government would <a href="https://www.ft.com/content/c6108c1a-97dc-4469-aeb3-8b81ab52aaa9">seize their assets</a> and intellectual property if they do. </p>
<p>But every time a business makes the choice to leave Russia or has their assets seized, the ones who stay face lower competition, and potentially make even more profit. As of today, the only price they pay for staying <a href="https://edition.cnn.com/2023/07/10/business/russia-companies-leaving-putin/index.html">is a tarnished reputation</a> in western countries.</p>
<h2>A tax on the cost of war</h2>
<p>But there is a way to make foreign companies pay the cost they impose on the world, while acknowledging the impossibility of making them completely leave Russia. </p>
<p>In fact, western governments have already designed the two main tools necessary. What it would take is a <a href="https://www.ft.com/content/a9750db3-5d5c-4afb-a33e-e5b960b63a93">coalition of sanctioning countries</a> and a mechanism that’s already being used in other regulations: the “<a href="https://www.oecd.org/tax/beps/oecd-releases-pillar-two-model-rules-for-domestic-implementation-of-15-percent-global-minimum-tax.htm">Pillar 2</a>” OECD strategy on taxation, due to come into force next year, as well as the EU’s new <a href="https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en">Carbon Border Adjustment Mechanism</a>, due to come into force in October 2023.</p>
<p>The coalition of sanctioning countries must first implement a tax on a western company’s Russian revenues. This is public information available in company financial reports – other <a href="https://leave-russia.org/">organisations already track</a> this information. The tax would cover the company’s sales, based on the goods and services bought by people in Russia. But the tax would be collected by the country in which the company is headquartered.</p>
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<img alt="Hands counting Russian notes, piles of rouble-denominated notes on the table in foreground." src="https://images.theconversation.com/files/541934/original/file-20230809-29-8o0yyx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/541934/original/file-20230809-29-8o0yyx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/541934/original/file-20230809-29-8o0yyx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/541934/original/file-20230809-29-8o0yyx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/541934/original/file-20230809-29-8o0yyx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/541934/original/file-20230809-29-8o0yyx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/541934/original/file-20230809-29-8o0yyx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Doing business in Russia.</span>
<span class="attribution"><span class="source">Andrey Sayfutdinov/Shutterstock</span></span>
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</figure>
<p>In the case of sales of Cornetto ice creams, for example, Unilever is the parent company and is based in <a href="https://www.ft.com/content/dbaa61b7-e3c6-4e82-9680-9745953a056b">the UK</a>. So the UK government would have the first option to tax Unilever, but if it chose not to, any other country in the coalition could do so instead. </p>
<p>That would mean a country has nothing to gain from protecting its national businesses. If the UK does not tax Cornetto sales in Russia, Unilever could be taxed by the EU or US and the proceeds would go into their government coffers instead.</p>
<p>The OECD’s Pillar 2 tax agreement uses this principle in its aim to end the practice of fictionally <a href="https://www.sciencedirect.com/science/article/pii/S0047272722001785">locating profit in tax havens</a>. By the end of this year, countries have committed to charge at least 15% in profit tax to the largest multinational companies <a href="https://www.consilium.europa.eu/en/press/press-releases/2022/12/12/international-taxation-council-reaches-agreement-on-a-minimum-level-of-taxation-for-largest-corporations/">in the EU</a> and <a href="https://www.gov.uk/government/publications/introduction-of-the-new-multinational-top-up-tax-and-domestic-top-up-tax/multinational-top-up-tax-and-domestic-top-up-tax-uk-adoption-of-oecd-pillar-2">in the UK</a>. </p>
<p>If some part of a multinational’s profits is not taxed abroad, the country in which the company is headquartered can tax extra, up to the 15% limit. And if that country does not impose the extra charge, other countries in which the firm is active can collect the unpaid tax. </p>
<h2>What about non-western companies?</h2>
<p>Charging the tax on western companies only would disadvantage them in global markets. It may also make it even more profitable for other countries to trade with Russia. To avoid such “<a href="https://www.annualreviews.org/doi/abs/10.1146/annurev-environ-120820-053625">leakage</a>”, non-western companies who trade with the west and continue to do business with Russia should also be made liable for the tax. </p>
<p>This amounts to a form of <a href="https://academic.oup.com/jcsl/article/27/1/53/6528963">extra-territorial trade sanction</a>. The approach <a href="https://www.sciencedirect.com/science/article/pii/S0014292120302026">is simple</a>: if a company wants to do business with the west, it must pay a fine for any trade in Russia. The US already does something much stricter to companies trading with Iran or Cuba. French bank Société Générale <a href="https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-announces-criminal-charges-against-soci-t-g-n-rale-sa-violations">paid US$1.3 billion to the US government</a> in 2018 as a punishment for providing financial services in Cuba. </p>
<p>Taxing foreign companies to level competition is very similar to a <a href="https://www.journals.uchicago.edu/doi/full/10.1093/reep/rey020">border adjustment mechanism</a> for polluting industries. This is what <a href="https://www.sciencedirect.com/science/article/pii/S0140988323001718">the EU will begin to do</a> in 2026 under the Carbon Border Adjustment Mechanism. It will charge a carbon tax on certain products or activities, starting with the most <a href="https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en">energy-intensive industries</a> such as cement, iron and steel production, unless a company can prove it has already paid the equivalent at home. </p>
<figure class="align-center ">
<img alt="Child with flowers in hair holding sign with Ukrainian flag colours that says " src="https://images.theconversation.com/files/541933/original/file-20230809-13146-9hchag.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/541933/original/file-20230809-13146-9hchag.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/541933/original/file-20230809-13146-9hchag.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/541933/original/file-20230809-13146-9hchag.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/541933/original/file-20230809-13146-9hchag.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/541933/original/file-20230809-13146-9hchag.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/541933/original/file-20230809-13146-9hchag.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">shutterstock.</span>
<span class="attribution"><span class="source">Mykola Romanovskyy/Shutterstock</span></span>
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</figure>
<p><a href="https://www.politico.eu/article/russia-ukraine-war-invasion-slammed-russias-global-reputation-poll-shows/">Global public opinion</a> has turned against Russia since the invasion of Ukraine. Just like with global tax evasion and climate change, most countries understand that it is in everyone’s interest that a nuclear power is not allowed to invade other countries with no consequence. </p>
<p>The tools the world has developed to cooperate on international taxation and carbon emissions could now be used to take definitive action on economic sanctions and make the war in Ukraine much more difficult for Russia to sustain.</p><img src="https://counter.theconversation.com/content/210475/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Renaud Foucart does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Some western companies have continued operating in Russia since it invaded Ukraine, while others have left the country altogether.Renaud Foucart, Senior Lecturer in Economics, Lancaster University Management School, Lancaster UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2061362023-06-18T11:19:56Z2023-06-18T11:19:56ZGold fraud: the Goldenberg scam that cost Kenya billions of dollars in the 1990s – and no one was jailed<figure><img src="https://images.theconversation.com/files/528027/original/file-20230524-15-ipamm.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p><em>The <a href="https://www.theguardian.com/world/2006/mar/16/kenya.jeevanvasagar">Goldenberg scandal</a> in the early 1990s is Kenya’s largest documented gold fraud. The scheme involved Goldenberg International Limited, which pretended to export gold and diamonds, and in exchange received substantial subsidies from the government for “earning” foreign exchange. Kenyan businessman Kamlesh Pattni – who was at the centre of the scandal and was charged with fraud but <a href="https://www.businessdailyafrica.com/bd/economy/court-formally-terminates-goldenberg-case-2031264">eventually acquitted</a> – was recently <a href="https://www.aljazeera.com/news/2023/3/23/gold-smuggler-pattni-kenya-zimbabwe">named</a> in a new investigation into gold fraud. This time his operation is allegedly being run through Zimbabwe from his base in Dubai. Economists Roman Grynberg and Fwasa Singogo, who have <a href="https://core.ac.uk/download/pdf/304991797.pdf">researched</a> the Goldenberg case, and <a href="https://www.researchgate.net/profile/Fwasa-Singogo-2">the gold mining industry and its role in illicit financial flows in Africa</a>, unpack the issue.</em></p>
<h2>What was the Goldenberg scandal?</h2>
<p>The scandal centred on two companies: Goldenberg International and Exchange Bank Limited. Both were owned and directed by businessman <a href="http://kenyalaw.org/kl/fileadmin/CommissionReports/Report-of-the-Judicial-Commission-of-Inquiry-into-the-Goldenberg-Affair.pdf#page=32">Kamlesh Pattni</a> and his partner James Kanyotu, the director of intelligence in the Kenyan police force. The two were licensed by the government to export gold and diamonds from Kenya. But they did not. They just collected an inflated subsidy.</p>
<p>The Goldenberg scandal occurred at a time of <a href="https://www.elibrary.imf.org/view/journals/002/1995/133/article-A001-en.xml">severe economic austerity</a> in Kenya in the early 1990s. The country’s economy was characterised by long periods of macroeconomic instability and dwindling foreign reserves. </p>
<p>Economic policy was inward-looking. It leaned towards the protection of local industries and the retention of foreign exchange. This period also coincided with the <a href="https://www.britannica.com/topic/Kenya-African-National-Union">one-party state that began in 1982</a> and was marked by political oppression. </p>
<p>As a result, donors gradually reduced support and investment evaporated. Foreign debt payments became irregular and the government increasingly fell back on local borrowing. </p>
<p>The Kenyan government turned to international financial institutions for cheaper loans. These were provided, but were conditional on <a href="https://core.ac.uk/download/pdf/304991797.pdf#page=2">economic reforms</a>, such as measures intended to stimulate trade. </p>
<p>Coincidentally, or otherwise, Goldenberg International applied to the Kenyan government in <a href="http://kenyalaw.org/kl/fileadmin/CommissionReports/Report-of-the-Judicial-Commission-of-Inquiry-into-the-Goldenberg-Affair.pdf#page=33">July 1990</a> for certain privileges that spoke directly to the economic needs of the country. The company received a monopoly on exports of gold and diamonds from Kenya. </p>
<p>It was also given a subsidy of 35% of the value of these exports – 15% more than the official rate at the time. </p>
<p>Goldenberg managed to defraud the Kenyan state of between <a href="https://core.ac.uk/download/pdf/304991797.pdf#page=1">US$600 million and US$1.5 billion</a> in <a href="https://www.wto.org/english/res_e/booksp_e/anrep_e/wtr06-2b_e.pdf#page=1">subsidies</a>. Subsidies can be direct (such as cash payments) or indirect (such as tax breaks). Goldenberg’s subsidy was in monetary form, on condition that the company proved foreign exchange gains through exporting non-traditional commodities. </p>
<p>The fraud was that Kenya had <a href="http://kenyalaw.org/kl/fileadmin/CommissionReports/Report-of-the-Judicial-Commission-of-Inquiry-into-the-Goldenberg-Affair.pdf#page=44">insignificant amounts of known gold deposits and absolutely no diamonds</a>. Government officials authorised payments for fictitious exports.</p>
<p>Goldenberg’s main transactions were recorded between <a href="https://issafrica.s3.amazonaws.com/site/uploads/Paper117.pdf#page=1">1991 and 1993</a>. The <a href="http://kenyalaw.org/kl/fileadmin/CommissionReports/Report-of-the-Judicial-Commission-of-Inquiry-into-the-Goldenberg-Affair.pdf#page=312">2003 Judicial Commission of Inquiry</a> into the scandal estimated that Goldenberg pilfered a <a href="http://kenyalaw.org/kl/fileadmin/CommissionReports/Report-of-the-Judicial-Commission-of-Inquiry-into-the-Goldenberg-Affair.pdf#page=379">total of KSh158.3 billion</a> (US$2.3 billion at the time). However, the exact amount remains in the area of speculation. </p>
<h2>What institutional gaps enabled the fraud?</h2>
<p>The architects of the Goldenberg scandal abused a number of <a href="http://kenyalaw.org/kl/fileadmin/CommissionReports/Report-of-the-Judicial-Commission-of-Inquiry-into-the-Goldenberg-Affair.pdf#page=32">trade policies</a>. These included the <a href="http://kenyalaw.org:8181/exist/kenyalex/actview.xql?actid=CAP.%20482">Export Compensation Act</a>, <a href="http://supplychainfinanceforum.org/techniques/pre-shipment-finance/">Pre-shipment Finance</a> and the Retention Scheme.</p>
<p>There’s inherently nothing wrong with these measures, which are intended to stimulate trade. But they were implemented in the context of a corrupt political system and became <a href="http://kenyalaw.org/kl/fileadmin/CommissionReports/Report-of-the-Judicial-Commission-of-Inquiry-into-the-Goldenberg-Affair.pdf#page=364">instruments of fraud</a>.</p>
<p>Another significant aspect of the fraud was Kenya’s exchange rate system. The difference between official and parallel exchange rates, and the depreciating Kenyan shilling, allowed Goldenberg to earn illegal returns on foreign exchange. </p>
<p><a href="http://kenyalaw.org/kl/fileadmin/CommissionReports/Report-of-the-Judicial-Commission-of-Inquiry-into-the-Goldenberg-Affair.pdf#page=135">Cheque kiting</a> is another tool that was used. It’s a form of cheque fraud that utilises the time it takes for a cheque to clear to use non-existent money in an account. </p>
<p>Officials at the highest levels of government were heavily involved in authorising payments to Goldenberg. </p>
<p>Under the rules to obtain subsidies, Goldenberg had to get signatories from the customs department that exports had occurred; from the Central Bank of Kenya that revenue had arrived; from the ministry of minerals that production had occurred; and from the ministry of finance for final authorisation. </p>
<p>As was alleged in a recent <a href="https://www.aljazeera.com/news/2023/4/14/six-secrets-uncovered-by-al-jazeeras-gold-mafia-investigation">Al-Jazeera exposé on gold fraud in Zimbabwe</a>, where Pattni’s name has featured, corrupt and well-paid senior government officials in Kenya played a part in the plunder of the nation during the Goldenberg years. </p>
<p>An audit ordered by the International Monetary Fund and World Bank into cheque kiting and forex fraud <a href="https://issafrica.s3.amazonaws.com/site/uploads/Paper117.pdf#page=9">in April 1993</a> sparked the unravelling of the Goldenberg scandal.</p>
<p>No one ever went to jail for this grand fraud despite <a href="http://kenyalaw.org/kl/fileadmin/CommissionReports/Report-of-the-Judicial-Commission-of-Inquiry-into-the-Goldenberg-Affair.pdf">years of inquiry</a> and the <a href="https://www.businessdailyafrica.com/bd/economy/court-formally-terminates-goldenberg-case-2031264">prosecution of some of the parties involved</a>. </p>
<h2>What was the cost to Kenya?</h2>
<p>The government of Kenya received no benefit as there were no official export earnings from the sale of gold and diamonds. </p>
<p>There are no reliable estimates as to the scandal’s effect on Kenyans to date, largely because the payments made and money siphoned <a href="https://www.standardmedia.co.ke/article/2000065911/goldenberg-scandal-still-a-mystery-decades-later">couldn’t be easily accounted for</a>.</p>
<h2>What are the lessons learned?</h2>
<p>The judges in the judicial review of the Goldenberg scandal blamed the International Monetary Fund and World Bank for setting the <a href="https://www.imf.org/external/pubs/ft/esaf/exr/">context</a> that enabled the abuse of subsidies.</p>
<p>In a world where more people and nations are subject to sanctions if they trade in US dollars, <a href="https://www.aljazeera.com/news/2023/4/14/six-secrets-uncovered-by-al-jazeeras-gold-mafia-investigation">gold</a> has become a way to evade economic restrictions. It isn’t easily detected in developed country jurisdictions. For instance, since 2019, trade in gold in <a href="https://ahvalnews-com.cdn.ampproject.org/c/s/ahvalnews.com/node/36566?amp">Venezuela</a> and <a href="https://financialtribune.com/articles/domestic-economy/98593/77-rise-in-irans-non-oil-trade-with-turkey">Iran</a> has increased drastically with Turkey despite US sanctions. </p>
<p>The use of physical gold traded through a country like the United Arab Emirates – Pattni now operates out of Dubai – evades the financial sanctions imposed on nations like Zimbabwe. </p>
<p>Regulatory frameworks governing trade in gold are weaker than the ones governing the entry of US dollars into the global banking system. To address this, the international community must put pressure on <a href="https://taxjustice.net/faq/what-is-a-secrecy-jurisdiction/">secrecy jurisdictions</a> to align their gold trade and anti-money laundering regulatory frameworks with global best practices. </p>
<p>Both Kenya and Zimbabwe have had long reputations of being politically risky, mired in corruption and having unsound policies. Political connections are also important in doing business. </p>
<p>Deliberate and continuous efforts to curb corruption, have stable and sound policies, and establish solid independent institutions are needed for these countries to have some semblance of accountability. If not curbed, the systemic greed of the political elite and those politically connected will continue to lead countries into ruin and citizens to destitution. Competing limited resources will continue to end up in the pockets of a select few and not cater to the public good so often championed in policy pronouncements.</p><img src="https://counter.theconversation.com/content/206136/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>In a world where economic sanctions make trade in US dollars almost impossible, gold has offered a way to evade these restrictions.Roman Grynberg, Adjunct Professor, Griffith UniversityFwasa K Singogo, Research Associate, Indaba Agricultural Policy Research Institute (IAPRI)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1997182023-02-21T19:34:50Z2023-02-21T19:34:50ZHow Putin has shrugged off unprecedented economic sanctions over Russia’s war in Ukraine – for now<figure><img src="https://images.theconversation.com/files/510994/original/file-20230219-1800-9t7wa9.jpg?ixlib=rb-1.1.0&rect=143%2C134%2C5472%2C3603&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Putin has survived with a little help from his friends. </span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/WCupSportswashingSoccer/615bd840f65a4ac9b2ce2b2c03340211/photo?Query=vladimir%20putin%20xi&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=1211&currentItemNo=9">Alexei Druzhinin, Sputnik, Kremlin Pool Photo via AP</a></span></figcaption></figure><p>The <a href="https://www.reuters.com/graphics/UKRAINE-CRISIS/SANCTIONS/byvrjenzmve/">U.S. and four dozen other countries</a> have <a href="https://www.piie.com/blogs/realtime-economics/russias-war-ukraine-sanctions-timeline">imposed punishing sanctions</a> on Russia in reaction to its invasion of Ukraine on Feb. 24, 2022. The sanctions <a href="https://www.nytimes.com/2022/04/01/opinion/ezra-klein-podcast-nicholas-mulder.html">were unprecedented</a> in their scope and severity for an economy of Russia’s size.</p>
<p>The initial sanctions included the <a href="https://www.washingtonpost.com/us-policy/2022/06/30/russia-oligarch-elite-treasury/">freezing of Russian assets</a> abroad and a ban on the export of key technologies to Russia. Over the course of 2022, the sanctions were ratcheted up significantly as the <a href="https://energyindustryreview.com/oil-gas/eu-embargo-on-russian-oil-implications-and-consequences/">European Union eventually phased in a radical reduction</a> of the purchase of Russian oil and gas. Separately, over <a href="https://leave-russia.org/about-project">1,200 Western companies closed their operations</a> in Russia.</p>
<p>One year into the war, are the sanctions working?</p>
<h2>Initial setbacks but quick recovery</h2>
<p>Before the invasion, Western nations <a href="https://www.csis.org/analysis/deterrence-first-applying-lessons-sanctions-russia-china">had hoped the threat of sanctions</a> would deter Russia from attacking Ukraine. But once the invasion began, the goal shifted to deterring President Vladimir Putin from escalating and encouraging him to withdraw – by reducing his ability to fund his war machine. </p>
<p>At first, <a href="https://www.iif.com/Portals/0/Files/content/IIF20220323_MN.pdf">Western commentators were confident</a> that the sanctions were working. </p>
<p>In the first week of the war, the <a href="https://theconversation.com/russian-rubles-recovery-masks-disruptive-impact-of-wests-sanctions-but-it-wont-make-putin-seek-peace-181120">Russian ruble plunged in value</a> as Russians panicked when most Russian banks were excluded from the Swift international transaction system and government assets in foreign banks were frozen. However, Russia’s central bank <a href="https://www.economist.com/leaders/2022/08/25/are-sanctions-working">was able to quickly stabilize</a> the exchange rate, bringing it back to prewar levels. Inflation peaked at 18% in April before easing to <a href="https://www.wsj.com/articles/russias-central-bank-warns-of-rate-rises-if-war-fuels-inflation-eec36e42">12%</a> by December.</p>
<p>Even after that, <a href="https://www.theguardian.com/commentisfree/2022/oct/26/sanctions-russia-war-ukraine-putin-oligarchs">some Western observers</a> continued to insist that the <a href="https://doi.org/10.2139/ssrn.4167193">sanctions were crippling</a> the Russian economy.</p>
<p>It is true that the <a href="https://www.martenscentre.eu/publication/beyond-the-headlines-the-real-impact-of-western-sanctions-on-russia/">sanctions have devastated</a> certain sectors, <a href="https://istories.media/opinions/2022/08/30/ne-letaite-rossiiskimi-samoletami/">notably aviation</a> and <a href="https://www.autonews.ru/news/6242e8749a79476479353aa5">auto manufacturing</a>, which saw an 80% decline in output due to lack of imported components. However, overall Russia finished 2022 with a mere <a href="https://www.ft.com/content/42b53987-8280-469e-8014-9ddb0c98463b">3% contraction</a> in its gross domestic product. <a href="https://www.ft.com/content/42b53987-8280-469e-8014-9ddb0c98463b">Retail sales fell 9%</a> during the year, with local brands – along with some <a href="https://au.fashionunited.com/news/retail/russian-shopping-centers-may-replace-western-brands-with-turkish-and-chinese-ones/2022030818283">Chinese and Turkish companies</a> – replacing Western companies on the domestic market. </p>
<p>Despite the sanctions and setbacks on the battlefield, Putin <a href="https://www.npr.org/2023/02/19/1153430731/ukraine-russia-war-one-year-anniversary-how-will-it-end">has shown no signs of backing down</a>. In September, he <a href="https://www.reuters.com/world/europe/russias-partial-mobilisation-will-see-300000-drafted-defence-minister-2022-09-21/">mobilized 300,000 reservists</a> and <a href="https://www.reuters.com/world/europe/kyivs-mayor-says-blasts-hit-kyivs-desnianskiy-district-emergency-services-site-2023-01-01/">started a campaign to cripple Ukraine’s electricity system</a> through missile and drone attacks.</p>
<p><a href="https://www.wesleyan.edu/academics/faculty/prutland/profile.html">I have studied</a> the Soviet and the Russian economy for over four decades. I believe there are four reasons the sky has yet not fallen in on the Russian economy.</p>
<figure class="align-center ">
<img alt="An oil tanker is moored at a dock near shore" src="https://images.theconversation.com/files/511232/original/file-20230220-28-15dqv9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/511232/original/file-20230220-28-15dqv9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/511232/original/file-20230220-28-15dqv9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/511232/original/file-20230220-28-15dqv9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/511232/original/file-20230220-28-15dqv9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/511232/original/file-20230220-28-15dqv9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/511232/original/file-20230220-28-15dqv9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Russian oil exports have been a significant reason the country has been able to absorb Western sanctions.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/RussiaUkraineWarOilPriceCap/bc218a6cb8524e0482bb9bf1e2253809/photo?Query=russian%20oil&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=1928&currentItemNo=51">AP Photo/Gaetano Adriano Pulvirenti</a></span>
</figcaption>
</figure>
<h2>1. Russia’s energy lifeline</h2>
<p>Russia may be spending over <a href="https://thebell.io/en/rising-oil-dependency/">US$300 million</a> a day to fight the war, but for much of 2022 it was earning <a href="https://energyandcleanair.org/publication/russian-fossil-exports-first-100-days">$800 million</a> every day from energy exports. That revenue stream was enough to prevent living standards from collapsing and to replenish Russia’s stock of arms and ammunition.</p>
<p>The war, together with Russia’s cutback on gas deliveries to Europe in 2021, caused a spike in oil and gas prices. In the first month of the war, global <a href="https://oilprice.com/">oil prices</a> surged 50%, reaching a peak of $139 a barrel in April, while wholesale <a href="https://tradingeconomics.com/commodity/eu-natural-gas">gas prices</a> in Europe increased 500%, peaking at 300 euros ($320) per megawatt-hour. This created windfall profits for Russia. </p>
<p>Even though the <a href="https://www.dw.com/ru/eksport-nefti-iz-rf-po-moru-v-dekabre-rezko-sokratilsa/a-64169674">volume of Russian oil and gas exports to Europe fell</a> in 2022, its energy revenues <a href="https://www.ft.com/content/8a5f4681-9592-469f-b223-a939dcbbf3f3">surged to $168 billion</a> for the year, the highest level since 2011. Russia ended the year with a <a href="https://www.4freerussia.org/wp-content/uploads/sites/3/2023/01/frf-sanctions-web.pdf">current account surplus</a> of $227 billion, a record high.</p>
<h2>2. Russia has plenty of other customers</h2>
<p>Second, the <a href="https://www.castellum.ai/insights/russia-is-now-the-worlds-most-sanctioned-country">49 sanctioning countries</a> <a href="https://www.ng.ru/itog/2022-12-24/02_8623_02.html">account for just 60%</a> of the world’s economy. That leaves 40% still willing to do business with Moscow.</p>
<p>Most non-Western countries refused to join the sanctions. <a href="https://www.ponarseurasia.org/why-the-west-is-losing-the-global-information-war-over-ukraine-and-how-it-can-be-fixed">Many view</a> the Ukraine war as a result of great power rivalry and do not blame Russia. India and China are buying even more Russian oil and gas – though they persuaded Russia to give them a <a href="https://www.wsj.com/articles/russian-economic-optimism-is-based-on-suspect-data-11662111002">steep discount</a> of $20 to $30 a barrel. Turkey is also a critical partner: Its <a href="https://www.wsj.com/articles/russias-ukraine-war-effort-fueled-by-turkish-exports-11675447477?mod=article_inline">trade with Russia increased</a> 45% in 2022.</p>
<p>And despite their efforts to reduce purchases from Russia, European countries <a href="https://energyandcleanair.org/weekly-snapshot-russian-fossil-fuel-exports-26-december-2022-to-01-january-2023/">have still bought</a> $125 billion of Russian oil and gas since the invasion began, compared with $50 billion by China, $20 billion by Turkey and $18 billion by India. </p>
<h2>3. Russia’s economy is battle-hardened</h2>
<p>The third factor is that the observers predicting Armageddon failed to appreciate the Russian economy’s unique features. </p>
<p>The Russian government <a href="https://www.newyorker.com/news/daily-comment/putins-preparation-for-ukraine">has been preparing and planning for this war</a> for many years and has learned to live with and work around the sanctions that were imposed after the annexation of Crimea in 2014. </p>
<p>The tumultuous 1990s taught Russian business, consumers and workers how to <a href="https://intellinews.com/long-read-is-russia-s-economy-headed-for-economic-oblivion-as-a-report-from-yale-says-252508/">adapt to random shocks</a> – such as the high inflation that wiped out many people’s savings or the corporate raiders and tax police who stole businesses. Many people came to expect the worst and prepared for it. As a whole, they are both resilient in the face of challenges and resigned to lower expectations. </p>
<p>The <a href="https://russiapost.info/society/cart_creaking">Russian labor market</a> generally absorbs shocks not by companies firing workers but paying them less until things improve. Also, 15% of the workforce <a href="https://finexpertiza.ru/press-service/researches/2022/trud-migr-max/">is made up of migrants</a>, mainly from Central Asia – and they can be fired and sent home, then rehired as needed.</p>
<h2>4. Oligarchs and policymakers remain loyal</h2>
<p>One of the key political assumptions animating the initial sanctions strategy was flawed.</p>
<p>The <a href="https://www.cnn.com/2022/01/31/politics/us-russian-elite-sanctions/index.html">theory was that the sanctioned oligarchs</a> stood to lose tens of millions of dollars and access to their Western luxuries, and they would persuade Putin to change course to save their fortunes. </p>
<p>Well, I’d argue that <a href="https://global.oup.com/academic/product/the-code-of-putinism-9780190867324?cc=us&lang=en&">Russia is a dictatorship</a>, <a href="https://www.simonandschuster.com/books/Putins-Kleptocracy/Karen-Dawisha/9781476795201">not a kleptocracy</a>, and Putin values national power over personal wealth. The oligarchs <a href="https://www.theguardian.com/world/2022/dec/30/russian-oligarchs-lose-95bn-in-2022-amid-sanctions-after-ukraine-war">lost half or more</a> of their net worth, but few <a href="https://www.washingtonpost.com/world/2022/04/29/russia-oligarchs-ukraine-invasion-dissent/">have publicly criticized</a> the war. They knew that challenging Putin would mean losing their businesses in Russia, at the very least.</p>
<p>Meanwhile, the “liberal” economists <a href="https://www.bloomberg.com/news/articles/2022-07-30/meet-the-russian-architect-of-putin-s-economic-counterattack">running the central bank</a> and finance ministry – who were pivotal in helping Russia withstand the sanctions – stayed loyal. As the <a href="https://www.ft.com/content/fe5fe0ed-e5d4-474e-bb5a-10c9657285d2">Financial Times</a> put it, “Putin’s technocrats saved the economy to fight a war they opposed.”</p>
<p><a href="https://theconversation.com/economic-sanctions-may-deal-fatal-blow-to-russias-already-weak-domestic-opposition-178274">Some observers hoped</a> that the sanctions would cause ordinary Russians to rise up in protest. That did not happen. There were protests, but they tapered in the face of police repression, <a href="https://ovdinfo.org/">with over 19,500</a> people arrested and some leaders sentenced to eight years in jail. </p>
<p>The main response of those opposing the war was to leave the country. Some 500,000 have left, including many technology workers – which will undoubtedly <a href="https://www.bruegel.org/policy-brief/how-have-sanctions-impacted-russia">crimp Russia’s economic growth</a>.</p>
<h2>Signs of economic weakness</h2>
<p>As the war enters its second year, there are reasons to believe that this situation may change.</p>
<p>It’s important to note that the Russian government <a href="https://carnegieendowment.org/eurasiainsight/87404">stopped publishing</a> most aggregate economic statistics, so all the data <a href="https://www.state.gov/disarming-disinformation/fact-vs-fiction-kremlin-disinformation-about-international-sanctions/">must be treated with caution</a> – and it’s possible the reality is worse than the data suggests. </p>
<p>And Putin’s energy lifeline may be running out, with European purchases <a href="https://www.cnbc.com/2023/02/16/sanctions-on-russian-oil-are-having-the-intended-effect-iea-says.html">set to decline substantially</a> in 2023. On Dec. 5, 2022, the EU imposed a <a href="https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv%3AOJ.LI.2022.311.01.0001.01.ENG&toc=OJ%3AL%3A2022%3A311I%3ATOC">$60-a-barrel price cap</a> on Russian crude, blocking insurance for tankers carrying oil sold at a higher price. The cap on oil products came into effect on Feb. 5. </p>
<p>Russia’s federal budget was already under extreme pressure. Russia <a href="http://government.ru/news/47509/">had a $47 billion deficit</a> in 2022, which was covered by the <a href="https://www.reuters.com/markets/europe/russias-national-wealth-fund-148-bln-jan-1-finance-ministry-2023-01-18/">National Welfare Fund</a>. But that fund, which was $187 billion at the end of the year, is shrinking fast. In January 2023, a sharp drop in oil and gas revenue <a href="https://www.rferl.org/a/russia-national-wealth-fund-38-billion-deficit/32229281.html">created a $38 billion deficit</a> in one month alone. January might be an outlier, but if the trend continues, the Russian government will find it increasingly difficult to continue financing the war as the year progresses. </p>
<p>But for now at least, I believe that it’s clear the sanctions have not weakened Putin’s grip on power, nor his resolve – and capacity – to continue waging the war on Ukraine.</p><img src="https://counter.theconversation.com/content/199718/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Rutland does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The US and dozens of other nations have punished Russia with round after round of sanctions – yet the Russian economy is expected to grow in 2023.Peter Rutland, Professor of Government, Wesleyan UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1983952023-01-30T13:13:37Z2023-01-30T13:13:37ZUS debt default could trigger dollar’s collapse – and severely erode America’s political and economic might<figure><img src="https://images.theconversation.com/files/525410/original/file-20230510-12317-tw7ct7.jpg?ixlib=rb-1.1.0&rect=79%2C70%2C5832%2C3864&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Kevin McCarthy., left, Chuck Schumer, right, and President Joe Biden meet at the White House on May 9, 2023.</span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/Biden/bd4ffc74fe4e4646a58a1be1324ae5df/photo?Query=mccarthy&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=now-24h&totalCount=57&currentItemNo=42">AP Photo/Evan Vucci</a></span></figcaption></figure><p><a href="https://www.bloomberg.com/news/articles/2023-05-09/joe-biden-kevin-mccarthy-meet-on-debt-limit-as-threat-of-first-us-default-looms?sref=Hjm5biAW">Congressional leaders</a> at loggerheads over a debt ceiling impasse sat down with President Joe Biden on May 9, 2023, as the clock ticks down to a potentially catastrophic default if nothing is done <a href="https://apnews.com/article/x-date-debt-ceiling-yellen-treasury-borrowing-f726fd88a9bb7f72e50f0b948731ac57">by the end of the month</a>.</p>
<p>Republicans, who <a href="https://www.politico.com/news/2022/11/16/house-control-midterm-elections-results-2022-00066546">regained control of the House of Representatives</a> in November 2022, are <a href="https://www.cnn.com/2023/04/26/politics/debt-ceiling-house-vote-negotiations/index.html">threatening not to allow an increase in the debt limit</a> unless they get spending cuts and regulatory rollbacks in return, which they outlined in a bill passed in April 2023. In so doing, they risk pushing the U.S. government into default.</p>
<p>It feels a lot like a case of déjà vu all over again.</p>
<p>Brinkmanship over the debt ceiling has <a href="https://www.latimes.com/business/story/2023-01-17/the-u-s-economy-is-again-being-held-hostage-to-our-ridiculous-federal-debt-ceiling">become a regular ritual</a> – it <a href="https://newrepublic.com/article/93043/obama-clinton-debt-ceiling-crisis">happened under the Clinton administration</a> in 1995, then again <a href="https://apnews.com/article/biden-politics-united-states-government-national-debt-us-republican-party-d6bfc59aa623c8c972c44e1aced85d9c">with Barack Obama as president in 2011</a>, and <a href="https://crsreports.congress.gov/product/pdf/IN/IN11702#:%7E:text=The%20new%20limit%20stands%20just,pace%20of%20federal%20debt%20accumulation.">more recently in 2021</a>.</p>
<p>As <a href="https://tci.touro.edu/academics/faculty/">an economist</a>, I know that defaulting on the national debt would have real-life consequences. Even the threat of pushing the U.S. into default has an economic impact. In August 2021, the mere prospect of a potential default led to an <a href="https://www.wsj.com/articles/SB10001424053111903454504576492724028210348">unprecedented downgrade</a> of the the nation’s credit rating, hurting America’s financial prestige as well as countless individuals, including retirees.</p>
<p>And that was caused by the mere specter of default. An actual default would be far more damaging. </p>
<h2>Dollar’s collapse</h2>
<p>Possibly the most serious consequence would be the collapse of the U.S. dollar and its replacement as global trade’s “<a href="https://www.brookings.edu/wp-content/uploads/2019/09/DollarInGlobalFinance.final_.9.20.pdf">unit of account</a>.” That essentially means that it is widely used in global finance and trade.</p>
<p>Day to day, most Americans are likely unaware of the economic and political power that goes with being the world’s unit of account. Currently, <a href="https://www.euronews.com/next/2022/08/03/watch-the-us-dollar-is-the-mightiest-of-all-world-currencies-but-is-its-position-under-thr">more than half of world trade</a> – from oil and gold to cars and smartphones – is in U.S. dollars, with the <a href="https://www.swift.com/news-events/news/new-research-highlights-currency-usage-and-trends-global-payments">euro accounting for around 30%</a> and all other currencies making up the balance.</p>
<p>As a result of this dominance, the U.S. is the only country on the planet that can <a href="https://www.cfr.org/backgrounder/dollar-worlds-currency">pay its foreign debt in its own currency</a>. This gives both the U.S. government and American companies tremendous leeway in international trade and finance. </p>
<p>No matter how much debt the U.S. government owes foreign investors, it can simply print the money needed to pay them back – although for economic reasons, it may not be wise to do so. Other countries <a href="https://www.twincities.com/2022/08/21/real-world-economics-why-other-countries-need-our-dollars/">must buy either the dollar or the euro</a> to pay their foreign debt. And the only way for them to do so is to either to export more than they import or borrow more dollars or euros on the international market.</p>
<p>The U.S. is free from such constraints and can <a href="https://www.epi.org/publication/trade-deficits-consequences-policy-implications/">run up large trade deficits</a> – that is, import more than it exports – for decades without the same consequences.</p>
<p>For American companies, the dominance of the dollar means they’re <a href="https://www.brookings.edu/blog/ben-bernanke/2016/01/07/the-dollars-international-role-an-exorbitant-privilege-2/">not as subject to the exchange rate risk</a> as are their foreign competitors. Exchange rate risk refers to how changes in the relative value of currencies may affect a company’s profitability.</p>
<p>Since international trade is generally denominated in dollars, U.S. businesses can buy and sell in their own currency, something their foreign competitors cannot do as easily. As simple as this sounds, it gives American companies a tremendous competitive advantage. </p>
<p>If Republicans push the U.S. into default, the dollar would likely <a href="https://theconversation.com/if-the-us-defaults-on-debt-expect-the-dollar-to-fall-and-with-it-americans-standard-of-living-169079">lose its position as the international unit of account</a>, forcing the government and companies to pay their international bills in another currency.</p>
<figure class="align-center ">
<img alt="A mincer shows dollars being inserted in the top and shredded underneath." src="https://images.theconversation.com/files/506839/original/file-20230127-23-j6o3xl.jpg?ixlib=rb-1.1.0&rect=0%2C16%2C3903%2C2872&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/506839/original/file-20230127-23-j6o3xl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/506839/original/file-20230127-23-j6o3xl.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/506839/original/file-20230127-23-j6o3xl.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/506839/original/file-20230127-23-j6o3xl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/506839/original/file-20230127-23-j6o3xl.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/506839/original/file-20230127-23-j6o3xl.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A U.S. debt default would mangle the dollar’s international reputation.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/destroying-dollars-with-a-grinder-royalty-free-image/154934035?phrase=dollar%20ripped&adppopup=true">photovideostock/E+ via Getty Images</a></span>
</figcaption>
</figure>
<h2>Loss of political power too</h2>
<p>The dollar’s dominance means trade must go through an American bank at some point. This is one important way it gives the U.S. tremendous political power, especially to punish economic rivals and unfriendly governments.</p>
<p>For example, when former President Donald Trump <a href="https://www.washingtonpost.com/national-security/trump-administration-to-impose-crushing-sanctions-on-iran-in-defiance-of-european-humanitarian-concerns/2020/10/07/f29c052c-08f4-11eb-991c-be6ead8c4018_story.html">imposed economic sanctions on Iran</a>, he <a href="https://www.cambridge.org/core/journals/american-journal-of-international-law/article/dollar-and-the-united-states-exorbitant-power-to-sanction/419F2FDF5BF6E052258DEE592853D6C3">denied the country access to American banks and to the dollar</a>. He also imposed secondary sanctions, which means that non-American companies trading with Iran were also sanctioned. Given a choice of access to the dollar or trading with Iran, <a href="https://www.cnas.org/publications/reports/sanctions-by-the-numbers-u-s-secondary-sanctions">most of the world economies</a> chose access to the dollar and complied with the sanctions. As a result, Iran entered a deep recession, and <a href="https://www.xe.com/currencycharts/?from=USD&to=IRR&view=10Y">its currency plummeted</a> about 30%.</p>
<p>President Joe Biden did something similar <a href="https://www.cnbc.com/2022/02/28/biden-administration-expands-russia-sanctions-cuts-off-us-transactions-with-central-bank.html">against Russia</a> in response to its invasion of Ukraine. Limiting Russia’s access to the dollar has helped <a href="https://www.wilsoncenter.org/blog-post/russias-economy-end-2022-deeper-troubles">push the country into a recession</a> that’s bordering on a depression.</p>
<p>No other country today could unilaterally impose this level of economic pain on another country. And all an American president currently needs is a pen. </p>
<h2>Rivals rewarded</h2>
<p>Another consequence of the dollar’s collapse would be enhancing the position of the U.S.’s top rival for global influence: China.</p>
<p>While the euro would likely replace the dollar as the world’s primary unit of account, the <a href="https://financialpost.com/moneywise/could-chinas-yuan-replace-the-u-s-dollar-as-the-worlds-dominant-currency#:%7E:text=The%20researchers%20argue%20that%20replacing,in%20a%20%E2%80%9Cmultipolar%E2%80%9D%20world.">Chinese yuan</a> would move into second place.</p>
<p>If the yuan were to become a significant international unit of account, this would enhance China’s international position both economically and politically. As it is, China has been working with the other BRIC countries – Brazil, Russia and India – to accept the yuan as a unit of account. With the other three already <a href="https://www.cambridge.org/core/elements/can-brics-dedollarize-the-global-financial-system/0AEF98D2F232072409E9556620AE09B0">resentful of U.S. economic and political dominance</a>, a U.S. default would support that effort. </p>
<p>They may not be alone: Recently, Saudi Arabia suggested it was open to <a href="https://finance.yahoo.com/news/saudi-arabia-just-said-now-213200817.html">trading some of its oil in currencies other than the dollar</a> – something that would change long-standing policy.</p>
<h2>Severe consequences</h2>
<p>Beyond the impact on the dollar and the economic and political clout of the U.S., a default would be profoundly felt in many other ways and by countless people. </p>
<p>In the U.S., tens of millions of Americans and thousands of companies that depend on government support <a href="https://www.whitehouse.gov/cea/written-materials/2021/10/06/life-after-default/">could suffer</a>, and the economy would most likely sink into recession – or worse, given the U.S. is already expected to soon suffer a downturn. In addition, retirees could see the worth of their pensions dwindle.</p>
<p>The truth is, we really don’t know what will happen or how bad it will get. The scale of the damage caused by a U.S. default is hard to calculate in advance because it has never happened before. </p>
<p>But there’s one thing we can be certain of. If Republicans take their threat of default too far, the U.S. and Americans will suffer tremendously.</p>
<p><em>This is an updated version of an article originally published on Jan. 30, 2023</em></p><img src="https://counter.theconversation.com/content/198395/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michael Humphries does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>As President Biden begins meeting with congressional leaders to resolve the debt ceiling showdown, an economist warns the consequences of a default could be dire.Michael Humphries, Deputy Chair of Business Administration, Touro UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1897802022-11-18T03:58:45Z2022-11-18T03:58:45ZChina’s influence in Myanmar could tip the scales towards war in the South China Sea<p>The fate of Myanmar has major implications for a free and open Indo-Pacific. </p>
<p>An undemocratic Myanmar serves no one’s interests except China, which is consolidating its economic and strategic influence in its smaller neighbour in pursuit of its <a href="https://cimsec.org/chinese-maritime-strategy-indian-ocean/">two-ocean strategy</a>.</p>
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Read more:
<a href="https://theconversation.com/friday-essay-if-growing-us-china-rivalry-leads-to-the-worst-war-ever-what-should-australia-do-185294">Friday essay: if growing US-China rivalry leads to 'the worst war ever', what should Australia do?</a>
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<p>Since the coup China has been – by far – the main source of <a href="https://www.reuters.com/article/myanmar-economy-idUSL4N2U721T">foreign investment</a> in Myanmar. </p>
<p>This includes <a href="https://www.myanmar-now.org/en/news/junta-approves-25bn-power-plant-project-backed-by-chinese-companies">US$2.5 billion</a> in a gas-fired power plant to be built west of Myanmar’s capital, Yangon, that will be 81% owned and operated by Chinese companies.</p>
<p>Among the dozens of infrastructure projects China is funding are high-speed rail links and dams. But its most strategically important investment is the <a href="https://www.wilsoncenter.org/blog-post/china-myanmar-economic-corridor-and-chinas-determination-see-it-through">China-Myanmar Economic Corridor</a>, encompassing oil and gas pipelines, roads and rail links costing many tens of billions of dollars. </p>
<p>The corridor’s “jewel in the crown” is a deep-sea port to be built at Kyaukphyu, on Myanmar’s west coast, at an estimated <a href="https://www.bnionline.net/en/news/kyaukphyu-deep-sea-port-poses-challenges-maday-islanders-and-local-fisheries">cost of US$7 billion</a>.</p>
<p>This will finally give China its long-desired “back door” to the Indian Ocean.</p>
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<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/495784/original/file-20221117-23-chh7pu.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/495784/original/file-20221117-23-chh7pu.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/495784/original/file-20221117-23-chh7pu.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=540&fit=crop&dpr=1 600w, https://images.theconversation.com/files/495784/original/file-20221117-23-chh7pu.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=540&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/495784/original/file-20221117-23-chh7pu.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=540&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/495784/original/file-20221117-23-chh7pu.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=679&fit=crop&dpr=1 754w, https://images.theconversation.com/files/495784/original/file-20221117-23-chh7pu.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=679&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/495784/original/file-20221117-23-chh7pu.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=679&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="attribution"><span class="source">Source: Vivekananda International Foundation</span></span>
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<p>Natural gas from Myanmar can help China reduce its dependence on imports from suppliers such as Australia. Access <a href="https://www.diis.dk/en/research/myanmar-chinas-west-coast-dream">to the Indian Ocean</a> will enable China to import gas and oil from the Middle East, Africa and Venezuela without ships having to pass through the contested waters of the South China Sea to Chinese ports. </p>
<p>About <a href="https://chinapower.csis.org/much-trade-transits-south-china-sea/">80% of China’s oil imports</a> now move through the South China Sea via the Malacca Strait, which is just 65 kilometres wide at its narrowest point between the Malay Peninsula and Indonesia’s Sumatra. </p>
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<p>Overcoming this strategic vulnerability arguably makes the Kyaukphyu port and pipelines the most important element of China’s <a href="https://theconversation.com/china-is-financing-infrastructure-projects-around-the-world-many-could-harm-nature-and-indigenous-communities-168060">Belt and Road initiative</a> to reshape global trade routes and assert its influence over other nations.</p>
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Read more:
<a href="https://theconversation.com/conflict-in-the-south-china-sea-threatens-90-of-australias-fuel-imports-study-188148">Conflict in the South China Sea threatens 90% of Australia's fuel imports: study</a>
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<h2>Deepening relationship</h2>
<p>Most of China’s infrastructure investment was planned before Myanmar’s coup. But whereas other governments and foreign investors have sought to distance themselves from the junta since it overthrew Myanmar’s elected government in February 2021, China has deepened its relationship.</p>
<p>China is the Myanmar regime’s most important international supporter. In April Foreign Minister Wang Yi said <a href="https://apnews.com/article/wang-yi-aung-san-suu-kyi-china-myanmar-diplomacy-d68de69436c1462f647f6475b6315c92">China would support Myanmar</a> “no matter how the situation changes”. In May it used its veto power on the United Nations Security Council to thwart <a href="https://news.yahoo.com/russia-china-block-un-statement-034542265.html">a statement expressing concern</a> about violence and the growing humanitarian crisis in Myanmar. </p>
<p>Work continues on projects associated with the China-Myanmar Economic Corridor. New ventures (such as the aforementioned power station) have been approved.
More projects are on the cards. In June, for example, China’s embassy in Myanmar announced the completion of <a href="https://www.thestar.com.my/aseanplus/aseanplus-news/2022/06/08/feasibility-study-completed-for-myanmar039s-wan-pong-port-improvement-project">a feasibility study</a> to upgrade the Wan Pong port on the Lancang-Mekong River in Myanmar’s east.</p>
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Read more:
<a href="https://theconversation.com/as-myanmar-suffers-the-military-junta-is-desperate-isolated-and-running-out-of-options-187697">As Myanmar suffers, the military junta is desperate, isolated and running out of options</a>
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<h2>Debt trap warnings</h2>
<p>In 2020, before the coup, Myanmar’s auditor general Maw Than <a href="https://www.rfa.org/english/news/myanmar/costly-borrowing-06102020151951.html">warned of growing indebtedness</a> to China, with Chinese lenders charging higher interest payments than those from the International Monetary Fund or World Bank. </p>
<p>At that time <a href="https://www.asianews.it/news-en/Forty-per-cent-of-Myanmar%E2%80%99s-government-debt-held-by-China-46071.html">about 40%</a> of Myanmar’s foreign debt of US$10 billion was owed to China. It is likely to be greater now. It will only increase the longer a military dictatorship, with few other supporters or sources of foreign money, remains in power, <a href="https://www.eastasiaforum.org/2021/06/23/how-the-coup-is-destroying-myanmars-economy/">dragging down Myanmar’s economy</a>.</p>
<p>Efforts to restore democracy in Myanmar should therefore be seen as crucial to the long-term strategic interests of the region’s democracies, and to global peace and prosperity, given the increasing belligerence of China under Xi Jinping. </p>
<p>Xi, now president for life, this month told the People’s Liberation Army to <a href="https://www.theguardian.com/world/2022/nov/09/xi-jinping-tells-chinas-army-to-focus-on-preparation-for-war">prepare for war</a>. A compliant and indebted Myanmar with a deep-sea port controlled by Chinese interests tips the scales towards that happening. </p>
<p>A democratic and independent Myanmar is a counter-strategy to this potential. </p>
<h2>Calls for sanctions</h2>
<p>Myanmar’s democracy movement wants the international community to impose <a href="https://specialadvisorycouncil.org/cut-the-cash/">tough sanctions</a> on the junta. But few have responded.</p>
<p>The United States and United Kingdom have gone furthest, banning business dealings with Myanmar military officials and state-owned or private companies controlled by the military. </p>
<p>The European Union and Canada have imposed sanctions against a more limited range of individuals and economic entities.</p>
<p>South Korea has suspended financing new infrastructure projects. Japan has suspended aid and postponed the launch of Myanmar’s first satellite. New Zealand has suspended political and military contact. </p>
<p>Australia has suspended military cooperation (with some <a href="https://www.dfat.gov.au/international-relations/security/sanctions/sanctions-regimes/myanmar-sanctions-regime">pre-existing restrictions</a> on dealing with military leaders imposed following the human rights atrocities committed against the <a href="https://www.bbc.com/news/world-asia-41566561">Rohingya</a> in 2017. </p>
<p>But that’s about it. </p>
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<em>
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Read more:
<a href="https://theconversation.com/sanctions-against-myanmars-junta-have-been-tried-before-can-they-work-this-time-158054">Sanctions against Myanmar's junta have been tried before. Can they work this time?</a>
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<p>Myanmar’s closest neighbours in the ten-member Association of South-East Asian Nations are still committed to a policy of dialogue and “<a href="https://thediplomat.com/2022/11/will-asean-finally-change-its-approach-toward-myanmar/">non-interference</a>” – though <a href="https://thediplomat.com/2022/05/malaysian-fm-says-asean-envoy-welcomes-idea-of-engaging-myanmars-nug/">Malaysia</a> and <a href="https://thediplomat.com/2022/11/indonesian-fm-says-myanmar-military-to-blame-for-countrys-crisis/">Indonesia</a> are increasingly arguing for a tougher approach as the atrocities mount. </p>
<p>The <a href="https://myanmar.iiss.org/">Armed Conflict Location and Event Data Project</a> says the only country now more violent than Myanmar is Ukraine. </p>
<p>Given its unique geo-strategic position, self-interest alone should be enough for the international community to take greater action.</p><img src="https://counter.theconversation.com/content/189780/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Htwe Htwe Thein receives funding from the Australian Research Council (ARC) Discovery grant. </span></em></p>An undemocratic Myanmar serves no one’s interests except China.Htwe Htwe Thein, Associate professor, Curtin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1916672022-09-30T05:12:20Z2022-09-30T05:12:20ZA sham sentence after a secret trial for Australian Sean Turnell<figure><img src="https://images.theconversation.com/files/487460/original/file-20220930-16-4vbc24.jpg?ixlib=rb-1.1.0&rect=0%2C3%2C1799%2C921&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.irrawaddy.com/news/burma/ruling-for-australian-nld-economics-advisor-expected-next-month.html">The Irawaddy</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>Australian Sean Turnell, economic adviser to Myanmar’s democratically elected leader Aung San Suu Kyi, has been in prison since the military coup of February 2021, awaiting trial for the supposed crime of stealing state secrets. </p>
<p>This week a puppet court sentenced him <a href="https://www.reuters.com/world/asia-pacific/myanmar-court-sentences-suu-kyi-australian-economist-3-years-jail-source-2022-09-29/">to three years</a> in prison, alongside Suu Kyi, who has already been sentenced to 20 years’ jail in other sham court cases.</p>
<p>Both pled not guilty to the charge of holding confidential secret government documents. Turnell has said all he had were economic papers needed for his work as a technical economic adviser to Myanmar’s government. </p>
<p>The trial was held behind closed doors. Australian consular officials attempted to attend but were denied access. Foreign affairs minister Penny Minister <a href="https://www.foreignminister.gov.au/minister/penny-wong/media-release/sentencing-professor-sean-turnell">has issued a statement</a> rejecting the legitimacy of the trial and calling for Turnell’s release.</p>
<p>The Myanmar regime has agreed to take into account the 20 months Turnell has already spent in prison. So he is due for release in January 2024.</p>
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Read more:
<a href="https://theconversation.com/as-myanmar-suffers-the-military-junta-is-desperate-isolated-and-running-out-of-options-187697">As Myanmar suffers, the military junta is desperate, isolated and running out of options</a>
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<p>It is possible, however, that he could be released and deported early. There is a precedent for this. In November 2011 US journalist Danny Fenster was <a href="https://www.theguardian.com/world/2021/nov/12/myanmar-junta-jails-us-journalist-danny-fenster-for-11-years">sentenced to 11 years</a> with hard labour but <a href="https://www.theguardian.com/world/2021/nov/15/us-journalist-danny-fenster-released-from-prison-in-myanmar">released just a day later</a>. Bill Richardson, a former New Mexico governor and US ambassador to the UN, was appointed as a special envoy and negotiated his release.</p>
<h2>How Turnell ended up in Myanmar</h2>
<p>I’ve known Turnell as a family friend and colleague for many years.</p>
<p>A working-class kid from Macquarie Fields in south-west Sydney, he attended Macquarie University, where he earned a bachelor’s degree in economics, then a PhD and ended up as an associate professor.</p>
<p>Turnell went on to become an expert on the links between banking systems and economic performance in developing countries, particularly in South-East Asia. </p>
<p>He wrote some important academic articles on Myanmar discussing how, after decades of isolation under military rule, economic reforms could rebuild the nation’s agriculture and tourism sector. </p>
<p>His work gained the attention of Aung San Suu Kyi. They first met in the early 1990s, before Suu Kyi was sentenced to house arrest. After her release in 2010 the junta (temporarily) allowed democratic reforms and she invited him to become her economic adviser. </p>
<p>Turnell’s economic competence was widely admired. He became a sort of John Maynard Keynes of Myanmar. I witnessed this in 2017 when he gave the keynote address to an <a href="https://aummi.edu.au/conference-2017/">Australian Myanmar Institute</a> conference in Yangon. It was a full house with an enthusiastic audience.</p>
<p>On February 1 2021 the miltary staged its coup. Turnell was arrested, along with other prominent advisers to Suu Kyi, a few days later. </p>
<h2>Is it time for sanctions?</h2>
<p>It has been suggested that Australia should appoint a special envoy help get Turnell released, just as the US did for Danny Fenster. Former prime minister Kevin Rudd might be suitable given his good relationships in Asia.</p>
<p>In the meantime it is pleasing to see that foreign minister Penny Wong has been more vigorous than her predecessor Marise Payne in advocating for Turnell, and Myanmar generally. </p>
<p>Last month Wong <a href="https://www.foreignminister.gov.au/minister/penny-wong/speech/statement-asean-australia-ministerial-meeting">raised the issue</a> of Myanmar at a meeting of ministers of the Association of Southeast Asian Nations (ASEAN). Myanmar is one of ASEAN’s ten members, and its neighbours have been divided over the forum’s longstanding policy of “constructive engagement” versus taking a harder line. </p>
<p>But will the Australian government back up its rhetorical support for Myanmar’s democracy movement with the type of sanctions the movement wants from the international community?</p>
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<strong>
Read more:
<a href="https://theconversation.com/sanctions-against-myanmars-junta-have-been-tried-before-can-they-work-this-time-158054">Sanctions against Myanmar's junta have been tried before. Can they work this time?</a>
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<p>Observers <a href="https://www.lowyinstitute.org/the-interpreter/will-australia-use-its-amended-sanctions-act-against-myanmar">have suggested</a> Turnell’s fate may have influenced the former government’s lack of enthusiasm for sanctions. </p>
<p>That still appears the case, with Wong adopting a similar stance to Payne in saying only that sanctions against members of Myanmar’s military regime “<a href="https://www.sbs.com.au/news/article/australia-mulls-sanctions-against-myanmars-military-leaders-after-appalling-executions/bhwe88g6l">are under active consideration</a>”.</p>
<p>But there’s a paradox at play here. If Turnell’s predicament really is behind the government’s reluctance to impose sanctions, that gives Myanmar’s junta an incentive to keep Turnell locked up.</p><img src="https://counter.theconversation.com/content/191667/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sean Turnell is a family friend</span></em></p>Having already spent 20 months in a prison, Aung San Syy Kyi’s Australian economic advisor is due for release in January 2024.Tim Harcourt, Industry Professor and Chief Economist, University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1822142022-05-03T20:49:42Z2022-05-03T20:49:42ZNo, Biden can’t just sell off seized Russian yachts and central bank assets to help aid Ukraine – international law and the US Constitution forbid it<figure><img src="https://images.theconversation.com/files/461032/original/file-20220503-19379-xgcgk0.jpg?ixlib=rb-1.1.0&rect=302%2C87%2C6205%2C4244&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Biden wants to find a way to seize oligarch-owned yachts.</span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/RussiaUkraineWar-SanctionsExplainer/2b8b144590104677b1f74bd58e0552fb/photo?Query=us%20Russian%20yacht&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=21&currentItemNo=0">AP Photo/Francisco Ubilla</a></span></figcaption></figure><p>The Biden administration <a href="https://www.vanityfair.com/news/2022/04/joe-biden-wants-to-sell-russian-yachts-ukraine-aid">wants to sell off the yachts, homes and other luxury assets</a> it has seized from Russian oligarchs and use those proceeds to support reparations for Ukraine. </p>
<p>As part of <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/04/28/fact-sheet-white-house-calls-on-congress-to-provide-additional-support-for-ukraine/">his proposal for the latest aid package</a> to Ukraine, President Joe Biden <a href="https://www.whitehouse.gov/briefing-room/speeches-remarks/2022/04/28/remarks-by-president-biden-on-the-request-to-congress-for-additional-funding-to-support-ukraine">is asking lawmakers</a> for the authority to formally confiscate the assets of sanctioned oligarchs to pay to “remedy the harm Russia caused … and help build Ukraine.” The House has already passed a bill <a href="https://www.nytimes.com/2022/04/27/us/politics/biden-russia-sanctions.html">urging Biden to sell the assets</a>, but it didn’t specifically give him the authority to do so. </p>
<p>Others have encouraged the administration <a href="https://www.nytimes.com/2022/04/15/opinion/russia-war-currency-reserves.html">to sell off the tens of billions of dollars</a> in Russian central bank assets it has frozen. It’s not clear <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/04/28/fact-sheet-white-house-calls-on-congress-to-provide-additional-support-for-ukraine/">from the White House statement</a> whether Biden plans to go after state-owned assets too.</p>
<p>That he has gone to Congress to get permission indicates that his lawyers believe, <a href="https://www.lawfareblog.com/giving-russian-assets-ukraine-freezing-not-seizing">as do I</a>, that <a href="https://www.law.cornell.edu/uscode/text/50/chapter-35">current law permits only</a> freezing, and not selling, foreign property in the course of an international crisis. </p>
<p><a href="https://scholar.google.com/citations?user=HyGhJIoAAAAJ&hl=en&oi=ao">I’ve studied and practiced international law</a> for several decades and advised the departments of State and Defense on issues like this one. The idea of forcing Russia to pay reparations for the harm to Ukraine has obvious appeal. But the U.S. needs to comply with constitutional and international law when it does so. </p>
<h2>Freezing vs. confiscating</h2>
<p>You might ask what the difference is <a href="https://ec.europa.eu/info/law/cross-border-cases/judicial-cooperation/types-judicial-cooperation/confiscation-and-freezing-assets_en">between seizing or freezing property</a> – forbidding anyone to dispose of or use an asset or take income from it – and confiscating it.</p>
<p>Freezing destroys the economic benefits of ownership. But the owner at least retains the hope that, when the conflict is over and the freeze order ends, the property – or its equivalent in money – will return. Confiscation means selling off the property and giving the proceeds, along with any cash seized, to a designated beneficiary – in this case, people acting on behalf of Ukraine. </p>
<p>The <a href="https://www.law.cornell.edu/uscode/text/50/chapter-35">International Economic Emergency Powers Act of 1977</a> permits only freezing, and not selling, foreign property in the course of an international crisis. Congress adopted this law to replace the <a href="https://uscode.house.gov/view.xhtml?path=/prelim@title50/chapter53&edition=prelim">Trading With the Enemy Act of 1917</a>, which gave the president much broader power to take action against U.S. adversaries in and out of war. </p>
<p>Since then, the U.S. has frequently used the power to seize assets belonging to foreign individuals or nations as an economic sanction to punish what it considers bad behavior. For example, after Iran stormed and seized the American embassy in Tehran, the U.S. government <a href="https://sgp.fas.org/crs/mideast/RS20871.pdf">seized billions of dollars</a> in Iranian assets in the U.S, including cash and property. The U.S. has also frozen assets of Venezuela and the Taliban over ties to terrorism and Russian individuals considered responsible for human rights violations, thanks to the <a href="https://theconversation.com/the-us-doesnt-need-to-wait-for-an-invasion-to-impose-sanctions-on-russia-it-could-invoke-the-magnitsky-act-now-176202">Magnitsky Act</a>. </p>
<p>In all these cases, the United States held on to the foreign property rather than sell it off. In some cases, it used the seized property as a bargaining chip toward a future settlement. In 2016, the Obama administration famously returned US$400 million to Iran that the U.S. had <a href="https://www.wsj.com/articles/inside-the-37-year-standoff-over-irans-frozen-u-s-dollars-1482956855">seized after the embassy siege</a> in 1979 – delivering stacks of Swiss francs stuffed inside a Boeing 737. In other cases, the assets remain under government control, administered by an office of the U.S. Treasury, in hope that eventually some compromise can be reached.</p>
<p>The Patriot Act, adopted in the wake of 9/11, <a href="https://www.govinfo.gov/content/pkg/PLAW-107publ56/pdf/PLAW-107publ56.pdf">created a limited exception</a> to the confiscation ban in instances in which the United States is at war. The U.S. never has used this authority. And despite the <a href="https://www.npr.org/2022/04/29/1095458518/russia-ukraine-us-military-aid">increasingly heated rhetoric</a>, <a href="https://home.treasury.gov/policy-issues/financial-sanctions/sanctions-programs-and-country-information/ukraine-russia-related-sanctions">stepped-up sanctions</a> and <a href="https://www.state.gov/u-s-security-cooperation-with-ukraine">growing aid for Ukraine</a>, the U.S. is not at war with Russia. </p>
<figure class="align-center ">
<img alt="A large crowd of Iranian protesters press against the gates of the American embassy in Tehran in 1979" src="https://images.theconversation.com/files/461088/original/file-20220503-12-hrf49y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/461088/original/file-20220503-12-hrf49y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=396&fit=crop&dpr=1 600w, https://images.theconversation.com/files/461088/original/file-20220503-12-hrf49y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=396&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/461088/original/file-20220503-12-hrf49y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=396&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/461088/original/file-20220503-12-hrf49y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=498&fit=crop&dpr=1 754w, https://images.theconversation.com/files/461088/original/file-20220503-12-hrf49y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=498&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/461088/original/file-20220503-12-hrf49y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=498&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">The US frozen billions worth of Iranian assets after the siege of the American embassy in Tehran.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/NBAAt751970sTimeline/740b324279c943ca843cc907fc714a78/photo?Query=iran%20us%20embassy&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=1132&currentItemNo=19">AP Photo</a></span>
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<h2>Redressing gross violations</h2>
<p>A fundamental principle of justice says those who cause harm while breaking the law should pay.</p>
<p>In international law, we call this “reparations.” As the <a href="https://www.ohchr.org/en/instruments-mechanisms/instruments/basic-principles-and-guidelines-right-remedy-and-reparation">United Nations puts it</a>, “Adequate, effective and prompt reparation is intended to promote justice by redressing gross violations of international human rights law or serious violations of international humanitarian law.” </p>
<p>In recent history, victors have often forced reparations on the losers of war – as was the case <a href="https://www.britannica.com/topic/reparations">following both World War I and World War II</a> – especially when they are deemed responsible for massive death and ruin.</p>
<p>Russia has wrought terrible destruction in Ukraine. Several cities, including Mariupol, <a href="https://www.washingtonpost.com/world/interactive/2022/ukraine-before-after-destruction-photos/">are all but destroyed</a>, and evidence of war crimes in <a href="https://apnews.com/article/russia-ukraine-europe-war-crimes-7791e247ce7087dddf64a2bbdcc5b888">places like Bucha is mounting</a>. </p>
<p>So it makes sense that so many scholars, lawmakers and others would argue that the regime of Vladimir Putin and those who benefit from his rule should help pay for it. </p>
<p>Some, <a href="https://www.nytimes.com/2022/04/15/opinion/russia-war-currency-reserves.html">such as Harvard legal scholar Laurence Tribe, argue</a> U.S. law <a href="https://www.foreignaffairs.com/articles/ukraine/2022-04-19/how-ukraine-can-build-back-better">already allows</a> the president to use any seized or frozen asset as reparations. But, as <a href="https://www.ft.com/content/50aae1a2-088a-47f9-b936-30fa02cf03de">other experts have pointed out</a>, doing so has serious problems. The legal issues noted above are one major hurdle and open this up to being challenged in court. </p>
<p>Another is political. Confiscating assets <a href="https://www.politico.com/news/magazine/2022/03/30/rebuilding-ukraine-make-putin-pay-00021649">takes away important bargaining chips</a> in any future negotiations, as they have been with Iran and other countries. </p>
<p><a href="https://www.politico.com/news/magazine/2022/03/30/rebuilding-ukraine-make-putin-pay-00021649">Specialists</a> in <a href="https://www.justsecurity.org/81165/why-proposals-for-u-s-to-liquidate-and-use-russian-central-bank-assets-are-legally-unavailable/">sanctions law</a> – <a href="https://www.lawfareblog.com/giving-russian-assets-ukraine-freezing-not-seizing">including me</a> – agree with Biden that Congress needs to pass a new law.</p>
<h2>Punishing Russia while preserving the rule of law</h2>
<p>The question then becomes what that legislation should look like to avoid running afoul of international law and the U.S. Constitution. There still seem to be several limitations on what Congress can do.</p>
<p>For example, the Constitution’s <a href="https://www.law.cornell.edu/wex/due_process">Fifth Amendment guarantees due process</a> before the government can confiscate a private citizen’s property. But does this apply to property in the U.S. that belongs to a foreign citizen? The answer seems to be yes, at least according to two <a href="https://www.law.cornell.edu/supremecourt/text/315/203">Supreme</a> <a href="https://www.law.cornell.edu/supremecourt/text/282/481">Court</a> cases.</p>
<p>Selling off Russian state property such as central bank assets, creates other problems. International law provides a certain degree of immunity from confiscation to foreign nations and their assets overseas. Outside of wartime, confiscation of state property, including U.S. deposits of Russia’s central bank, <a href="https://www.justsecurity.org/81165/wh%20%20%20y-proposals-for-u-s-to-liquidate-and-use-russian-central-bank-assets-are-legally-unavailable/">runs up against these challenges</a>. </p>
<p>A case currently before the International Court of Justice will decide <a href="https://www.icj-cij.org/en/case/164">whether the United States violated this rule</a> when it used funds from frozen Iranian central bank deposits to compensate people who had won a default judgment from Iran for supporting terrorists. </p>
<p>[<em>More than 150,000 readers get one of The Conversation’s informative newsletters.</em> <a href="https://memberservices.theconversation.com/newsletters/?source=inline-140K">Join the list today</a>.]</p>
<p>So, yes, I believe that Russia’s invasion of Ukraine is outrageous and demands a response. But that doesn’t mean the U.S. and other countries should ride roughshod over international law and the U.S. Constitution to do so. Congress should be able to craft a law that allows some assets to be confiscated without violating due process or international law.</p>
<p>I predict that disregarding these issues will likely produce embarrassing judicial setbacks that will make it harder to help Ukraine down the road.</p><img src="https://counter.theconversation.com/content/182214/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Paul Stephan worked in the past as an expert witness in support of Naftogaz, the Ukrainian national oil and gas company, in its efforts to use international investment law to obtain compensation for the seizure by Russia of its assets in Crimea. </span></em></p>The US has frozen tens of billions of dollars worth of assets belonging to Russians and their government. A legal scholar explains why confiscating them is a bit trickier.Paul B. Stephan, John C. Jeffries Jr. Distinguished Professor of Law and David H. Ibbeken '71 Research Professor of Law, University of VirginiaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1807732022-04-12T12:50:12Z2022-04-12T12:50:12Z5 areas where Canada needs to step up on the war in Ukraine<figure><img src="https://images.theconversation.com/files/457672/original/file-20220412-30687-i3nztd.JPG?ixlib=rb-1.1.0&rect=0%2C0%2C3000%2C2002&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">People march in Saskatoon, Sask., with the flag of Ukraine during a rally mourning the deaths of civilians killed during the Russian invasion of Ukraine. </span> <span class="attribution"><span class="source">THE CANADIAN PRESS/Heywood Yu</span></span></figcaption></figure><p>Russian atrocities against Ukrainians <a href="https://www.politico.eu/article/russia-war-crime-ukraine-never-again/">are increasingly coming to light</a>. Canada could and should be doing more to stop Russia, both independently and in coalition with other countries.</p>
<p>More than a month into Russia’s unprovoked military aggression against Ukraine, I was invited to appear before Canada’s <a href="https://www.ourcommons.ca/Committees/en/FAAE/StudyActivity?studyActivityId=11484098">Standing Senate Committee on Foreign Affairs and International Development</a> as an expert witness and to provide ideas that could bring about peace and security. </p>
<p>In my remarks, I explained that Ukrainians are doing a heroic job defending themselves, their values and their democracy. But they need more help in their David and Goliath struggle; they cannot win this war alone.</p>
<p>It’s comparable to the United States attacking Canada — no matter how brave, well-equipped and powerful Canadian soldiers are, there is no way they could withstand a long-term assault from a superior military force.</p>
<h2>Canada-Ukraine bonds</h2>
<p>Canada and Ukraine have a special relationship, forged over 30 years. <a href="https://www.international.gc.ca/country-pays/ukraine/relations.aspx?lang=eng">Canada was the first western country to recognize Ukraine’s independence in 1991</a>; Poland was the only country ahead of Canada to do so. </p>
<p>In 1991, <a href="https://cup.columbia.edu/book/ukraine-calling/9783838214726">I was a journalist in Ukraine</a> and in the room when Canada’s chargé d'affaires in Kyiv, <a href="https://peoplepill.com/people/nestor-gayowsky">Nestor Gayowsky</a>, read the telegram announcing that Canada recognized Ukraine’s referendum results and welcomed it as an independent country. I felt so proud in that moment as a Canadian-Ukrainian, and I would like to feel that pride again.</p>
<p>Canada has an important role to play now, and it’s time for new ideas. </p>
<p>The <a href="https://www.theguardian.com/world/2009/sep/11/second-world-war-rebuilding">international institutional infrastructure created at the end of the Second World War</a> is clearly unable to stop war and atrocities. Lester B. Pearson, who later became Canadian prime minister, <a href="https://www.thecanadianencyclopedia.ca/en/article/suez-crisis">came up with the idea of peacekeeping forces and resolved the Suez crisis</a>. The war in Ukraine represents another moment in history when Canadians can propose innovative solutions.</p>
<p>When asked by media how Canada is doing, I echo Ukrainian President Volodymyr Zelensky, who recently thanked Canadian parliamentarians for all the ways they’ve shown support for Ukraine, but said that Ukrainians needed more help.</p>
<p><a href="https://globalnews.ca/news/8684223/volodymyr-zelenskyy-speech-parliament-transcript/">His actual words</a> to Canada’s Parliament and Prime Minister Justin Trudeau on March 14, 2022, were:</p>
<blockquote>
<p>“I know that you all support Ukraine. Justin, but also, I would like you to understand, and I would like you to feel this — what we feel every day. Can you imagine when you call your friends, your friendly nation, and you ask: ‘Please close the sky, close the airspace, please stop the bombing. How many more cruise missiles have to fall on our cities until you make this happen?’ And they, in return, they express their deep concerns about the situation.” </p>
</blockquote>
<p>There are five areas where Canada could be doing more: diplomacy, military, economics, humanitarian and information issues.</p>
<h2>Diplomacy</h2>
<p>Diplomatically, Canada has made strong statements in support of Ukraine and critical of Russia. But it could take a more active role in the peace talks, an area where Canada has a lot to bring to the table.</p>
<p>A high-level visit to Ukraine would send a strong signal of support. Numerous leaders have already visited Kyiv, including <a href="https://www.nytimes.com/2022/04/09/world/europe/boris-johnson-kyiv-ukraine-aid.html">British Prime Minister Boris Johnson</a>, <a href="https://www.reuters.com/world/europe/three-eu-country-leaders-take-train-kyiv-show-support-ukraine-2022-03-15/">Poland’s Prime Minister Mateusz Morawiecki</a> and <a href="https://www.europarl.europa.eu/unitedkingdom/en/news-and-press-releases/news/2022/april2022/metsolainkyiv.html">European Parliament President Roberta Metsola</a>. The furthest Canadian leaders have gone is Poland. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1509981300240879618"}"></div></p>
<p>Canada could also scale down its diplomatic relations with Russia, <a href="https://www.aljazeera.com/news/2022/4/5/denmark-italy-expel-dozens-of-russian-diplomats">something numerous states have already done</a>.</p>
<p>The Russian Embassy in Canada needs to remain open to keep diplomatic channels accessible — but the size of Russia’s diplomatic mission does not need to be the same as it is during peacetime.</p>
<h2>Military</h2>
<p>In the military sphere, Canada had been supporting Ukraine via training and arms supplies even before the war. But as Zelensky has said repeatedly, Ukrainians need more help.</p>
<p>When he addressed the EU and the G7 summits, <a href="https://www.cbc.ca/news/politics/trudeau-nato-summit-march24-1.6395576">he told NATO</a>: “Please give us one per cent of what you have; that would really help us.”</p>
<p>There are constraints facing Canada and NATO, but also room for creative thinking — both in covert actions and supplying Ukraine with funds it can use <a href="https://www.ctvnews.ca/politics/trudeau-unveils-new-russia-sanctions-amid-growing-nato-pressure-over-defence-spending-1.5832471">to purchase weapons on the open market, as suggested by retired Gen. Rick Hillier</a>.</p>
<figure class="align-center ">
<img alt="two uniformed men push a large crate" src="https://images.theconversation.com/files/457024/original/file-20220407-22-xo4faq.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/457024/original/file-20220407-22-xo4faq.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=376&fit=crop&dpr=1 600w, https://images.theconversation.com/files/457024/original/file-20220407-22-xo4faq.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=376&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/457024/original/file-20220407-22-xo4faq.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=376&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/457024/original/file-20220407-22-xo4faq.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=473&fit=crop&dpr=1 754w, https://images.theconversation.com/files/457024/original/file-20220407-22-xo4faq.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=473&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/457024/original/file-20220407-22-xo4faq.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=473&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Royal Canadian Air Force personnel load non-lethal and lethal aid at CFB Trenton, Ont. on March 7, 2022. The cargo was bound for Ukraine via Poland.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Sean Kilpatrick</span></span>
</figcaption>
</figure>
<h2>Economics, humanitarian efforts</h2>
<p>Economic sanctions against Russia have been unprecedented, yet they need to be strengthened, with a focus on the energy and financial sectors. </p>
<p>The best chance to stop Putin <a href="https://www.newyorker.com/news/q-and-a/the-purges-in-putins-shrinking-inner-circle">is via his inner circle</a> — if they are excluded from the international economy, they will lose interest in acquiescing to their president. </p>
<p><a href="https://www.aljazeera.com/news/2022/3/25/us-eu-launch-team-to-reduce-european-reliance-on-russian-gas#:%7E:text=The%20EU%20in%20early%20March,locked%20into%20long%2Dterm%20contracts.">European countries are working on reducing their energy dependency on Russia</a>. Canada is in a position to help by increasing oil production in the short term and working on renewable energy for the long term.</p>
<p>In the humanitarian sector, Canada has opened its doors to Ukrainians fleeing the war, including in an area that I’m working on — assisting scholars. </p>
<p>But the process needs to be streamlined, and health care must be provided to those arriving.</p>
<figure class="align-center ">
<img alt="A dark-haired man wearing a mask shakes hands and talks to women and children." src="https://images.theconversation.com/files/457025/original/file-20220407-19249-qwz26w.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/457025/original/file-20220407-19249-qwz26w.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=430&fit=crop&dpr=1 600w, https://images.theconversation.com/files/457025/original/file-20220407-19249-qwz26w.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=430&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/457025/original/file-20220407-19249-qwz26w.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=430&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/457025/original/file-20220407-19249-qwz26w.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=540&fit=crop&dpr=1 754w, https://images.theconversation.com/files/457025/original/file-20220407-19249-qwz26w.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=540&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/457025/original/file-20220407-19249-qwz26w.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=540&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Prime Minister Justin Trudeau shakes hands with Ukrainian refugees in Warsaw, Poland, on March 10, 2022.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Adrian Wyld</span></span>
</figcaption>
</figure>
<h2>Information</h2>
<p>Finally, the information front is key given Russia’s powerful disinformation machine. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/how-russias-unanswered-propaganda-led-to-the-war-in-ukraine-180202">How Russia's unanswered propaganda led to the war in Ukraine</a>
</strong>
</em>
</p>
<hr>
<p>Constant vigilance against the spread of Russian disinformation on social media is key, but simple language is also important. Ukrainian media professionals <a href="https://www.mediasupport.org/blogpost/open-letter-to-media-professionals-who-cover-russias-invasion-of-ukraine/">are appealing to Canadian and world leaders</a> to use the correct terminology — for example, not “the Ukraine crisis” but “Russia’s war against Ukraine.” </p>
<p>There’s been some improvement in this — fewer people are now saying “the Ukraine” (a Soviet practice) and correctly saying Ukraine — but once again, more can be done to ensure language and news coverage doesn’t minimize Ukrainians or the unprovoked military invasion of their country.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/its-ukraine-not-the-ukraine-heres-why-178748">It's 'Ukraine,' not 'the Ukraine' – here's why</a>
</strong>
</em>
</p>
<hr>
<p>It’s time to set up a task force bringing together the best brains in Canada to come up with new ideas of how to end this war — and future wars. I would be happy to serve on it. Canada has played the role of <a href="https://doi.org/10.1177/002070200906400417">a global peace advocate</a> before and it can again. Rarely has the world needed it more than right now.</p>
<hr>
<p><em>This article is based on remarks delivered to Canada’s Standing Senate Committee on Foreign Affairs and International Development on March 31, 2022</em></p><img src="https://counter.theconversation.com/content/180773/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Marta Dyczok receives funding from SSHRCC.</span></em></p>Canada has played the role of a global peace advocate before. Rarely has the world needed it more than right now.Marta Dyczok, Associate Professor of History and Political Science, Specializing in Ukraine, Western UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1796242022-04-07T12:25:46Z2022-04-07T12:25:46ZWhy the best way to stop strongmen like Putin is to prevent their rise in the first place<figure><img src="https://images.theconversation.com/files/456402/original/file-20220405-18-m5oam5.jpg?ixlib=rb-1.1.0&rect=61%2C24%2C8181%2C5462&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">There are few ways for the West to deter the rise of another dictator like Russian President Vladimir Putin.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/russian-president-vladimir-putin-speaks-during-a-joint-news-photo/1238504428">Mikhail Klimentyev/Sputnik/AFP via Getty Images</a></span></figcaption></figure><p>Russia’s invasion of Ukraine presents foreign policymakers with few good options to punish Russian President Vladimir Putin, or to deter these types of aggressions in the future. The U.S. government, for example, continues to <a href="https://www.cnbc.com/2022/04/05/us-allies-to-impose-russia-sanctions-following-outrage-over-bucha.html">push for additional sanctions on Russia</a> in response to news of <a href="https://www.hrw.org/news/2022/04/03/ukraine-apparent-war-crimes-russia-controlled-areas">Russian military atrocities</a>, even though prior sanctions <a href="https://theconversation.com/economic-sanctions-may-make-russians-lives-worse-without-stopping-putins-assault-on-ukraine-179623">did not deter those abuses</a> in the first place. So it is worth thinking about what policymakers might do to prevent future world leaders from following Putin’s example.</p>
<p>Putin is what political scientists <a href="https://scholar.google.com/citations?user=DV5ECYgAAAAJ&hl=en&oi=ao">like</a> <a href="https://scholar.google.com/citations?hl=en&user=1-C0q3IAAAAJ">us</a> call a <a href="https://www.foreignaffairs.com/articles/2016-09-26/new-dictators">personalist dictator</a>. The <a href="https://global.oup.com/academic/product/the-new-kremlinology-9780192896193">center of power</a> in Russia is <a href="https://www.cambridge.org/core/books/how-dictatorships-work/8DC095F7A890035729BB0BB611738497">not a political party or the military</a>. It’s him, personally. Strongmen’s choices are relatively unconstrained by these institutions. All power is thus concentrated in his hands, including, most notably, personal discretion and control over decision-making and appointments to state offices.</p>
<p>This is the type of dictator who causes <a href="http://dx.doi.org/10.1080/0163660X.2017.1302735">much of modern global strife</a>.
They <a href="https://www.cambridge.org/core/journals/american-political-science-review/article/abs/strongmen-and-straw-men-authoritarian-regimes-and-the-initiation-of-international-conflict/4352949B5F1550DD67076468BFB1BB8F">start conflicts with other nations</a>, <a href="https://doi.org/10.1111/ajps.12080">invest in nuclear weapons</a> and <a href="https://doi.org/10.1086/706049">repress their own citizens</a>. In addition to Putin, notable examples from recent history include Moammar Gadhafi, Saddam Hussein, Idi Amin and three generations of North Korean leaders.</p>
<p>Our research has found that once these type of leaders start repressing their own citizens at home or initiating conflicts abroad, <a href="https://doi.org/10.1093/acprof:oso/9780198746997.001.0001">there are few good ways to stop them</a>. But that doesn’t mean their rise to power in the first place is inevitable.</p>
<h2>A source of international trouble</h2>
<p>There are several reasons personalist dictators initiate most international conflicts. They face <a href="https://www.cornellpress.cornell.edu/book/9780801479823/dictators-at-war-and-peace/#bookTabs=1">relatively little domestic opposition</a>, so when trouble starts, nobody checks them by highlighting their faults or mistakes.</p>
<p>In addition, these leaders surround themselves with compliant staffers who retain their own power only if they say what the dictator wants to hear. So he or she gets <a href="https://www.bloomsbury.com/us/dictators-and-dictatorships-9781441173966/">less accurate intelligence</a>, because the people giving briefings are afraid to give bad news.</p>
<p>In addition, personalist leaders are the type most likely to be <a href="https://doi.org/10.1080/13510347.2013.738866">ousted violently</a>. Their fear of what might happen to them upon leaving power pushes them to use conflict as a <a href="https://www.cambridge.org/es/academic/subjects/politics-international-relations/international-relations-and-international-organisations/leaders-and-international-conflict?format=PB">diversionary tactic</a>. An international crisis can boost domestic support among the people and among the elites, who are key to the dictator’s success.</p>
<p>Indeed, Putin’s domestic popularity <a href="https://www.dw.com/en/vladimir-putins-crimea-effect-ebbs-away-5-years-on/a-47941002">soared</a> after he annexed Crimea in 2014; and he <a href="https://theconversation.com/putins-public-approval-is-soaring-during-the-russia-ukraine-crisis-but-its-unlikely-to-last-177302">remained popular</a> at home as he prepared for war in 2022. The <a href="https://www.rferl.org/a/putin-poll-ratings-climb/31781913.html">latest polls</a> suggest Putin is even <a href="https://www.statista.com/statistics/896181/putin-approval-rating-russia/">more popular in Russia today</a> than at the start of the war.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/456407/original/file-20220405-20-jkiji1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A man strides toward the center of a stage with a crowd behind him waving Russian flags" src="https://images.theconversation.com/files/456407/original/file-20220405-20-jkiji1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/456407/original/file-20220405-20-jkiji1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/456407/original/file-20220405-20-jkiji1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/456407/original/file-20220405-20-jkiji1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/456407/original/file-20220405-20-jkiji1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/456407/original/file-20220405-20-jkiji1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/456407/original/file-20220405-20-jkiji1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Russian President Vladimir Putin’s invasion of Crimea in 2014 remains popular in 2022.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/RussiaCrimeaReunificationAnniversary/25189daa46304783ac1a46a68a2157d1/photo">Mikhail Klimentyev, Sputnik, Kremlin Pool Photo via AP</a></span>
</figcaption>
</figure>
<h2>Stopping them before they start</h2>
<p>The most common international response to personalist dictators causing problems are economic sanctions – but our research finds these <a href="https://doi.org/10.1093/acprof:oso/9780198746997.001.0001">rarely work when dictators export oil or other natural resources</a>. In fact, they often lead to <a href="https://doi.org/10.1093/acprof:oso/9780198746997.001.0001">increased repression and harm for ordinary citizens</a>, who suffer the brunt of the sanctions.</p>
<p>Direct military intervention is sometimes possible against these dictators’ regimes. But those rarely go well. U.S. invasions of Afghanistan and Iraq, which led to further <a href="https://watson.brown.edu/costsofwar/costs/human/civilians/afghan">deadly</a> <a href="https://www.iraqbodycount.org/">conflicts</a>, ended with a fragile state in <a href="https://www.theglobaleconomy.com/Iraq/fragile_state_index/">Iraq</a> and the return of personalist-style Taliban rule in <a href="https://www.theguardian.com/news/2022/feb/17/inside-taliban-return-to-power-afghanistan-mazar-i-sherif">Afghanistan</a>. Even <a href="https://www.reuters.com/article/us-libya-usa-military-factbox/factbox-western-military-assault-on-libyas-gaddafi-idUSTRE72L7X720110322">U.S. military strikes</a> to stop Libya’s Moammar Gadhafi from slaughtering his own citizens resulted in a <a href="https://www.atlanticcouncil.org/blogs/menasource/ten-years-ago-libyans-staged-a-revolution-heres-why-it-has-failed/">failed state</a> rife with <a href="https://www.cfr.org/global-conflict-tracker/conflict/civil-war-libya">civil war</a>.</p>
<p>In the present situation, <a href="https://theconversation.com/what-countries-have-nuclear-weapons-and-where-are-they-180382">Russia has nuclear weapons</a>, and Putin has <a href="https://theconversation.com/would-putin-use-nuclear-weapons-an-arms-control-expert-explains-what-has-and-hasnt-changed-since-the-invasion-of-ukraine-178509">signaled he might use them</a> if he views the conflict as escalating. </p>
<p>That leaves practically <a href="https://www.amazon.com/gp/product/0198746997/ref=olp_product_details?ie=UTF8&me=">no way for Western democracies</a> to <a href="https://theconversation.com/lessons-in-realpolitik-from-nixon-and-kissinger-ideals-go-only-so-far-in-ending-conflict-in-places-like-ukraine-179979">shut down Putin’s aggression</a>.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/456408/original/file-20220405-18-v7k6kt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Armed men stand on a dock next to a large yacht." src="https://images.theconversation.com/files/456408/original/file-20220405-18-v7k6kt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/456408/original/file-20220405-18-v7k6kt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/456408/original/file-20220405-18-v7k6kt.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/456408/original/file-20220405-18-v7k6kt.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/456408/original/file-20220405-18-v7k6kt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/456408/original/file-20220405-18-v7k6kt.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/456408/original/file-20220405-18-v7k6kt.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Spanish and U.S. police seized this yacht, owned by a Russian oligarch closely linked to Russian President Vladimir Putin.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/SpainUSOligarchsYachtSanctions/da2e3664c9ba46b5977ef167dec724c9/photo">AP Photo/Francisco Ubilla</a></span>
</figcaption>
</figure>
<h2>Shielding the money</h2>
<p>In recent decades, Western governments have aided – whether intentionally or by accident – the rise of personalist dictators in three ways.</p>
<p>First, Western governments enable dictators’ cronies to <a href="https://foreignpolicy.com/2022/03/08/russian-oligarch-money-london-uk-economic-crime-bill/">launder the illicit gains</a> paid by the dictator in exchange for their loyalty. <a href="https://www.theguardian.com/uk-news/2022/mar/06/how-london-became-the-place-to-be-for-putins-oligarchs">London</a> and <a href="https://www.nbcnews.com/business/real-estate/russian-money-flows-us-real-estate-rcna17723">Miami</a> have become havens for Russia’s oligarchs to <a href="https://www.atlanticcouncil.org/in-depth-research-reports/report/defending-the-united-states-against-russian-dark-money/">stash</a> their <a href="https://www.nber.org/papers/w23712">payouts</a> from Putin. </p>
<p>To protect these investments, Russian oligarchs have <a href="https://www.ft.com/content/48c4bfa6-7ca2-11e9-81d2-f785092ab560">funded political campaigns</a> throughout <a href="https://euobserver.com/foreign/137631">Europe</a>, and especially in the <a href="https://www.theguardian.com/politics/2022/feb/23/oligarchs-funding-tories">U.K.</a>, with well-heeled London <a href="https://www.bloomberg.com/news/articles/2022-03-02/london-lawyers-say-no-comment-on-links-to-rich-russian-clients">lawyers lobbying</a> Boris Johnson’s government on behalf of Russian clients in a bid to prevent too harsh a crackdown.</p>
<p>Some of this money <a href="https://www.politico.com/news/2022/03/14/russian-oligarch-charged-illegal-political-donations-00017090">flows to political campaigns in the U.S.</a> as well.</p>
<h2>Buying oil and gas</h2>
<p>Second, rising commodity prices, especially a spike in oil or gas prices, provide a windfall for many personalist dictators, enabling them to consolidate domestic power by using the extra revenue to pay loyal supporters. In 2009, political commentator Thomas Friedman proclaimed the “<a href="https://foreignpolicy.com/2009/10/16/the-first-law-of-petropolitics/">First Law of Petropolitics</a>,” which states that as oil prices rise, dictators undermine political freedoms. But recent research shows that <a href="https://doi.org/10.1017/psrm.2019.14">increasing oil revenue</a> facilitates the rise of personalist dictators, who are the ones largely <a href="https://doi.org/10.1086/706049">responsible for repressing their citizens</a>. </p>
<p>In the short term, Western governments are <a href="https://www.wsj.com/articles/ukraine-war-drives-u-s-hunt-for-more-oil-to-help-tame-rising-prices-11646935216">scrambling</a> to find substitutes for Russian energy imports. One long-term solution may be to <a href="https://www.nap.edu/catalog/25932/accelerating-decarbonization-of-the-us-energy-system">decarbonize Western economies</a> so energy markets are not at the mercy of dictators in oil-rich countries such as Russia and Venezuela – and perhaps someday Saudi Arabia.</p>
<h2>Military support</h2>
<p>Third, foreign military support for dictators helps them to consolidate power. In general, dictators have trouble purging military elites who oppose them: The men with guns can oust the leader anytime. In most autocracies, therefore, the military acts as a limiting force on the leader’s power. But with <a href="https://academic.oup.com/isq/article/63/1/43/5290475">support from foreign allies</a>, a dictator can more easily install a cadre of personally loyal military and security leaders.</p>
<p>Sometimes this support comes in the form of an actual military occupation. Soviet occupation of North Korea in the late 1940s paved the way for Kim Il Sung to oust his generals, <a href="https://doi.org/10.1017/jea.2018.8">creating a personalist dictatorship</a> that still confounds policymakers decades later. Foreign powers often supply dictators with money to purchase military equipment, in the process making the dictator into a <a href="https://doi.org/10.1017/S0043887120000039">reliable customer</a>. </p>
<p>The <a href="https://www.politico.com/magazine/story/2014/02/rwanda-paul-kagame-americas-darling-tyrant-103963/">U.S.</a> and the <a href="https://www.bbc.com/news/world-africa-38568629">U.K.</a> have been known to train dictators’ sons at their military schools. For example, leaders of personalist dictatorships in the <a href="https://www.ftleavenworthlamp.com/perspective/2019/12/19/dominican-playboy-causes-stir-at-cgsc/">Dominican Republic</a> and <a href="https://www.army.mil/article/35854/rwanda_president_visits_west_point">Rwanda</a> sent children to be trained in the U.S., while <a href="https://allafrica.com/stories/200102020065.html">Uganda’s president sent his son to a British military school</a>.</p>
<p>And Belarussian strongman Alexander Lukashenko has apparently sent his youngest son, who frequently <a href="https://www.usatoday.com/story/news/world/2015/10/12/europes-last-dictator-lukashenko-has-mini-me-young-son/73813498/">appears with his father</a> in military <a href="https://www.theguardian.com/world/2009/apr/06/belarus-nikolai-lukashenko">outfits</a>, to <a href="https://www.themoscowtimes.com/2020/09/17/protest-plagued-belarus-strongman-transfers-son-to-moscow-school-reports-a71474">study in Moscow</a>. When these relatives <a href="https://www.theafricareport.com/6767/musevenis-speedy-promotion-of-son-and-a-new-african-trend/">ascend the ranks</a> of their nations’ military, they ensure the most loyal person possible is in charge of the weapons. </p>
<p>Or dictators may simply mount a countercoup to reinstall “<a href="https://foreignpolicy.com/2013/08/20/mapped-the-7-governments-the-u-s-has-overthrown/">their man</a>” should the military bite back in the face of repeated purges. <a href="https://www.nytimes.com/1964/02/21/archives/gabon-president-resumes-office-mba-restored-by-french-vows-total.html">French paratroopers</a> saved the necks of multiple <a href="https://rowman.com/ISBN/9781538120675/Historical-Dictionary-of-Modern-Coups-D%E2%80%99%C3%A9tat">West African leaders</a> when their militaries attempted coups in response to policy failures and purges in their ranks.</p>
<p>Foreign support also protects dictators from domestic insurgents. In 2014, U.S. President Barack Obama sent additional troops to Iraq and authorized <a href="https://www.rand.org/pubs/research_briefs/RBA388-1.html">airstrikes</a> to save the U.S.-backed <a href="https://www.nytimes.com/2014/07/15/world/middleeast/echoes-of-a-strongman-in-baghdad-today.html">strongman</a> in Baghdad from an Islamic State group advance. And in <a href="https://www.rand.org/pubs/research_reports/RR3180.html">2015</a>, the Russian military helped <a href="https://www.latimes.com/world/middleeast/la-fg-syria-russia-20170406-story.html">save</a> Syrian president Bashar al-Assad from defeat at the hands of Syrian rebels.</p>
<h2>Is it too late to respond effectively?</h2>
<p>Putin’s regime joins personalist dictatorships – including those in Afghanistan, Iraq, Libya, North Korea and Venezuela – that have confounded policymakers for decades. </p>
<p>Once a leader successfully <a href="https://www.cambridge.org/US/academic/subjects/politics-international-relations/comparative-politics/how-dictatorships-work-power-personalization-and-collapse">consolidates power and transforms his rule</a> into a personalist dictatorship, he is likely to keep causing trouble on the world stage. And once these rulers do bad things, it is often too late to stop them.</p>
<p>[<em>There’s plenty of opinion out there. We supply facts and analysis, based in research.</em> <a href="https://memberservices.theconversation.com/newsletters/?nl=politics&source=inline-politics-no-opinion">Get The Conversation’s Politics Weekly</a>.]</p><img src="https://counter.theconversation.com/content/179624/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Joseph Wright has received funding from the U.S. National Science Foundation and the Minerva Research Initiative of the U.S. Department of Defense.</span></em></p><p class="fine-print"><em><span>Abel Escribà-Folch does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>In recent years, Western governments have, in effect, aided the rise of personalist dictators in Russia, Iraq, Libya, North Korea and Venezuela.Joseph Wright, Professor of Political Science, Penn StateAbel Escribà-Folch, Associate Professor of Political and Social Sciences, Universitat Pompeu FabraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1796232022-03-22T19:33:13Z2022-03-22T19:33:13ZEconomic sanctions may make Russians’ lives worse – without stopping Putin’s assault on Ukraine<figure><img src="https://images.theconversation.com/files/453424/original/file-20220321-14965-1dlejm2.jpg?ixlib=rb-1.1.0&rect=29%2C0%2C6481%2C4899&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Everyday Russians, like these people in Moscow, may shoulder much of the burden of the world's economic sanctions aimed at Vladimir Putin and his oligarchs.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/shop-assistant-speaks-to-customers-in-a-candy-store-in-news-photo/1239387719">AFP via Getty Images</a></span></figcaption></figure><p>The <a href="https://www.piie.com/blogs/realtime-economic-issues-watch/russias-war-ukraine-sanctions-timeline">economic sanctions</a> levied upon Russia as a consequence of its <a href="https://www.reuters.com/world/europe/putin-orders-military-operations-ukraine-demands-kyiv-forces-surrender-2022-02-24/">invasion of Ukraine</a> target the Russian economy and Russian President Vladimir Putin’s closest personal and business associates. </p>
<p>The goal is to alter domestic politics within Russia, ultimately <a href="https://www.cnbc.com/2022/02/28/biden-administration-expands-russia-sanctions-cuts-off-us-transactions-with-central-bank.html">stopping Putin’s aggression</a>. Yet our research into <a href="https://doi.org/10.1093/acprof:oso/9780198746997.001.0001">how economic sanctions affect the behavior of dictators</a> indicates the sanctions are likely to increase political repression in Russia and hurt average Russians’ economic security – without stopping Putin from pulverizing Ukraine.</p>
<h2>Personal rule</h2>
<p>Putin rules Russia with what political scientists <a href="https://scholar.google.com/citations?user=DV5ECYgAAAAJ&hl=en&oi=ao">like</a> <a href="https://scholar.google.com/citations?hl=en&user=1-C0q3IAAAAJ">us</a> call a <a href="https://www.foreignaffairs.com/articles/2016-09-26/new-dictators">personalist dictatorship</a>. </p>
<p>This term means that the <a href="https://www.cambridge.org/core/books/how-dictatorships-work/8DC095F7A890035729BB0BB611738497">leader has more power</a> than the political party that backs him, and more than the military and security forces. In Russia, <a href="https://global.oup.com/academic/product/the-new-kremlinology-9780192896193?cc=us&lang=en&">Putin controls</a> policy decisions and political appointments and thus <a href="https://www.nytimes.com/2022/03/19/opinion/putin-zelensky-trump-heroism.html">faces few constraints</a> from Russian political institutions or organized elites. </p>
<p>Recent news indicates that Putin has surrounded himself with a small <a href="https://www.newyorker.com/news/daily-comment/putins-historic-miscalculation-may-make-him-a-war-criminal">group of hand-picked yes men</a> – that is exactly what a personalist dictatorship looks like.</p>
<h2>Will sanctions stop Putin?</h2>
<p>Economic sanctions are an <a href="https://www.economist.com/finance-and-economics/2021/04/22/sanctions-are-now-a-central-tool-of-governments-foreign-policy">increasingly widespread</a> international response when personalist dictators start making trouble on the world stage, such as abusing human rights at home or investing in nuclear weapons programs. Though the sanctions are economic in nature, they also impose political costs on personalist leaders by affecting the people who support the leader’s tenure in office.</p>
<p>Our research finds that <a href="https://doi.org/10.1111/j.1468-2478.2010.00590.x">sanctions make it more likely</a> that personalist autocracies – but not other types of autocracies – lose power. </p>
<p>Personalist dictatorships rely on delivering immediate material benefits to their elite supporters. When sanctions cut off foreign revenue that funds regime backers’ fancy lifestyles, those backers tend to withdraw their support, or even leave the country, destabilizing the regime.</p>
<p>Sanctions are most destabilizing when the targeted country depends on exports of one or only a few goods to pay for the loyalty of the ruling elite. When Uganda’s <a href="http://www.international-economy.com/TIE_F03_Nurnberger.pdf">Idi Amin lost coffee export revenue because of sanctions in 1977</a>, he could no longer pay military elites. Many defected, weakening his power. A similar process unfolded when <a href="https://www.jstor.org/stable/25612695?seq=1">U.S. sanctions restricted sugar imports</a> from the Dominican Republic in 1960 and 1961 during Rafael Trujillo’s rule.</p>
<p>There is, however, one important caveat to the rule that sanctions make it more likely that personalist autocracies lose power. Sanctions, historically, have not destabilized dictatorships of any stripe that <a href="https://doi.org/10.1093/acprof:oso/9780198746997.001.0001">are substantial petroleum exporters</a>.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/453426/original/file-20220321-25-1wk9j0n.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="An industrial plant has smokestacks steaming into the sky" src="https://images.theconversation.com/files/453426/original/file-20220321-25-1wk9j0n.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/453426/original/file-20220321-25-1wk9j0n.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/453426/original/file-20220321-25-1wk9j0n.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/453426/original/file-20220321-25-1wk9j0n.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/453426/original/file-20220321-25-1wk9j0n.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/453426/original/file-20220321-25-1wk9j0n.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/453426/original/file-20220321-25-1wk9j0n.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Germany, where this oil refinery is located, gets much of its petroleum from Russia.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/shell-wesseling-oil-refinery-is-seen-in-wesseling-germany-news-photo/1239011371">NurPhoto via Getty Images</a></span>
</figcaption>
</figure>
<h2>Petroleum is different</h2>
<p>Although sanctions have <a href="https://edition.cnn.com/2022/03/05/politics/sanctions-russian-oligarch-elites/index.html">caused much pain for Russian elites</a> and their banks, foreign currency is still flowing into Russia <a href="https://euobserver.com/world/154530">to pay for oil and gas</a>. </p>
<p>Petroleum exports – oil and natural gas – are different from other exports, because world demand for oil is <a href="https://www.investopedia.com/ask/answers/040915/how-does-law-supply-and-demand-affect-oil-industry.asp">consistently strong</a>. With few substitutes for oil in the world economy, the Biden administration is scrambling to replace Russian petroleum exports with increased imports to the U.S. from <a href="https://www.politico.com/news/2022/03/07/white-house-oil-deals-saudi-arabia-venezuela-iran-00014803">Saudi Arabia</a> and <a href="https://www.cnbc.com/2022/03/09/house-gop-leader-kevin-mccarthy-warns-against-iran-venezuela-oil-to-offset-russia.html">Venezuela</a>.</p>
<p>The oil trade also involves many international players with distinct motivations – including democratic governments with varying degrees of energy independence, multinational firms, banks and investors. EU and U.S. sanctions so far have <a href="https://www.wsj.com/articles/russia-sanctions-over-ukraine-largely-spare-energy-sector-vital-to-europe-11645970890">exempted Russian energy exports</a> to Europe.</p>
<p>To put it bluntly, while Germans have sent helmets and defensive weapons to Ukraine, they are still <a href="https://www.politico.eu/article/germany-rejects-calls-for-banning-russian-oil-and-gas/">sending euros to Putin</a> in exchange for his gas. </p>
<p>If sweeping international sanctions could somehow choke oil and gas export revenue for the Russian regime, that might destabilize Putin’s regime. But Western governments have yet to impose those kinds of sanctions. And even if they did, non-Western demand for Russia’s oil and gas could “<a href="https://www.degruyter.com/document/doi/10.1515/9780804794329/html">bust</a>” Western sanctions, with other countries and companies buying Russian exports at a cost below the world market price, effectively getting a good deal on oil for helping Russia evade the sanctions.</p>
<p>For example, the U.S. imposed oil-transaction sanctions on Venezuela <a href="https://venezuelanalysis.com/images/15301">in 2019</a>, but <a href="https://www.reuters.com/business/energy/exclusive-under-us-sanctions-iran-venezuela-strike-oil-export-deal-sources-2021-09-25/">Iran still buys Venezuelan oil</a>, as does <a href="https://www.bloomberg.com/news/articles/2022-01-10/china-buys-more-sanctioned-oil-from-iran-venezuela-at-a-bargain">China</a>, at a discount from standard world-market oil prices. </p>
<p>U.N. sanctions against Saddam Hussein’s regime in Iraq led to <a href="https://www.cnn.com/2005/WORLD/meast/02/02/iraq.oil.smuggle/index.html">massive oil smuggling</a> because the sanctioned oil could be bought at below-market prices, encouraging illicit sales. That revenue undercut the sanctions’ goal of weakening Saddam’s grip on power. Now <a href="https://www.reuters.com/world/india/india-considers-buying-discounted-russian-oil-commodities-officials-say-2022-03-14/">India is contemplating buying Russian oil</a> for cheap.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/xqS1l3wWVa8?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Russians protest the war in Ukraine.</span></figcaption>
</figure>
<h2>The story gets worse</h2>
<p>Sanctions destabilize target regimes by causing the elites to become discontent, leading to their defection – or by emboldening domestic opponents to mobilize against the sanctioned government, as may have been <a href="https://slate.com/news-and-politics/2013/12/opponents-of-sanctions-on-south-africa-were-wrong-but-that-doesn-t-mean-they-always-work.html">the case when sanctions targeted the South African apartheid regime</a>. Indeed, many <a href="https://www.reuters.com/world/europe/police-detain-more-than-900-people-anti-war-protests-across-russia-monitoring-2022-02-27/">Russian citizens have taken to the streets</a> to protest Putin’s war in Ukraine.</p>
<p>However, personalist regimes rely <a href="https://doi.org/10.1086/706049">heavily on repression</a> carried out by loyal security forces, more so than other kinds of dictatorships. Fearful that protests could spiral out of control, Putin has <a href="https://www.theguardian.com/commentisfree/2022/mar/10/vladimir-putin-regime-anti-war-protests-russia-russian">arrested thousands</a>. </p>
<p>Personalist dictators <a href="https://doi.org/10.1080/13510347.2013.738866">rarely have peaceful ways of retreating</a> when backed into a corner. So they use every means at their disposal – including lethal violence against their own people – to stay in power. Indeed, personalist dictatorships are more likely than other types of dictatorships <a href="https://doi.org/10.1093/acprof:oso/9780198746997.001.0001">to increase domestic repression</a> when hit with sanctions.</p>
<p>The threat of mass protest has forced Putin to engage in a <a href="https://www.politico.eu/article/ukraine-russia-disinformation-propaganda/">disinformation campaign</a> to control the domestic narrative. His government has <a href="https://www.nytimes.com/2022/03/03/world/europe/russia-ukraine-propaganda-censorship.html">shut down independent media</a> and threatened to <a href="https://www.cfr.org/in-brief/russia-censoring-news-war-ukraine-foreign-media-are-trying-get-around">jail foreign journalists who report truthfully on the war</a>. If media repression fails to curb protests, Putin is likely to <a href="https://doi.org/10.1086/706049">meet large protests on the streets with violence or mass arrests</a>.</p>
<p>Finally, economic sanctions <a href="https://doi.org/10.1111/j.1743-8594.2011.00136.x">hurt ordinary citizens</a> in personalist dictatorships because these leaders tend to shield elites from the economic pain of sanctions by pushing costs onto regular people. Our <a href="https://doi.org/10.1093/acprof:oso/9780198746997.001.0001">research</a> demonstrates that sanctions targeting personalist dictatorships take more food out of citizens’ mouths those those targeting other types of regimes.</p>
<p>[<em>More than 150,000 readers get one of The Conversation’s informative newsletters.</em> <a href="https://memberservices.theconversation.com/newsletters/?source=inline-140K">Join the list today</a>.]</p><img src="https://counter.theconversation.com/content/179623/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Joseph Wright has received funding from the U.S. National Science Foundation and the Minerva Research Initiative of the U.S. Department of Defense. </span></em></p><p class="fine-print"><em><span>Abel Escribà-Folch does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Personalist dictators tend to shield the elites who support them from the economic pain of sanctions by pushing costs onto regular people.Joseph Wright, Professor of Political Science, Penn StateAbel Escribà-Folch, Associate Professor of Political and Social Sciences, Universitat Pompeu FabraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1795592022-03-22T01:50:16Z2022-03-22T01:50:16ZAre Russia’s elite really using cryptocurrency to evade sanctions?<figure><img src="https://images.theconversation.com/files/452939/original/file-20220318-15-1wwc8sp.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C5152%2C2498&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Anatoly Maltsev/EPA</span></span></figcaption></figure><p>Fearing Russia’s elite will evade economic sanctions by converting their wealth to cryptocurrency, high-profile US Democratic senator Elizabeth Warren has <a href="https://www.bostonglobe.com/2022/03/17/nation/warren-bill-would-crack-down-russians-use-bitcoin-evade-ukraine-sanctions/">introduced a bill</a> into US Congress to stymie Russian crypto transactions.</p>
<p>Warren <a href="https://www.warren.senate.gov/newsroom/press-releases/at-hearing-warren-warns-putin-and-russian-elites-could-use-crypto-to-hide-their-wealth-and-evade-economic-sanctions">warned</a> a Senate committee hearing:</p>
<blockquote>
<p>So no one can argue that Russia can evade all sanctions by moving all its assets into crypto. But for Putin’s oligarchs who are trying to hide, you know, a billion or two of their wealth, crypto looks like a pretty good option.</p>
</blockquote>
<p>The bill does not seek to impose a blanket ban on all Russian cryptocurrency transactions. But it would give the US government the authority to ban US companies from processing cryptocurrency transactions connected to sanctioned Russian accounts, and to apply secondary sanctions to foreign cryptocurrency exchanges doing business with sanctioned Russian individuals, companies or government agencies. </p>
<p>But is it even necessary? </p>
<p>Even though the evidence shows that Russian cryptocurrency transactions have been increasing in both number and value in the past month, the scale suggests buyers are ordinary Russians seeking to hold on to their savings as the value of the ruble crashes.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/during-the-cold-war-us-and-europe-were-just-as-divided-over-russia-sanctions-heres-how-it-played-out-179437">During the cold war, US and Europe were just as divided over Russia sanctions – here's how it played out</a>
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</em>
</p>
<hr>
<h2>Targeting sanctions</h2>
<p>The economic sanctions imposed on Russia for invading Ukraine are naturally hurting the entire Russian economy. Their intended target, though, is to hit Putin and the billionaire oligarchs who support his rule where it hurts most.</p>
<p>A cornerstone of this strategy is stopping these individuals from using or moving their wealth around by freezing the assets they hold overseas and blocking financial transactions. </p>
<p>But the continued operation of cryptocurrency exchanges in Russia, such as Binance, Yobit and Local Bitcoins, has been worrying US officials for some time. Even before Russia’s latest invasion of Ukraine, the US Treasury Department warned cryptocurrencies could <a href="https://www.nytimes.com/2022/02/23/business/russia-sanctions-cryptocurrency.html">undermine the sanctions</a> already imposed on Russia over its 2014 annexation of Crimea. </p>
<h2>Ruble’s falling value</h2>
<p>Our first graph below shows why ordinary Russians have good reason to buy cryptocurrency.</p>
<p>Since the February 24 invasion of Ukraine, the ruble’s value against the US dollar has fallen by as much as 40%, from $US1 being worth 76 rubles to 132 rubles. At the time of publication, $US1 was worth about 109 rubles. </p>
<hr>
<p><strong>The ruble falls off a cliff</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/450556/original/file-20220308-130118-533oke.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/450556/original/file-20220308-130118-533oke.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/450556/original/file-20220308-130118-533oke.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=307&fit=crop&dpr=1 600w, https://images.theconversation.com/files/450556/original/file-20220308-130118-533oke.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=307&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/450556/original/file-20220308-130118-533oke.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=307&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/450556/original/file-20220308-130118-533oke.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=386&fit=crop&dpr=1 754w, https://images.theconversation.com/files/450556/original/file-20220308-130118-533oke.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=386&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/450556/original/file-20220308-130118-533oke.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=386&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Fraction of a US cent per ruble.</span>
<span class="attribution"><a class="source" href="https://tradingeconomics.com/russia/currency">Trading Economics</a></span>
</figcaption>
</figure>
<hr>
<h2>More rubles going into Bitcoin</h2>
<p>The next graph shows the value of Bitcoin transactions by Russian accounts in rubles. </p>
<p>Bitcoin is not the only cryptocurrency Russians could buy, but it is by far the most traded and trusted of all cryptocurrency offerings, so is a useful proxy for the market. This data comes from <a href="https://coin.dance/">Coin Dance</a>, a leading Bitcoin statistics and services company. </p>
<p>Since the war began on February 24 until time of publication, spending on Bitcoin using rubles has increased by 260%.</p>
<hr>
<p><strong>Bitcoin trading volumes by Russian accounts in rubles (weekly)</strong></p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/453214/original/file-20220321-19-g399t.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/453214/original/file-20220321-19-g399t.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/453214/original/file-20220321-19-g399t.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=307&fit=crop&dpr=1 600w, https://images.theconversation.com/files/453214/original/file-20220321-19-g399t.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=307&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/453214/original/file-20220321-19-g399t.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=307&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/453214/original/file-20220321-19-g399t.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=386&fit=crop&dpr=1 754w, https://images.theconversation.com/files/453214/original/file-20220321-19-g399t.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=386&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/453214/original/file-20220321-19-g399t.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=386&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://coin.dance/volume/localbitcoins">Coindance</a></span>
</figcaption>
</figure>
<hr>
<p>This is an impressive rise, but less impressive when the devaluation of the ruble is factored in. The weekly value of rubles being converted into Bitcoin was about $US28 million last week, compared with about $US14 million in mid-February. That's a 100% rise.</p>
<p>In global terms, this is still a tiny percentage of the money going into Bitcoin. According to cryptocurrency data provider <a href="https://www.kaiko.com/">Kaiko</a>, each week between $US20 billion to US$40 billion is spent on Bitcoin. So the Bitcoin-ruble trade represents less than 0.14% of the total.</p>
<h2>Small transaction size</h2>
<p>It is also important to consider the number of accounts and size of average transactions.</p>
<p>According to Glassnode, another cryptocurrency data service, the number of Russian Bitcoin accounts has increased from 39.9 million to 40.7 million since the February invasion. (The Russian population is about 144 million.) </p>
<p>The daily average size of each Bitcoin-ruble transaction – based on data from the the largest exchange in Russia, Binance – has risen to $US580 by mid-February. This compares to the average value of American transactions being $US2,198 at the same time. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/bitcoin-is-helping-both-sides-in-ukraine-conflict-but-it-wont-wreck-russian-sanctions-178442">Bitcoin is helping both sides in Ukraine conflict, but it won't wreck Russian sanctions</a>
</strong>
</em>
</p>
<hr>
<p>The capacity to put large amounts of rubles through crypto exchanges operating in Russia is also heavily constrained by the relatively low liquidity in Russian crypto trade. </p>
<p>Liquidity refers to the ease with which an asset or security – in this case Bitcoin – can be converted from or into cash without affecting its market price. When a market has more buyers and sellers, it becomes easier to complete a transaction, and the less impact there is on the exchange rate. With fewer buyers and sellers, it is harder. </p>
<p>A measure of the liquidity of the Russian Bitcoin exchanges is the value of orders submitted by buyers and sellers at any given time. This is about US$200,000, compared with $US22 million for US-based crypto exchanges – a volume 110 times larger. </p>
<p>These statistics suggest anyone wishing to trade large volumes of Bitcoin against the ruble will have difficulties. </p>
<h2>Small-time investors</h2>
<p>The evidence therefore points to most of the uptick in Russian cryptocurrency trading being dominated by small-time investors. </p>
<p>It is possible that Putin and his cronies could be using hundreds or thousands of accounts to perform many small-scale transactions to move their fortunes around. </p>
<p>But it’s more likely their wealth is mostly invested through shell companies in assets in places like Monaco, the British Virgin Islands, Ireland or even the <a href="https://finance.yahoo.com/news/citizens-pro-business-delaware-calls-142500567.html">US district of Delaware</a>. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-next-pandora-papers-expose-is-inevitable-unless-governments-do-more-on-two-key-reforms-169357">The next Pandora Papers exposé is inevitable – unless governments do more on two key reforms</a>
</strong>
</em>
</p>
<hr>
<p>There is little argument against the strategy of using economic sanctions to combat recalcitrant regimes. Other than direct military intervention, there are few other meaningful weapons available. But a detailed analysis of any proposed sanction beforehand is needed so as to not overestimate its likely effectiveness.</p><img src="https://counter.theconversation.com/content/179559/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A closer look at Bitcoin transactions suggests ordinary Russians are the ones buying more cryptocurrency, hoping to hang onto savings as the ruble’s value plummets.Paul Mazzola, Lecturer Banking and Finance, Faculty of Business and Law, University of WollongongMitchell Goroch, Cryptocurrency Trader and Researcher, University of WollongongLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1785082022-03-11T16:31:19Z2022-03-11T16:31:19ZSanctions against Russia are targeting the ‘elite’ — but did that work in Iran?<figure><img src="https://images.theconversation.com/files/450466/original/file-20220307-44826-3357t5.jpg?ixlib=rb-1.1.0&rect=0%2C17%2C3950%2C2584&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The yacht Amore Vero is docked in the Mediterranean resort of La Ciotat, France. French authorities have seized the yacht linked to Igor Sechin, a Vladimir Putin ally who runs Russian oil giant Rosneft, as part of EU sanctions over Russia's invasion of Ukraine.</span> <span class="attribution"><span class="source"> (AP Photo/Bishr Eltoni)</span></span></figcaption></figure><p>The wave of sanctions that has followed Russia’s invasion of Ukraine has been described with adjectives <a href="https://www.theguardian.com/world/2022/feb/24/boris-johnson-promises-massive-sanctions-to-hobble-russian-economy">such as “massive”</a> <a href="https://home.treasury.gov/news/press-releases/jy0608">and “severe.”</a></p>
<p>Another word has also often been used <a href="https://www.gov.uk/government/news/uk-hits-russian-oligarchs-and-banks-with-targeted-sanctions-foreign-secretary-statement">to describe sanctions on Russia: “targeted.”</a> Ursula von der Leyen, the head of the European Commission, has even used both words side by side, describing “a package of massive, targeted sanctions.”</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1496749941301121027"}"></div></p>
<p>So who’s being targeted? Canadian Prime Minister Justin Trudeau has stated that Canada’s sanctions would “<a href="https://www.cbc.ca/player/play/2006433347714">impose severe costs on complicit Russian elites</a>.” Similarly, Chrystia Freeland, Canada’s deputy prime minister, has spoken of “<a href="https://www.cbc.ca/player/play/2006467651722">targeting the people who have been Putin’s fellow travellers</a>.”</p>
<p>British Foreign Secretary Liz Truss has argued that sanctions would “<a href="https://www.gov.uk/government/news/foreign-secretary-imposes-uks-most-punishing-sanctions-to-inflict-maximum-and-lasting-pain-on-russia">squeeze Putin’s regime and all those close to him</a>.”</p>
<p>This emphasis on targeting the “elite” is in line with a longstanding principle of sanctions policy. For example, as stated in <a href="https://ec.europa.eu/info/business-economy-euro/banking-and-finance/international-relations/restrictive-measures-sanctions_en">the European Commission’s explainer</a> on the EU’s sanctions policy, sanctions should be “aimed at those responsible for the policies or actions the EU wants to influence.”</p>
<p>Why target the elite? The idea is that to achieve the stated goal of sanctions — “to bring about a change of policy or activity,” in the words of the European Commission — they must be designed to affect the decisions of people with political power. If sanctions can change the cost-benefit calculations of the powerful, then they might lead to policy change.</p>
<h2>Targeting the elite in Iran</h2>
<p>In our upcoming research paper, “<a href="http://web5.uottawa.ca/www5/jasongarred/on_target_2022_01_27.pdf">On Target? Sanctions and the Economic Interests of Elite Policymakers in Iran</a>,” we’ve investigated how this might work in practice. Our study focuses on another recent “massive, targeted” sanctions regime: the multilateral sanctions on Iran that preceded the <a href="https://www.nbcnews.com/politics/national-security/time-iran-decide-whether-revive-2015-nuclear-deal-says-us-official-rcna14302">2015 nuclear deal</a>.</p>
<p><a href="https://www.cfr.org/backgrounder/international-sanctions-iran">These sanctions</a> were prompted by Iran’s nuclear program, with the aim of preventing Iranians from producing nuclear weapons. Like the new Russian sanctions, they included severe limitations on Iran’s international financial access, restrictions covering entire industries (such as oil and automotives) and many narrower measures such as asset freezes focused on specific firms or people.</p>
<p>Our study examines the possible role that “elite targeting” played in the diplomatic negotiations leading up to the nuclear deal. During the negotiations, the sanctions package essentially acted as a “carrot” — if Iran agreed to limits on its nuclear program, it would get relief from sanctions in return. </p>
<p>But was this incentive directly relevant to elite policy-makers in Iran? What did they gain from progress towards a deal securing sanctions relief?</p>
<p>Our research focuses on those with significant political influence over the nuclear program: the <a href="https://www.britannica.com/biography/Ali-Khamenei">Supreme Leader Ali Khamenei</a> and the <a href="https://www.cfr.org/backgrounder/irans-revolutionary-guards">Islamic Revolutionary Guard Corps</a> (IRGC). Importantly, both the supreme leader (<a href="https://www.reuters.com/article/us-iran-setad-news-idUSBRE9AA0CY20131111">through an organization known as Setad</a>) and the IRGC are known to control substantial economic holdings.</p>
<figure class="align-center ">
<img alt="A man wearing a mask carries a poster of the ayatollah during a street march." src="https://images.theconversation.com/files/450471/original/file-20220307-51485-l08x0g.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/450471/original/file-20220307-51485-l08x0g.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/450471/original/file-20220307-51485-l08x0g.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/450471/original/file-20220307-51485-l08x0g.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/450471/original/file-20220307-51485-l08x0g.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/450471/original/file-20220307-51485-l08x0g.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/450471/original/file-20220307-51485-l08x0g.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A man carries a poster of the Iranian Supreme Leader Ayatollah Ali Khamenei during the annual rally commemorating the anniversary of the 1979 Islamic Revolution in Tehran in February 2022.</span>
<span class="attribution"><span class="source">(AP Photo/Vahid Salemi)</span></span>
</figcaption>
</figure>
<p>While the value of most of these assets is opaque, the key to our study is that we are aware of some assets of both organizations that are publicly traded on the Tehran Stock Exchange. This means that we can examine whether diplomatic progress resulted in a rise in the value of these holdings.</p>
<h2>Market reacted</h2>
<p>Our study finds that when negotiators moved closer to a deal, the market reaction boosted stock returns for firms owned by Setad and the IRGC. Other publicly traded firms also benefited, but to a lesser extent. While companies in sanctioned industries were boosted in general by progress in negotiations, Setad and IRGC holdings in those industries saw significantly larger returns.</p>
<p>Perhaps the biggest breakthrough in negotiations with Iran was the <a href="https://www.reuters.com/article/us-iran-nuclear-agreement-text-idUSBRE9AN0FS20131124">2013 interim Geneva agreement</a>. This deal raised expectations about eventual sanctions relief and immediately boosted the Iranian stock market. </p>
<p>Our estimates suggest that the Geneva deal led to a rise in the value of publicly traded Setad and IRGC assets by hundreds of millions of dollars. This may actually be a highly conservative estimate of their gains, because most of the economic interests of these organizations are privately held and so not included in our study.</p>
<h2>Lessons for Russian sanctions</h2>
<p>As in Iran, reliable valuations of many of the assets of Russian elites may be difficult to attain. Nonetheless, a similar approach could be used to gather some information on the effectiveness of targeting.</p>
<p>How? It might involve monitoring fluctuations in the known stock market wealth of key members of the elite both when sanctions are tightened or when a diplomatic resolution to the conflict seems possible. In the case of <a href="https://www.aeaweb.org/articles?id=10.1257/0895330053147994">Russia’s elites</a>, access to amenities is another potential indicator: to what extent are the lifestyles of the elite affected by the sanctions?</p>
<figure class="align-center ">
<img alt="yellow police crime scene tape and federal agents are seen outside an elegant white stone mansion framed by leafy trees" src="https://images.theconversation.com/files/450473/original/file-20220307-85746-1p5l2zl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/450473/original/file-20220307-85746-1p5l2zl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/450473/original/file-20220307-85746-1p5l2zl.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/450473/original/file-20220307-85746-1p5l2zl.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/450473/original/file-20220307-85746-1p5l2zl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/450473/original/file-20220307-85746-1p5l2zl.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/450473/original/file-20220307-85746-1p5l2zl.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">U.S. federal agents stand outside a home of Russian oligarch Oleg Deripaska in October 2021 in Washington, D.C., carrying out what the FBI called a ‘court-authorized law enforcement activity.’</span>
<span class="attribution"><span class="source">(AP Photo/Manuel Balce Ceneta)</span></span>
</figcaption>
</figure>
<p>Such monitoring could be a long-term proposition. The gap between the initial imposition of sanctions on Iran and a diplomatic breakthrough was measured in years. The first <a href="https://www.securitycouncilreport.org/un_documents_type/security-council-resolutions/?ctype=Iran&cbtype=iran">UN Security Council resolution on Iranian sanctions was passed in 2006</a>. But serious progress in negotiations only started after the sanctions were tightened between 2010 and 2012, and the final nuclear deal wasn’t reached until 2015.</p>
<p>Our findings suggest that the multilateral sanctions on Iran may have created “targeted” incentives for elite policy-makers to negotiate a deal. But we should also consider the “massive” nature of the sanctions on Iran. Beyond the firms listed on the Tehran Stock Exchange, there is ample evidence that the Iranian economy as a whole <a href="https://www.npr.org/2013/11/25/247077050/crippled-by-sanctions-irans-economy-key-in-nuclear-deal">suffered greatly</a> from sanctions.</p>
<p>If they’re successful, sanctions on Russia might eventually change the course of events through their impact on the circumstances of elite influencers. But they also have the potential to cripple the rest of the Russian economy.</p>
<hr>
<p><em>A version of this article was originally published on the London School of Economics’ <a href="https://blogs.lse.ac.uk/politicsandpolicy/iran-sanctions-targeting/">British Politics and Policy blog</a></em></p><img src="https://counter.theconversation.com/content/178508/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The targeting of elite interests has been at the centre of recent sanctions policies, including sanctions on Russia. We look at the effectiveness of targeting in Iran in the 2010s.Jason Garred, Assistant Professor, Department of Economics, L’Université d’Ottawa/University of OttawaMirko Draca, Professor of Economics, University of WarwickNele Warrinnier, Senior Research Fellow, KU LeuvenLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1788732022-03-11T16:31:16Z2022-03-11T16:31:16ZFrom soaring gas prices to another world war, economic sanctions can lead to dire unintended consequences<figure><img src="https://images.theconversation.com/files/451145/original/file-20220309-28-8dnupg.jpg?ixlib=rb-1.1.0&rect=35%2C8%2C5955%2C4140&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">People in the Russian city of St. Petersburg stand in line to withdraw U.S. dollars and euros from an ATM. Ordinary Russians faced the prospect of higher prices as western sanctions over the invasion of Ukraine sent the ruble plummeting. </span> <span class="attribution"><span class="source">(AP Photo/Dmitri Lovetsky)</span></span></figcaption></figure><p>Western governments have united to bring in <a href="https://www.bbc.com/news/world-europe-60125659">a number of serious economic sanctions against Russia in retaliation for its violence in Ukraine</a>, including the latest announcement that the United States is revoking Russia’s <a href="https://www.cnbc.com/2022/03/11/biden-will-push-to-end-russias-most-favored-nation-trade-status.html">“most favoured nation” status</a> that will impose new trade tariffs. The moves were not a surprise.</p>
<p>The U.S. and its western allies have increasingly turned to sanctions, investment bans, embargoes and other forms of economic warfare over the last two decades. </p>
<p>But sanctions and economic warfare give rise to unintended consequences. They can divert from diplomatic mediation and dialogue. They also carry a price for those applying the sanctions, as well as third parties who may be indirectly impacted by the sanctions.</p>
<p>The desire to use these financial tools is understandable, especially by the U.S. government, because it means avoiding armed conflict. After two decades of war in the Middle East and Afghanistan, economic warfare is more acceptable to war-weary western societies than boots on the ground.</p>
<p>Powerful nations often use economic warfare measures to avoid protracted or difficult diplomatic negotiations, or to weaken the target country for negotiations. Sometimes countries impose sanctions as a way to play for time or to strengthen their negotiating hand.</p>
<h2>Imprecise tools</h2>
<p>However, sanctions and economic embargoes are also imprecise tools — even the highly tuned interventions into bank accounts and financial flows which <a href="https://home.treasury.gov/policy-issues/financial-sanctions/sanctions-programs-and-country-information/counter-terrorism-sanctions">the U.S. government developed after 9/11 to go after terrorist financing</a>. They also have spin-off effects, which may not be predicted beforehand.</p>
<p><a href="https://www.twai.it/articles/us-financial-statecraft-china-hong-kong/">Research finds that the unintended consequences of economic sanctions and financial warfare measures are difficult to predict</a> at the outset — and the more severe and encompassing the sanctions, the greater the unintended consequences. </p>
<p>Consumers in North America and Europe are seeing it now in surging gas prices. More inflation and supply problems are to come in western economies as the sanctions against Russia take effect. </p>
<figure class="align-center ">
<img alt="Farm machinery works on a large wheat field" src="https://images.theconversation.com/files/451138/original/file-20220309-17-1n0wru9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/451138/original/file-20220309-17-1n0wru9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/451138/original/file-20220309-17-1n0wru9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/451138/original/file-20220309-17-1n0wru9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/451138/original/file-20220309-17-1n0wru9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/451138/original/file-20220309-17-1n0wru9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/451138/original/file-20220309-17-1n0wru9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Farmers harvest with their combines in a wheat field near the Russian village of Tbilisskaya in 2021. Russia and Ukraine combine for about a third of the world’s wheat and barley exports and provide large amounts of corn and cooking oils.</span>
<span class="attribution"><span class="source">(AP Photo/Vitaly Timkiv)</span></span>
</figcaption>
</figure>
<p>The developing world is also feeling the war’s impact on grain supply and the unintended effects of the sanctions in surging food prices and other commodities. Food shortages will once again destabilize societies in the developing world, as they did in the past with food riots in Egypt in 1977, 1984 <a href="https://www.theguardian.com/world/2017/mar/08/egypt-protests-we-want-bread-subsidy-cut">and as recently as 2017</a>.</p>
<h2>Food prices will be impacted</h2>
<p>Countries in Northern Africa and the Middle East <a href="https://www.theguardian.com/global-development/2022/mar/07/we-need-bread-fears-in-middle-east-as-ukraine-russia-war-hits-wheat-imports">are already on high alert as the war and wheat prices surge</a> and cut into their staple grain supply from Ukraine and Russia. <a href="https://mg.co.za/opinion/2022-02-28-south-africas-diplomacy-falters-over-russias-attack-on-ukraine/">South Africans are concerned about surging prices of energy and bread</a>, which will hit the poor especially hard even as they try to recover from COVID-19, and about the more than 200 South Africans (mainly students) fleeing Ukraine for safety. </p>
<p>But there are other inherent dangers. Over-reliance on sanctions and economic warfare measures have led to strategic complacency and the avoidance of negotiations on the part of the governments of the western nations. </p>
<p>The announcements of sanctions against Russia are coming fast and furious. Politicians are anxious to announce their latest punishment of Russian President Vladimir Putin, Russian oligarchs and the people of Russia. </p>
<p>As a Canadian diplomat I witnessed the intended and unintended effects of <a href="https://www.jstor.org/stable/43908921">U.S. sanctions on the assets of North Korean entities in a Macau-based bank in 2005</a>. I’m currently researching the unsuccessful use of U.S. financial sanctions on Hong Kong and China in response to <a href="https://www.nytimes.com/2020/06/30/world/asia/hong-kong-security-law-explain.html">the implementation of the National Security Law in Hong Kong</a>. I’m concerned the flurry of economic sanctions against Russia lack strategic clarity. Simply saying the sanctions are meant to punish Putin and Russian elites for their actions is not a serious strategy. </p>
<h2>How will impacts be measured?</h2>
<p>Other questions need to be answered: What mix of diplomatic tools are sanctions and economic warfare part of, and toward what end — what exact change in the target’s behaviour? When will we know that economic warfare has worked? How are governments tracking the effects, intended and unintended? When will the measures end, and how?</p>
<p>If the goal is a stalemate or to aid the Ukrainian effort to repel the forces back into Russia, how likely is that to be achieved given the asymmetry in the armed forces of the two sides? </p>
<p>Or is the goal even broader, such as destabilizing Russia to the point of regime change? That too could lead to unintended consequences, especially given the failed record of western governments in dealing with regime changes in smaller countries like Libya, Iraq and Afghanistan. </p>
<p>And what if the sanctions, <a href="https://www.reuters.com/business/finance/eu-excludes-seven-russian-banks-swift-official-journal-2022-03-02/">investment and SWIFT bans</a>, embargoes and arms transfers don’t work? Is there a point where the cost to human life is too high — in Ukraine or other places?</p>
<figure class="align-center ">
<img alt="Biden raises a finger as he makes a point during his announcement to increase sanctions against Russia." src="https://images.theconversation.com/files/451141/original/file-20220309-22-1c1w1ef.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/451141/original/file-20220309-22-1c1w1ef.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/451141/original/file-20220309-22-1c1w1ef.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/451141/original/file-20220309-22-1c1w1ef.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/451141/original/file-20220309-22-1c1w1ef.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/451141/original/file-20220309-22-1c1w1ef.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/451141/original/file-20220309-22-1c1w1ef.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">U.S. President Joe Biden announces a ban on Russian oil imports on March 8, toughening the toll on Russia’s economy in retaliation for its invasion of Ukraine.</span>
<span class="attribution"><span class="source">(AP Photo/Andrew Harnik)</span></span>
</figcaption>
</figure>
<p>If the Russian military succeeds, would the economic punishments remain indefinitely? While some may make that argument, it would be the end of the globally integrated economy of the last 40 years, especially if China is somehow drawn into the conflict. </p>
<p>China would likely try to broker a cessation in the violence, but would not cease all financial transactions with Russia. That could lead to China developing alternatives to the SWIFT and U.S. dollar payment systems.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-china-could-become-a-mediator-in-negotiations-between-russia-and-ukraine-178736">Why China could become a mediator in negotiations between Russia and Ukraine</a>
</strong>
</em>
</p>
<hr>
<h2>The end of an integrated world economy?</h2>
<p>One of the truths of the world order since the 1980s is that the world was increasingly open and integrated — especially the world economy, but also socially to a large extent. </p>
<p>Social movements on the political left and right have raged against the globalized world. But there were no major wars between the military superpowers in the eight decades after the Second World War. </p>
<p>The world order is now being undone by all sides. </p>
<p>It is time for leading world powers to think seriously about how to return to diplomacy, as unpalatable as this may be at this point. Though it may sound tepid to call for mediation and dialogue, cooler heads are needed to work toward a ceasefire and to get serious and strategic about finding a negotiated solution in the Ukraine. Off ramps need to be found from the intensifying violence.</p>
<p>Sanctions, embargoes, financial bans and arms transfers with no negotiated end in sight is not the solution, tempting as they may be for western governments. Further escalation only leads to the unthinkable.</p><img src="https://counter.theconversation.com/content/178873/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Gregory T. Chin does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Over-reliance on sanctions and economic warfare measures have led to strategic complacency and the avoidance of negotiations on the part of the western governments.Gregory T. Chin, Associate Professor of Political Economy, Department of Politics, York University and former Canadian Diplomat, York University, CanadaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1786052022-03-10T15:20:54Z2022-03-10T15:20:54ZThe Russian economy is headed for collapse<figure><img src="https://images.theconversation.com/files/450535/original/file-20220307-44826-v4hdnx.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C6456%2C3740&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Ordinary Russians are facing the prospect of higher prices as western sanctions over the invasion of Ukraine sent the ruble plummeting. That's led uneasy people to line up at banks and ATMs on Monday in a country that has seen more than one currency disaster in the post-Soviet era. </span> <span class="attribution"><span class="source">(AP Photo/Pavel Golovkin)</span></span></figcaption></figure><p>To justify invading Ukraine, <a href="https://www.theguardian.com/commentisfree/2022/feb/22/putin-speech-russia-empire-threat-ukraine-moscow">Vladimir Putin has painted Russia</a> as a hegemonic power re-asserting its rightful claim to imperial greatness. Yet even before the invasion, Russia’s economic capabilities were hardly capable of sustaining an empire. </p>
<p>Now, with foreign sanctions presiding over a plummeting <a href="https://www.britannica.com/topic/ruble">Russian ruble</a>, Russia’s economic standing has fallen further still. If measured at today’s exchange rates, Russia’s economy would be the 22nd largest in the world, with a <a href="https://www.investopedia.com/terms/g/gdp.asp">gross domestic product (GDP)</a> not much larger than the state of Ohio’s.</p>
<figure class="align-center ">
<img alt="Graph of Russia's ranking among the largest economies in the world at current market exchange rate" src="https://images.theconversation.com/files/450795/original/file-20220308-13-1ai9hpa.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/450795/original/file-20220308-13-1ai9hpa.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=392&fit=crop&dpr=1 600w, https://images.theconversation.com/files/450795/original/file-20220308-13-1ai9hpa.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=392&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/450795/original/file-20220308-13-1ai9hpa.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=392&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/450795/original/file-20220308-13-1ai9hpa.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=493&fit=crop&dpr=1 754w, https://images.theconversation.com/files/450795/original/file-20220308-13-1ai9hpa.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=493&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/450795/original/file-20220308-13-1ai9hpa.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=493&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">With foreign sanctions presiding over a plummeting Russian ruble, Russia’s economic standing continues to fall.</span>
<span class="attribution"><span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>That’s a far cry from the past, when Russia was a true world power. According to <a href="https://www.rug.nl/ggdc/historicaldevelopment/maddison/?lang=en">data assembled by the late economic historian Angus Maddison</a>, it was the fifth largest economy in the world in 1913, behind the United States, China, Germany and Britain. By 1957, when the U.S.S.R. outpaced the United States to launch the first satellite into space, the Soviet economy was the world’s second largest after America’s.</p>
<h2>Putin’s quest for greatness</h2>
<p>Putin was elected president following the chaotic <a href="https://www.britannica.com/event/the-collapse-of-the-Soviet-Union">disintegration of the Soviet Union</a> and the 1998 financial crisis in which <a href="https://doi.org/10.1080/1060586X.1999.10641466">Russia defaulted on its debt and abandoned its fixed exchange rate</a>. </p>
<p>At the time, Russia’s market-value GDP had bottomed out at US$210 billion, <a href="https://www.imf.org/en/Publications/WEO/weo-database/2021/October">making it the world’s 24th largest economy</a>, behind Austria. (All contemporary GDP figures are from the <a href="https://www.imf.org/en/Publications/WEO/weo-database/2021/October">October 2021 World Economic Outlook</a> published by the International Monetary Fund.)</p>
<p>Putin established an <a href="https://www.nti.org/analysis/articles/state-russian-economy-balancing-political-and-economic-priorities/">informal social contract</a> with the Russian people based on his ability to deliver strong economic growth. Under Putin’s rule, and buoyed by a <a href="https://www.bankofcanada.ca/wp-content/uploads/2016/11/boc-review-autumn16-buyuksahin.pdf">commodity price supercycle</a> that would stretch well into the 21st century, Russia’s GDP in market exchange rates rose tenfold, returning Russia to global relevance and providing purchasing power to its middle class. </p>
<p>However, <a href="https://doi.org/10.1080/09668136.2016.1216949">Russia researchers argued</a> that as Russia’s economy began to flag, from a peak in 2013, Putin sought new legitimacy to govern through foreign policy actions to re-establish Russia’s status as a “<a href="https://doi.org/10.1177%2F1478929915623967">great power</a>.” These efforts were epitomized by the Crimean annexation of 2014.</p>
<p>Russia’s invasion of Ukraine, against the backdrop of Russia’s market-rate GDP losing a third of its value between 2013 and 2020, represents a doubling down of Putin’s strategy to seek legitimacy from “great power status,” rather than economic performance. </p>
<p>Yet the West’s unrelenting financial and economic sanctions have only accelerated <a href="https://www.theatlantic.com/newsletters/archive/2022/03/vladimir-putin-economy-sanctions-swift-fallout/623330/">Russia’s economic downfall</a>.</p>
<figure class="align-center ">
<img alt="People standing in line on a sidewalk" src="https://images.theconversation.com/files/450536/original/file-20220307-118221-1ub1qz1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/450536/original/file-20220307-118221-1ub1qz1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=416&fit=crop&dpr=1 600w, https://images.theconversation.com/files/450536/original/file-20220307-118221-1ub1qz1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=416&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/450536/original/file-20220307-118221-1ub1qz1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=416&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/450536/original/file-20220307-118221-1ub1qz1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=523&fit=crop&dpr=1 754w, https://images.theconversation.com/files/450536/original/file-20220307-118221-1ub1qz1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=523&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/450536/original/file-20220307-118221-1ub1qz1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=523&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Ordinary Russians face the prospect of higher prices and crimped foreign travel as western sanctions have sent the ruble plummeting, leading people to line up at banks and ATMs on Feb. 25 in a country that has seen more than one currency disaster in the post-Soviet era.</span>
<span class="attribution"><span class="source">(AP Photo/Dmitri Lovetsky)</span></span>
</figcaption>
</figure>
<p>Russian stocks traded on the U.K. market have fallen by 98 per cent, <a href="https://www.bloomberg.com/news/articles/2022-03-02/london-listed-russian-stocks-erase-570-billion-in-two-weeks">wiping out US$572 billion</a> of wealth, while stocks on Russian exchanges remain suspended. </p>
<p>The Russian currency has fallen to <a href="https://www.cnn.com/business/live-news/stock-market-news-russia-ukraine-030722/h_135238a56a8e8289176e5708633ff2c9">155 rubles per dollar — a drop of more than 50 per cent</a> from 75 rubles per U.S. dollar before the invasion. If not for <a href="https://www.wsj.com/livecoverage/russia-ukraine-latest-news-2022-03-09/card/moscow-limits-foreign-currency-trading-to-shore-up-struggling-ruble-dgTDTQdEOkO3wgoFyC3I">recent captial controls</a> and the rising prices of commodities — brought about by the sanctions themselves — that make up the majority of Russia’s exports, it would fall even further.</p>
<h2>Domino effect</h2>
<p>A country’s <a href="https://www.imf.org/external/pubs/ft/fandd/2007/03/basics.htm">market-rate GDP</a> is its GDP converted to a global currency like the U.S. dollar. While there are other ways to measure GDP, when it comes to global trade and investment — and economic power — the market rate is what matters. </p>
<p><a href="https://www.imf.org/en/Publications/WEO/weo-database/2021/October">Russia’s market-rate GDP in 2021 was US$1.65 trillion</a>, enough to make it the world’s 11th largest economy, behind South Korea. If we crudely convert Russia’s 2021 estimated GDP by March 7, 2022, currency rates, rather than the average exchange rate used last year, and place it against the <a href="https://www.visualcapitalist.com/visualizing-the-94-trillion-world-economy-in-one-chart/">2021 market-rate GDP table</a>, the rankings change and Russia slides to 22nd place, falling between Taiwan and Poland. </p>
<p>This drop is likely an underestimate. While a falling ruble lowers Russia’s exchange rate of its GDP to U.S. dollars, its <a href="https://www.theguardian.com/world/2022/mar/02/russia-economy-could-shrink-by-7-per-cent-as-result-of-ukraine-sanctions-war-recession-covid">weakening economy</a> lowers its ruble GDP directly. And <a href="https://www.cnn.com/2022/03/02/business/russia-markets-economy-sberbank/index.html">Russia’s isolation will erode its economic competitiveness</a>, widening the economic gap further in the medium term. </p>
<p>Ukrainians confronted with the oncoming Russian army were wise to Putin’s chimeric strategy. “Don’t you have problems in your country to solve? Are you all rich there, as in the Emirates?” one elderly <a href="https://www.thelondoneconomic.com/news/dont-you-have-your-own-problems-to-solve-russian-man-living-in-ukraine-confronts-soldiers-313783/">man heckled Russian soldiers</a>.</p>
<h2>Putin’s next move</h2>
<p><a href="https://www.jfklibrary.org/learn/about-jfk/the-kennedy-family/robert-f-kennedy/robert-f-kennedy-speeches/remarks-at-the-university-of-kansas-march-18-1968">Robert F. Kennedy famously observed</a> that GDP failed to account for many things that we care about — like health and education. The fall in Russia’s market-rate GDP cannot begin to describe the human tragedy playing out in both Ukraine and Russia. </p>
<p>But what these figures do make clear is that Putin’s claim to legitimacy through economic performance is all but destroyed. With “great power status” tied closely to economic power, Putin’s back-door source of legitimacy from stirring up nationalist pride now seems closed as well. </p>
<p>Putin may have led Russia from one “<a href="https://doi.org/10.1007/s11212-018-9298-0">Times of Troubles</a>,” but he has delivered it to another one. That’s cold comfort to the Ukrainians, and indeed to the rest of the world, who are wondering Putin’s next move.</p><img src="https://counter.theconversation.com/content/178605/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Eric Werker does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>With Russia’s “great power status” tied closely to economic power, the country’s crumbling economy is putting Putin’s claims to legitimacy at risk.Eric Werker, William Saywell Professor of International Business, Simon Fraser UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1788352022-03-10T11:14:20Z2022-03-10T11:14:20ZUkraine war: what history tells us about the effectiveness of sanctions<p>The west has responded to the invasion of Ukraine by <a href="https://theconversation.com/ukraine-sanctions-can-still-make-a-difference-but-only-if-done-right-177783">imposing economic sanctions on Russia</a>. There has been plenty of discussion about whether economic sanctions are an appropriate response, what they hope to achieve and what the results will be – not only for Russia but for the world. </p>
<p>Economic sanctions have been used as a tool of war for centuries. In 17th- and 18th-century Europe, when warfare was widespread, economic sanctions were frequently implemented. They included prohibitions on trade, the closure of ports against belligerent enemies, and bans on trade in certain commodities. </p>
<p>Economic exchange was affected in more indirect ways, too, by increased privateering and piracy at sea, high taxes, and conscription. The economic consequences of war were felt not only by governments, but by merchants, manufacturers, consumers and wider society, as business and daily life were thrown into chaos.</p>
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Read more:
<a href="https://theconversation.com/ukraine-sanctions-can-still-make-a-difference-but-only-if-done-right-177783">Ukraine: sanctions can still make a difference – but only if done right</a>
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<p>When Britain and France were at war during the Nine Years’ War (1688-97) and the War of the Spanish Succession (1702-13), both sides imposed economic sanctions on the other.</p>
<p>England entered the <a href="https://www.nam.ac.uk/explore/nine-years-war">Nine Years’ War</a> by declaring war on France on May 17, 1689, in response to Europe-wide concerns that France – and its absolutist monarch Louis XIV – was growing too strong. In its declaration of war, parliament authorised officials to “arrest all ships and vessels conveying any goods or merchandise in them belonging to the French King or to his subjects and inhabitants”. </p>
<p>When Scotland followed suit on August 6, the declaration of war forbade any Scottish subjects “to trade or correspond … with the said French king or any of his subjects”.</p>
<p>France and Britain again found themselves on opposing sides during the <a href="https://www.nam.ac.uk/explore/Spanish-succession">War of the Spanish Succession</a>, a conflict fought over the disputed succession to Spain’s vacant throne and control over that country’s vast global territories. Similar economic sanctions were imposed. In January 1701, the Scottish parliament embargoed “the importation of all French wines, Brandy and other strong waters and vinegar made in France from any place”. </p>
<p>The potential for broader ramifications are clear – not only would this harm France, but economic consequences would be felt by any nation doing business in French produce. There were social consequences, too, for anyone who enjoyed drinking French wine.</p>
<p>This resonates with current fears over the price of oil. As prices soar as a <a href="https://www.bbc.co.uk/news/business-52188448">direct result of the Ukraine conflict</a> and <a href="https://www.bbc.co.uk/news/world-us-canada-60666251">global bans</a> on Russian oil imports, it is feared that prices of crude oil could <a href="https://oilprice.com/Latest-Energy-News/World-News/Russia-Says-Energy-Embargo-Could-Send-Oil-Prices-Over-300.html">rise as high as US$300 (£228) a barrel</a>. Just like in 1701, this economic sanction does not only harm the nation against whom it is aimed, but has consequences across the globe.</p>
<h2>Turning a blind eye</h2>
<p>But these early-modern sanctions met with mixed success. Individual merchants used a variety of tactics to circumvent them, including sailing in neutral ships or carrying falsified documents, as well as entering goods through different ports. In addition, governments on both sides of the channel were complicit in permitting activities that undermined economic sanctions.</p>
<p>In 1692, three years into the Nine Years’ War, the Scottish privy council issued six passes for ships to travel to Bordeaux on a commercial venture. Again, in May 1693, Scots were allowed to trade with and travel to France with “express leave” of the monarch or privy council of Scotland. French admirals, too, ignored their own sanctions, granting passes for British ships to trade in La Rochelle and Bordeaux throughout the Nine Years’ War.</p>
<p>Similar patterns emerged during the War of the Spanish Succession. The British monarch, Queen Anne, earned herself a reputation for granting passes that allowed trade with France to continue despite wartime embargoes. And in 1702 the English treasury reported that French wine was being brought over from the Spanish port of St Sebastian: “It was taken there from Bordeaux, a Spanish name given to it, and reshipped in Spanish casks”. </p>
<p>There was also widespread bribery of port officials. In 1703, <a href="https://www.british-history.ac.uk/cal-treasury-papers/vol3/pp99-127">the English treasury noted that</a>: </p>
<blockquote>
<p>This management seemed to be carried on in concert between the consuls in foreign parts and some officers in the Customs … who for private gratuities undertook for and passed such wines as were of the growth of Spain. </p>
</blockquote>
<p>In 1704, in England, the House of Lords <a href="https://www.google.co.uk/books/edition/The_Wine_Trade/4QONQgAACAAJ?hl=en">undertook an enquiry</a> that found that 15 ships in Bordeaux, mostly from the West Country, had loaded French brandies and wines. The resulting report stated that the government discouraged informers and was inclined to hush the matter up rather than pursue the offenders.</p>
<p>The stringent economic sanctions imposed during these early-modern conflicts were not consistently upheld, even as bold public statements were made about the strength of enmity. The importance of international economic relationships meant that trade had to be allowed to continue, and governments needed to reconcile their political aims with economic necessity. Early-modern economies were interdependent, so it was in nobody’s interests to destroy established trading routes, whatever the political context.</p>
<p>We are already seeing the broader consequences of sanctions imposed on Russia, particularly in terms of the rising prices of oil and <a href="https://www.bbc.co.uk/news/business-60653856">food</a>. As the world watches Ukraine, it is worth remembering that in the past, the cost of upholding economic sanctions was often seen as too high a price to pay.</p><img src="https://counter.theconversation.com/content/178835/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Siobhan Talbott received funding from Arts and Humanities Research Council for the research on which this article is based.</span></em></p>Warring countries have ben imposing sanctions on their enemies for hundreds of years. They have met with mixed success.Siobhan Talbott, Reader in Early Modern History, Keele UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1783562022-03-06T12:15:09Z2022-03-06T12:15:09ZUkraine invasion: Why Canada should rethink its approach to economic sanctions<figure><img src="https://images.theconversation.com/files/449928/original/file-20220303-3137-1fp7md3.JPG?ixlib=rb-1.1.0&rect=7%2C0%2C4854%2C3221&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Women look at a screen displaying exchange rate at a currency exchange office in St. Petersburg, Russia. The Russian currency has plunged against the U.S. dollar after the West imposed severe economic sanctions. </span> <span class="attribution"><span class="source"> (AP Photo/Dmitri Lovetsky)</span></span></figcaption></figure><p>Western countries have imposed <a href="https://www.bbc.com/news/world-europe-60125659">massive sanctions</a> against Russia for its invasion of Ukraine. The <a href="https://www.brookings.edu/research/economic-sanctions-too-much-of-a-bad-thing/">West has increasingly relied on economic sanctions</a> to punish or change the policies of foreign governments in the last several decades. The conventional wisdom is that economic sanctions are an effective and peaceful foreign policy tool.</p>
<p>Some sanctions regimes, such as the current effort against Russia, may be both effective and lawful. </p>
<p>But as I explored in a <a href="https://rideauinstitute.ca/wp-content/uploads/2021/11/Martin_RI_Econ_Sanctions_Ottawa_2021.pdf">recent research report</a>, some economic sanctions may violate international law principles, including those the sanctions are intended to enforce. They may therefore undermine the very legal regimes that Canadians like to champion.</p>
<h2>The nature of economic sanctions</h2>
<p>Many economic sanctions are authorized by the United Nations Security Council or regional organizations. But countries are increasingly imposing sanctions without such <a href="https://www.bloomsbury.com/us/sanctions-law-9781509900145/">legal authority</a>. It’s these so-called <a href="https://doi.org/10.1017/aju.2019.20">unilateral or autonomous sanctions</a> that raise legal questions.</p>
<p>Economic sanctions typically involve a mix of trade restraints, constraints on financial transactions and travel restrictions. These may take the form of broad <a href="https://www.icrc.org/en/doc/resources/documents/report/57jqap.htm">trade and financial embargoes (like against Iraq in the 1990s</a>) or they may target certain industries or sectors (like the <a href="https://doi.org/10.1179/204243410X12674422128957">arms embargo against South Africa in the 1970s</a>).</p>
<p>While countries are the primary target, there is an increasing deployment of so-called targeted sanctions against people and companies within the target state as a means of exerting pressure on the government (like the <a href="https://home.treasury.gov/policy-issues/financial-sanctions/sanctions-programs-and-country-information/global-magnitsky-sanctions">Magnitsky sanctions against Russian oligarchs</a>).</p>
<p>The United States has also imposed secondary or extra-territorial sanctions against countries other than the primary target, and even against individuals and companies outside of the target state, to deter business with the target state (like the <a href="https://mcmillan.ca/insights/the-next-wave-of-us-extraterritorial-sanctions-regarding-cuba-potential-impacts-for-canadian-companies/">Helms-Burton sanctions relating to Cuba</a>).</p>
<figure class="align-center ">
<img alt="Men sit in the sun with empty fuel tanks." src="https://images.theconversation.com/files/449929/original/file-20220303-17-djtw89.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/449929/original/file-20220303-17-djtw89.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=425&fit=crop&dpr=1 600w, https://images.theconversation.com/files/449929/original/file-20220303-17-djtw89.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=425&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/449929/original/file-20220303-17-djtw89.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=425&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/449929/original/file-20220303-17-djtw89.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=534&fit=crop&dpr=1 754w, https://images.theconversation.com/files/449929/original/file-20220303-17-djtw89.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=534&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/449929/original/file-20220303-17-djtw89.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=534&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Men wait for a cooking gas store to open as they sit with their empty canisters in Havana in early 2020. The Cuban government warned citizens to prepare for shortages of cooking gas due to U.S. sanctions on the island.</span>
<span class="attribution"><span class="source">(AP Photo/Ismael Francisco)</span></span>
</figcaption>
</figure>
<h2>Human rights objections</h2>
<p>But there is <a href="http://bostonreview.net/war-security-politics-global-justice/asl%C4%B1-u-b%C3%A2li-aziz-rana-sanctions-are-inhumane%E2%80%94now-and-always">growing criticism</a> that comprehensive sanctions may inflict serious harm and suffering on the people of the target state. The sanctions against <a href="https://www.nytimes.com/1994/01/09/world/un-sanctions-led-to-400000-deaths-ministry-in-iraq-says.html">Iraq in the 1990s</a> are thought to have contributed to tens of thousands of deaths. </p>
<p>More recently, the American sanctions against Iran <a href="https://www.brookings.edu/opinions/iran-the-double-jeopardy-of-sanctions-and-covid-19/">may have caused</a> increased loss of life during the COVID-19 pandemic.</p>
<p>Whether states have human rights obligations to the people of other countries is a matter of some debate. But there is an emerging recognition that, at a minimum, comprehensive economic sanctions that significantly impact food security within the target state would constitute a violation of human rights law. </p>
<p>Recent developments therefore require sanctions include <a href="https://www.icj-cij.org/public/files/case-related/175/175-20181003-ORD-01-00-EN.pdf">humanitarian safeguards and exemptions</a> for food and medical supplies, though these are often ineffective.</p>
<p><a href="https://curia.europa.eu/juris/liste.jsf?num=C-402/05">International courts</a> have also ruled that it’s a violation of human rights not to provide people subjected to targeted sanctions with reasons and a process for challenging their sanctions. </p>
<h2>Unlawful intervention</h2>
<p>Economic sanctions may also violate the principle of non-intervention that prohibits countries from engaging in coercive interference in the internal affairs of other states. What kind of pressure exactly comprises coercive interference is <a href="https://doi.org/10.7574/cjicl.04.03.616">debated and somewhat unsettled</a> in international law.</p>
<p>Western states have consistently maintained that economic sanctions do not comprise unlawful intervention. The well-established practice of employing sanctions would tend to corroborate that view. But the developing world has long held that economic sanctions are not only a form of unlawful intervention, but a perpetuation of imperialistic policies against countries of the Global South.</p>
<p>There is a growing body of <a href="https://www.refworld.org/docid/3dda1f104.html">soft law</a>, such as UN resolutions, that condemn autonomous economic sanctions as a “means of political and economic coercion.” Canada has even supported some of <a href="https://www.un.org/press/en/2002/ga10083.doc.htm">these resolutions</a>. But sanctions that are designed to bring about regime change, as with the <a href="https://www.foreignaffairs.com/articles/united-states/2019-04-29/sanctions-cant-spark-regime-change">U.S. measures against Venezuela</a>, are coercive in nature.</p>
<figure class="align-center ">
<img alt="A man in a baseball cap holds up a sign that says Yankee Go Home." src="https://images.theconversation.com/files/449930/original/file-20220303-23-iuag2d.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/449930/original/file-20220303-23-iuag2d.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/449930/original/file-20220303-23-iuag2d.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/449930/original/file-20220303-23-iuag2d.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/449930/original/file-20220303-23-iuag2d.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/449930/original/file-20220303-23-iuag2d.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/449930/original/file-20220303-23-iuag2d.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">In this 2015 photo, a protester holds up an anti-U.S. poster of Uncle Sam during a pro-government rally at Miraflores presidential palace in Caracas, Venezuela, after the U.S. imposed sanctions.</span>
<span class="attribution"><span class="source">(AP Photo/Ariana Cubillos)</span></span>
</figcaption>
</figure>
<h2>Secondary sanctions</h2>
<p>There are also objections to the American practice of imposing secondary sanctions against third-party states, and companies and people outside the target state. </p>
<p>There is a basic prohibition in international law, with a few specific exceptions, against the extra-territorial application of domestic law. Secondary sanctions will <a href="https://academic.oup.com/bybil/advance-article/doi/10.1093/bybil/braa007/5909823">frequently violate this principle</a>.</p>
<p>Canada has been caught up in such secondary sanctions, from the <a href="https://www.canadainternational.gc.ca/cuba/highlights-faits/2019/2019-04-18-helms-burton.aspx?lang=eng.">Helms-Burton Act</a> sanctions against Canadian businesses in Cuba to Canada’s detainment, at the behest of the United States, of <a href="https://asialawportal.com/2021/02/19/tracing-the-origins-of-the-case-against-huawei-cfo-meng-wanzhou-how-global-banks-extend-the-reach-of-u-s-extraterritorial-jurisdiction-directly-and-indirectly-impacting-the-global-expansion-of-chin/">a Huawei executive</a> for violating U.S. sanctions against Iran.</p>
<p>Canada and other western countries have even <a href="https://laws-lois.justice.gc.ca/eng/acts/f-29/index.html.">enacted legislation</a> to block American secondary sanctions.</p>
<h2>Canadian sanctions</h2>
<p>Canada has <a href="https://www.international.gc.ca/world-monde/international_relations-relations_internationales/sanctions/legislation-lois.aspx?lang=eng">several laws in place</a> to implement sanctions. While the <a href="https://laws-lois.justice.gc.ca/eng/acts/u-2/index.html">United Nations Act</a> is specifically for implementing UN-authorized sanctions, the Special Economic Measures Act (SEMA) and the Justice for Victims of Corrupt Foreign Officials Act (the Magnitsky Law), provide for autonomous sanctions regimes.</p>
<p>Canada has sanctions under SEMA against 13 countries for human rights violations. It also has sanctions against Iran and North Korea for nuclear non-proliferation, and it had sanctions against both Russia and Ukraine even before the recent invasion. Canada has targeted sanctions in place against people in states that include Russia, Venezuela and Myanmar under the Magnitsky Law for human rights violations.</p>
<p>Canada has not engaged in secondary sanctions, and so isn’t vulnerable to criticism on this front. <a href="https://www.canlii.org/en/commentary/doc/2017CanLIIDocs119#!fragment//BQCwhgziBcwMYgK4DsDWszIQewE4BUBTADwBdoByCgSgBpltTCIBFRQ3AT0otokLC4EbDtyp8BQkAGU8pAELcASgFEAMioBqAQQByAYRW1SYAEbRS2ONWpA">Some scholars</a> <a href="https://umanitoba.ca/centres/media/Canadian-Economic-Sanctions-Workshop_finalreport_Nov-2019.pdf">have suggested</a> that Canada should actually consider being more aggressive in this regard. But Canada has been wise not to follow the U.S. down this increasingly controversial path. Indeed, Canada itself <a href="https://www.canadainternational.gc.ca/cuba/highlights-faits/2019/2019-04-18-helms-burton.aspx?lang=eng">has objected</a> to U.S. secondary sanctions.</p>
<p>Some autonomous Canadian sanctions are more vulnerable to criticism on human rights and intervention grounds. Sanctions against <a href="https://www.international.gc.ca/world-monde/international_relations-relations_internationales/sanctions/iran.aspx?lang=eng">Iran until 2016</a> and <a href="https://www.international.gc.ca/world-monde/international_relations-relations_internationales/sanctions/venezuela.aspx?lang=eng">against Venezuela</a> as part of U.S. sanctions regimes were quite comprehensive in their scope. These multilateral sanctions regimes may be viewed as coercive, and may undermine the food security and public health of the target populations. </p>
<p>Unlike the European Union, Canada doesn’t provide due process rights to individuals targeted for sanctions.</p>
<figure class="align-center ">
<img alt="A bald boy is seen in silhouette as he looks out a window." src="https://images.theconversation.com/files/449933/original/file-20220303-8354-rhndvl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/449933/original/file-20220303-8354-rhndvl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/449933/original/file-20220303-8354-rhndvl.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/449933/original/file-20220303-8354-rhndvl.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/449933/original/file-20220303-8354-rhndvl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/449933/original/file-20220303-8354-rhndvl.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/449933/original/file-20220303-8354-rhndvl.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A five-year-old Iranian boy suffering from eye cancer sits in a hospital in Tehran. From imported chemo and other medicines, many Iranians blame medical shortages on U.S. sanctions.</span>
<span class="attribution"><span class="source">(AP Photo/Ebrahim Noroozi)</span></span>
</figcaption>
</figure>
<h2>Champion of human rights?</h2>
<p>Canada has traditionally viewed itself as a <a href="https://www.international.gc.ca/world-monde/issues_development-enjeux_developpement/human_rights-droits_homme/advancing_rights-promouvoir_droits.aspx?lang=eng">champion of human rights</a> and the international rule of law. It also casts itself as a <a href="https://globalnews.ca/news/1016956/mandelas-deep-respect-for-canada-mulroney/">friend of the developing world</a>.</p>
<p>It should therefore be sensitive to claims that some of its sanctions may violate international human rights law and constitute unlawful intervention in states of the Global South. </p>
<p>Aside from the apparent hypocrisy, there’s also a risk that Canada could undermine the international law principles that it seeks to champion and betray the broader legal and ethical values that are part of Canada’s sense of identity in the world.</p><img src="https://counter.theconversation.com/content/178356/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Craig Martin received some funding from the Rideau Institute for the research on economic sanctions reflected in the referenced report. The research was independent and the funding was not conditioned upon any specific findings or conclusions. Martin is a Senior Fellow at the Rideau Institute. </span></em></p>Some economic sanctions may violate international law principles, including those the sanctions are intended to enforce. They may therefore undermine the very legal regimes Canadians champion.Craig Martin, Professor of Law, Washburn UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1780092022-03-01T15:49:26Z2022-03-01T15:49:26ZEconomic sanctions will hurt Russians long before they stop Putin’s war in Ukraine<figure><img src="https://images.theconversation.com/files/449062/original/file-20220301-12844-r7ppkz.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C7232%2C4817&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">People walk past a currency exchange office screen in Moscow displaying the exchange rates of the U.S. dollar and the euro and to the Russian ruble a few days after Vladimir Putin's invasion of Ukraine. Economic sanctions have caused the currency to plummet, causing hardship to citizens.</span> <span class="attribution"><span class="source">(AP Photo/Pavel Golovkin)</span></span></figcaption></figure><p>The <a href="https://www.bbc.com/news/world-europe-56720589">Russian invasion of Ukraine</a> has been met with <a href="https://www.aljazeera.com/news/2022/2/28/russia-ukraine-us-uk-eu-canada-sanction-russias-central-bank">myriad sanctions imposed by many western nations</a>. Imposing economic sanctions is often seen as an alternative to military intervention. The idea is that sanctions cause economic damage and coerce the target to change its objectionable course of action.</p>
<p>Although economic sanctions are widely used, their effectiveness is often debated. <a href="https://elgar.blog/2022/02/11/do-sanctions-work/">Recent research on sanctions</a> has generally concluded that economic sanctions seldom change behaviour, especially those aimed at disrupting military interventions.
If national security is viewed as being at stake, sanctions simply aren’t sufficiently costly. </p>
<p>The <a href="https://archive.globalpolicy.org/previous-issues-and-debate-on-iraq/41759.html">severe and universal sanctions against the Iraqi occupation of Kuwait in 1990</a>, for example, crippled the Iraqi economy but did not change the mindset of Iraq’s dictator Saddam Hussein at all. </p>
<p>Could sanctions imposed on Russia be effective? The western world has imposed sanctions on Russia and its predecessor, the Soviet Union, before. This long history of sanctions is sobering. Failures include the <a href="https://www.washingtonpost.com/archive/politics/1980/04/06/administration-is-facing-grain-embargo-backlash/ebeb1273-fc89-46ef-a426-e0060084d69e/">1980 American grain embargo</a> when Russia invaded Afghanistan in 1979 as well as <a href="https://cset.georgetown.edu/publication/from-cold-war-sanctions-to-weaponized-interdependence/">export control and restrictions on technology transfer during the Cold War</a>. The embargo did not discourage Russia from its Afghan occupation, and the export controls did not significantly affect the Communist states. </p>
<figure class="align-center ">
<img alt="Farmers are seen harvesting wheat with combines in an aerial photo." src="https://images.theconversation.com/files/449067/original/file-20220301-25-tetdjq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/449067/original/file-20220301-25-tetdjq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/449067/original/file-20220301-25-tetdjq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/449067/original/file-20220301-25-tetdjq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/449067/original/file-20220301-25-tetdjq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/449067/original/file-20220301-25-tetdjq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/449067/original/file-20220301-25-tetdjq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Farmers harvest wheat in a Russian village in July 2021.</span>
<span class="attribution"><span class="source">(AP Photo/Vitaly Timkiv)</span></span>
</figcaption>
</figure>
<h2>Post-Crimea sanctions</h2>
<p>Sanctions were also imposed on Russia in 2014 when President Vladimir Putin <a href="https://www.nytimes.com/2014/03/19/world/europe/ukraine.html">annexed the Crimea region of Ukraine</a>. Those sanctions didn’t force Russia to back down on its annexation. </p>
<p>What can we learn from this episode? </p>
<p>The first is that Russia was indeed vulnerable to economic pressure. Before the 2014 sanctions, trade flows between Russia and the European Union amounted to <a href="https://voxeu.org/article/russia-s-tit-tat">22 per cent of Russian GDP and three per cent of EU GDP</a>. The economic impact of full sanctions therefore was more costly for Russia than the EU. While <a href="https://ec.europa.eu/trade/policy/countries-and-regions/countries/russia/">the numbers</a> for the EU roughly stayed the same, the share of bilateral trade in Russia’s GDP decreased to 14 per cent. </p>
<p>But the second lesson is that the sanctions <a href="https://www.wilsoncenter.org/blog-post/sanctions-against-russia-rethinking-wests-approach">didn’t do a lot of damage in Russia</a>. Indeed, the EU restrictions on Russian trade and investment were designed to avoid affecting most of the EU’s exports. This reflects the difficulty reaching political consensus among a group of democracies where special interests are traded off.</p>
<p>In addition, Putin didn’t face internal opposition due to the 2014 sanctions because he deftly framed his military action as support for the Russian-speaking minority in Crimea. <a href="https://www.rferl.org/a/poll-majority-of-russians-support-crimea-annexation-but-worry-about-economic-effects/29859570.html">The Russian population rallied around the flag</a>. The sanctions did not bite.</p>
<figure class="align-center ">
<img alt="A bald man stands at a podium with statues of two men and an eternal flame behind him." src="https://images.theconversation.com/files/449069/original/file-20220301-21-1ta3j4s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/449069/original/file-20220301-21-1ta3j4s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=453&fit=crop&dpr=1 600w, https://images.theconversation.com/files/449069/original/file-20220301-21-1ta3j4s.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=453&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/449069/original/file-20220301-21-1ta3j4s.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=453&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/449069/original/file-20220301-21-1ta3j4s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=569&fit=crop&dpr=1 754w, https://images.theconversation.com/files/449069/original/file-20220301-21-1ta3j4s.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=569&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/449069/original/file-20220301-21-1ta3j4s.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=569&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Vladimir Putin delivers speech at the memorial complex dedicated to the end of the Russian Civil War during Unity Day in Sevastopol, Crimea, in November 2021.</span>
<span class="attribution"><span class="source">(AP Photo/Mikhail Metzel)</span></span>
</figcaption>
</figure>
<h2>History repeats?</h2>
<p>In the wake of Russia’s invasion of Ukraine, <a href="https://www.cnn.com/2022/02/25/business/list-global-sanctions-russia-ukraine-war-intl-hnk/index.html">the United States, the United Kingdom, the EU, Japan, Taiwan, New Zealand</a>, <a href="https://www.reuters.com/world/europe/neutral-swiss-adopt-sanctions-against-russia-2022-02-28/">Switzerland</a> <a href="https://www.canada.ca/en/global-affairs/news/2022/02/canada-imposes-additional-economic-measures-on-russia-in-response-to-russias-attack-on-ukraine.html">and Canada</a> have all announced different sanctions against Russia. </p>
<p>Officials have called these <a href="https://www.nbcnews.com/politics/national-security/biden-team-weighs-unprecedented-sanctions-russia-ukraine-rcna8030">sanctions severe and “without precedent</a>.” They aren’t. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/ukraine-conflict-why-russia-is-mostly-protected-from-sanctions-177950">Ukraine conflict: Why Russia is mostly protected from sanctions</a>
</strong>
</em>
</p>
<hr>
<p>Sanctions <a href="https://doi.org/10.2307/20034049">against Iraq</a> <a href="https://doi.org/10.1177/0022343313485487">and Iran</a> were more comprehensive. All foreign assets were frozen in Iraq, and almost all trade was halted; <a href="https://www.aljazeera.com/economy/2018/11/5/what-swift-is-and-why-it-matters-in-the-us-iran-spat">sanctions via SWIFT, the international payment system</a>, were imposed across the broader spectrum and unexpectedly on Iran.</p>
<p>Countries that have been targeted with sanctions <a href="https://www.cbc.ca/news/politics/ukraine-russia-putin-sanctions-1.6363781">can significantly undermine the effectiveness of those measures if they aren’t speedily imposed</a>. Russia planned the invasion of Ukraine and expected western sanctions as a consequence of its military actions. </p>
<p>Following the post-Crimea sanctions imposed in 2014, the Central Bank of Russia developed an alternative international payment platform, the so-called <a href="https://cyberft.com/about/comprasion/spfs">System for Transfer of Financial Messages (SPFS)</a> — the Russian equivalent to SWIFT. SPFS is not a perfect substitute for SWIFT, but it will allow some continuity in international exchange.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/swift-ejecting-russia-is-largely-symbolic-heres-why-178065">Swift: ejecting Russia is largely symbolic – here's why</a>
</strong>
</em>
</p>
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<h2>Consequences of sanctions</h2>
<p>Although western sanctions are unlikely to force Putin to abort his invasion of Ukraine, Russian citizens will certainly be hurt. <a href="https://www.un.org/press/en/2022/sc14788.doc.htm">The damage to civilians, particularly the poor populations of sanctioned countries</a>, are too often ignored.</p>
<p>But imposing economic sanctions can become a double-edged sword that adversely affects both innocent civilians and elites alike. </p>
<figure class="align-center ">
<img alt="A person with a peace sign painted on their forehead holds up a sign against the glass of a police bus that says 'no war' with an armoured police officer in the foreground." src="https://images.theconversation.com/files/449070/original/file-20220301-21-ulot5r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/449070/original/file-20220301-21-ulot5r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/449070/original/file-20220301-21-ulot5r.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/449070/original/file-20220301-21-ulot5r.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/449070/original/file-20220301-21-ulot5r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/449070/original/file-20220301-21-ulot5r.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/449070/original/file-20220301-21-ulot5r.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A detained demonstrator shows a sign that says ‘no war’ from a police bus in St. Petersburg, Russia.</span>
<span class="attribution"><span class="source">(AP Photo/Dmitri Lovetsky)</span></span>
</figcaption>
</figure>
<p>Even if the sanctions are specifically targeted, there are severe ramifications for the general populace. For instance, <a href="https://doi.org/10.1016/S0140-6736(00)02289-3">United Nations sanctions on Iraq doubled infant and under-five mortality rates</a>. Similarly, sanctions can also have major implications for food security — U.S. sanctions against Cuba <a href="https://doi.org/10.2105/AJPH.87.1.15">contributed to a decline in the availability of nutritious foods and increased infectious diseases and deaths for the adult and elderly population</a>. </p>
<p>More recent evidence suggests that imposing sanctions <a href="https://doi.org/10.1016/j.ejpoleco.2015.09.001">slows economic growth and development</a>, <a href="https://doi.org/10.1016/j.jdeveco.2016.03.005">widens the poverty gap</a>, <a href="https://doi.org/10.1016/j.ejpoleco.2018.06.002">restricts access to food and medicines</a> and <a href="https://doi.org/10.1016/j.worlddev.2016.03.015">exacerbates inequalities</a>.</p>
<p>Already, we’re watching ordinary Russians bearing the brunt of the ongoing economic sanctions as the <a href="https://www.cnn.com/2022/02/28/business/russia-ruble-banks-sanctions/index.html">ruble has lost 40 per cent of its value and interest rates increased to 20 per cent</a>.</p>
<p>Further isolating Russia and Putin from the international community also gives the Russian autocratic regime yet another opportunity to impose more repressive policies on its citizens and opposition parties. As the world rightfully fears for the Ukrainian people, we must not turn a blind eye to Russians who are also Putin’s victims.</p><img src="https://counter.theconversation.com/content/178009/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sylvanus Kwaku Afesorgbor receives funding from OMAFRA </span></em></p><p class="fine-print"><em><span>Peter A.G. van Bergeijk does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>As the world rightfully fears for the Ukrainian people, we must not turn a blind eye to Russians who are also Putin’s victims and will suffer the most from economic sanctions.Sylvanus Kwaku Afesorgbor, Assistant Professor, Agri-Food Trade and Policy, University of GuelphPeter A.G. van Bergeijk, Professor of International Economics and Macroeconomics, International Institute of Social StudiesLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1779132022-02-25T05:06:30Z2022-02-25T05:06:30ZAll told, Australian sanctions will have almost zero consequences for Russia<p>The <a href="https://www.dfat.gov.au/international-relations/security/sanctions/sanctions-regimes/russia-sanctions-regime">economic sanctions</a> Australia has imposed in the wake of Russia’s invasion of the Ukraine are an extension of those applied in 2014 after Russia annexed the Crimea. </p>
<p>As with the US, UK and European Union sanction regimes, Australia’s operate across three areas:</p>
<ul>
<li><p>technological, involving bans on exports of goods for use in oil and gas exploration and weapons production</p></li>
<li><p>financial, involving bans on financial services and financial trading with designated entities</p></li>
<li><p>personal, involving travel bans and limits on commercial relations for designated people</p></li>
</ul>
<p>The question is whether they will have consequences for Russia’s economy and so act as a deterrent to further military action.</p>
<p>Certain conditions are needed for sanctions to have coercive power.</p>
<ul>
<li><p>Either there needs to be a large and preferably asymmetric economic relationship between the countries, with the asymmetry favouring the sanctioning country. This might be the case if Russia bought many more goods from Australia than Australia bought from Russia.</p></li>
<li><p>Or the sanctioning country needs to control critical technologies and/or infrastructure that are essential to the targeted country, and the sanctions will cut-off access. </p></li>
</ul>
<p>Neither of these conditions hold for Russia and Australia.</p>
<h2>Australia’s leverage is negligible</h2>
<p>Of Australia’s total <a href="https://www.dfat.gov.au/sites/default/files/trade-and-investment-glance-2021.pdf">A$873 billion</a> two-way trade with all countries in 2019-20, only a miniscule <a href="0.14%">$1.2 billion</a> was with Russia. For both countries this figure is negligible, so asymmetry is irrelevant. </p>
<p>Nor does Australia control any critical infrastructure or technology of consequence to Russia which cannot be sourced elsewhere. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/morrison-announces-sanctions-against-russia-warns-of-cyber-retaliation-177734">Morrison announces sanctions against Russia, warns of cyber retaliation</a>
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<p>All told, Australian sanctions will have almost zero real-world consequences for Russia, nor do they imply difficulties for Australian businesses, aside from the tiny fraction who have trade and investment ties with the country.</p>
<p>The only states that have both the potential for effective sanctioning power over Russia and the will to use it are the US, the United Kingdom and the European Union acting as a block, due to large trade relationships and critical dependencies.</p>
<h2>Europe has more leverage</h2>
<p>Russia is highly dependent on fossil fuel exports, which comprised <a href="https://www.bbc.com/future/article/20211115-climate-change-can-russia-leave-fossil-fuels-behind">39%</a> of total state revenue in 2019. The European Union takes <a href="https://www.washingtonpost.com/business/energy/russia-needs-europeancash-more-than-europe-needs-russian-gas/2022/02/24/ff34941a-9549-11ec-bb31-74fc06c0a3a5_story.html">70%</a> of its gas exports. </p>
<p>Things are not entirely asymmetric because the EU in turn depends on Russia for about 40% of its gas imports. </p>
<p>Sanctions on buying energy would hurt Russia badly, but also result in a very significant price hike across the European Union and to a lesser extent globally – a cost that has made EU leaders <a href="https://www.afr.com/world/europe/why-europe-is-wary-of-sanctions-on-russia-20220124-p59qrw">cautious</a> about using this most potent of sanctions.</p>
<h2>The US has more leverage still</h2>
<p>The US has significant power over the <a href="https://www.economist.com/briefing/2020/01/18/americas-aggressive-use-of-sanctions-endangers-the-dollars-reign">global financial system</a> in what amounts to an asymmetric relationship to Russia. This derives from the dominant position of US financial institutions and of the US dollar as the global currency. </p>
<p>This dominance allows Washington to apply sanctions third countries must also enforce, or themselves face becoming financially sanctioned, making these sanctions global in practice – <a href="https://www.bbc.com/news/world-middle-east-54476894">as Iran experienced</a> to devastating effect.</p>
<p>Yet Russia is far larger than Iran economically, so there will be far greater costs from cutting Russia out of the global financial system, if not so much for the US, then for its allies in the European Union, where European banks have <a href="https://www.economist.com/finance-and-economics/2021/12/18/the-hidden-costs-of-cutting-russia-off-from-swift">tens of billions in outstanding loans</a> to Russian entities.</p>
<h2>So far, the US is cautious</h2>
<p>Repayments of these loans would be threatened by broad-based financial sanctions, especially banning Russia from the global payments system <a href="https://www.investopedia.com/articles/personal-finance/050515/how-swift-system-works.asp">SWIFT</a> run by the Society for Worldwide Interbank Financial Telecommunications.</p>
<p>While US sanctions announced on February 24 against Russia’s <a href="https://home.treasury.gov/news/press-releases/jy0608">biggest financial institutions</a> will cause considerable economic disruption and costs, they still do not amount to the full expulsion from the global financial system that was imposed on Iran.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/ukraine-sanctions-can-still-make-a-difference-but-only-if-done-right-177783">Ukraine: sanctions can still make a difference – but only if done right</a>
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<p>British sanctions could significantly hurt Putin’s clique of supporting oligarchs in the UK by shutting down <a href="https://www.dw.com/en/londongrad-uks-tough-balancing-act-on-russian-sanctions/a-60774545">“Londongrad”</a>, a term used to describe a city awash with laundered funds from Russian oligarchs. </p>
<p>Freezing the oligarchs’ assets could undermine their support for Putin, but has obvious financial costs to London, and would have to overcome the political influence of Russian elites in London.</p>
<h2>Little could deter Putin</h2>
<p>Australia cannot hurt Russia using sanctions, and the countries that can hurt Russia have complex calculations to make in calibrating their actions for maximum impact at minimum cost. </p>
<p>That does not mean Australian action is pointless. Australian sanctions exhibit solidarity with allies and add to the international pressure and outcry against Putin’s illegal act of war. </p>
<p>The bigger question is whether any sanctions at all will now deter Putin from following through on his goals, given that the invasion is underway.</p><img src="https://counter.theconversation.com/content/177913/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Naoise McDonagh is a Lecturer at the Institute for International Trade, University of Adelaide, and President of the Australian Institute of International Affairs South Australia, a not-for-profit educational association. </span></em></p>The EU, UK and US hold considerable leverage, but they need to make complex calculations about how to use it.Naoise McDonagh, Lecturer in Political Economy, Institute for International Trade, University of AdelaideLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1773022022-02-23T13:35:21Z2022-02-23T13:35:21ZPutin’s public approval is soaring during the Russia-Ukraine crisis, but it’s unlikely to last<p>Russian President Vladimir <a href="https://apnews.com/article/russia-ukraine-joe-biden-boris-johnson-europe-emmanuel-macron-2b7c2949ae3168effce9d0cb2584bb32">Putin invaded</a> Ukraine on Feb. 23, 2022, in what Ukraine’s foreign minister Dmytro Kuleba called a “<a href="https://www.aljazeera.com/gallery/2022/2/24/photos-russia-launches-full-scale-invasion-in-ukraine">full-scale invasion.”</a></p>
<p>Russia’s military attacks and bombing across Ukraine could lead to the biggest armed conflict in Europe since World War II, <a href="https://www.bbc.com/news/uk-politics-60448162">Western leaders have warned</a>. </p>
<p>But as mounting tensions over a potential conflict grew in February 2022, <a href="https://www.levada.ru/en/ratings/">public opinion polls in Russia showed</a> that support for Putin is rising. </p>
<p>The <a href="https://oxfordre.com/politics/view/10.1093/acrefore/9780190228637.001.0001/acrefore-9780190228637-e-518">rally ‘round the flag</a> effect of supporting political leadership during an international crisis will likely be short-lived. </p>
<p>Historical <a href="https://warontherocks.com/2019/08/how-does-the-kremlin-kick-when-its-down/">data shows</a> that <a href="https://oxfordre.com/politics/view/10.1093/acrefore/9780190228637.001.0001/acrefore-9780190228637-e-412">diversionary wars</a> — fighting abroad to draw attention away from problems at home — have rarely worked for Putin. </p>
<p>Daring and expensive military adventures will, over time, decrease the Kremlin’s popularity, <a href="https://www.tandfonline.com/doi/full/10.1080/10758216.2018.1561190">history also tells us</a>. </p>
<p>As a scholar of <a href="https://www.thechicagocouncil.org/research/experts/arik-burakovsky">Russia and public opinion</a>, I know that war ultimately requires an enormous amount of public goodwill and support for a political leader — far more than a brief spike in popularity can ensure. </p>
<h2>A shift in Putin’s public approval</h2>
<p>Russia’s <a href="https://www.atlanticcouncil.org/blogs/new-atlanticist/experts-react-russia-just-ordered-troops-into-ukraine-again-what-happens-next/">military buildup</a> along the Ukrainian border over the last few months coincides with a steady rise in Putin’s popularity. </p>
<p>Approximately 69% of Russians now approve of Putin, compared to the 61% who approved of him in August 2021, according to <a href="https://www.levada.ru/2022/02/04/odobrenie-institutov-polozhenie-del-v-strane-doverie-politikam/">Russian polling agency the Levada Center</a>. And 29% of Russians disapprove of Putin, down from 37% in August 2021. The polling group is the leading independent sociological research organization in Russia and is widely respected by many scholars, including myself. </p>
<p>Support for Russian Prime Minister Mikhail Mishustin and his cabinet also increased moderately in the same time period. </p>
<p>The Russian public largely believes that the Kremlin is defending Russia by standing up to the West. </p>
<p>Putin has enjoyed relatively high approval ratings since he first became president in May 2000. His popularity averaged 79% in his first 20 years in office. Some <a href="https://press.princeton.edu/books/hardcover/9780691212463/weak-strongman">political scientists attribute</a> this trend to “Putin’s personal charisma and public image” and Russians’ preference for a “strong ruler.” </p>
<p><a href="https://carnegiemoscow.org/commentary/86013">Other experts argue</a> that Putin’s approval ratings are actually related to Russians’ indifference and symbolic trust in political leaders. </p>
<h2>Normalizing war through misinformation</h2>
<p>Putin on Feb. 22 received <a href="https://apnews.com/article/russia-ukraine-business-europe-russia-vladimir-putin-46cef648807d0e3c2bac9793ad9022a6">Russian lawmakers’ permission</a> to send armed forces abroad. The same day, Putin <a href="https://thehill.com/policy/international/russia/595319-putin-ratifies-treaties-with-breakaway-ukraine-regions">ratified treaties</a> with the two separatist regions in eastern Ukraine – the so-called Luhansk People’s Republic and the Donetsk People’s Republic – that have Russian-backed political leadership. </p>
<p>More than 13,000 people <a href="https://www.nytimes.com/2022/02/21/world/europe/donetsk-luhansk-donbas-ukraine.html">have died fighting</a> in the Donbas region, as it is known, since 2014, when Russian loyalists seized power in the Ukrainian cities of Donetsk and Luhansk. </p>
<p>Few people in Moscow heard the drumbeat of war until mid-February. </p>
<p>Russian state media has issued <a href="https://www.reuters.com/world/europe/what-threat-russian-state-tv-plays-down-moscows-role-ukraine-crisis-2022-01-25/">continuous denials</a> that the Kremlin was preparing for war with Ukraine. </p>
<p>Russian talk shows regularly <a href="https://www.theguardian.com/world/2022/feb/16/russians-ridicule-western-media-on-day-of-no-invasion">mocked Western predictions</a> of a looming invasion into Ukraine as <a href="https://www.npr.org/2022/02/15/1080774883/russians-scoff-at-western-fears-of-ukraine-invasion">“hysteria” and “absurdity.”</a> </p>
<p>Russian news shows started circulating lies about the security situation in Ukraine around <a href="https://www.themoscowtimes.com/2022/02/21/what-are-russian-state-media-saying-about-ukraine-feb-7-a76172">Feb. 21</a>. Anchors on the state television Channel One, for example, have said that Ukraine is forcing its own citizens in the Donbas to flee. </p>
<p>Actually, separatist authorities in Luhansk and Donetsk had <a href="https://www.dw.com/en/ukraine-latest-separatists-tell-civilians-to-flee-to-russia/a-60821818">announced their own</a> plans to evacuate residents from the two breakaway regions to Russia. The United States has said that false warning about Ukraine attacking the separatist regions could help Putin <a href="https://www.nytimes.com/2022/02/20/world/europe/russia-eastern-ukraine-evacuation.html">publicly justify the invasion that launched Feb. 24</a>. </p>
<p>The cascade of <a href="https://www.tandfonline.com/doi/full/10.1080/09668136.2021.2016633">fake news is intended</a> to <a href="https://academic.oup.com/ijpor/article/29/4/657/2669483">normalize clashes</a> between Russia and Ukraine. </p>
<p>Putin’s <a href="https://www.washingtonpost.com/world/2022/02/21/putin-speech-ukraine/">Feb. 21 televised speech</a> addressed the dangers of Ukrainian nationalism. He also stressed Russians’ and Ukrainians’ <a href="http://en.kremlin.ru/events/president/news/66181">shared history</a>. This presidential address could serve to galvanize the Russian public to back Putin’s military aspirations. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/447885/original/file-20220222-13-1mazjey.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A group of people holding luggage are seen walking away from a train." src="https://images.theconversation.com/files/447885/original/file-20220222-13-1mazjey.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/447885/original/file-20220222-13-1mazjey.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/447885/original/file-20220222-13-1mazjey.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/447885/original/file-20220222-13-1mazjey.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/447885/original/file-20220222-13-1mazjey.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/447885/original/file-20220222-13-1mazjey.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/447885/original/file-20220222-13-1mazjey.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">People evacuated from the Donbas region are seen on a train platform in Taganrog, Russia, on Feb. 18, 2022.</span>
<span class="attribution"><a class="source" href="https://media.gettyimages.com/photos/people-evacuated-from-donbass-are-seen-on-a-platform-at-the-taganrog1-picture-id1238690283?s=2048x2048">Erik Romanenko/TASS via Getty Images</a></span>
</figcaption>
</figure>
<h2>Most Russians don’t want war</h2>
<p>About 38% of Russians did not consider war with Ukraine a real possibility as of December 2021, according to <a href="https://www.levada.ru/2021/12/14/obostrenie-v-donbasse/">Levada Center polling</a>. Another 15% completely ruled out the possibility of armed conflict.</p>
<p>Approximately <a href="https://www.levada.ru/2021/12/17/rossijsko-ukrainskie-otnosheniya-10/">83% of Russians</a> report positive views on Ukrainians. And 51% of Russians say that Russia and Ukraine should be independent, yet friendly, countries.</p>
<p>The <a href="https://carnegiemoscow.org/2016/06/14/do-russians-want-war-pub-63743">popular narrative</a> is that Russia is a <a href="https://link.springer.com/chapter/10.1057/9781137548115_7">besieged fortress,</a> constantly fending off Western attacks. </p>
<p>Half of Russians blame the <a href="https://www.levada.ru/2021/12/14/obostrenie-v-donbasse/">current crisis on the U.S. and NATO</a>, while 16% think Ukraine is the aggressor. Just 4% believe Russia is responsible.</p>
<h2>War is ultimately an unpopular strategy</h2>
<p>Putin’s approval ratings reached an all-time high of <a href="https://www.forbes.com/sites/paulroderickgregory/2015/06/08/deconstructing-putins-approval-ratings-one-thousand-casualties-for-every-point/?sh=3ae5a3434c3f">89% less than one year</a> after Russia forcibly annexed Crimea, a Ukrainian peninsula, in 2014. </p>
<p>The largely bloodless conquest resulted in <a href="https://yalebooks.yale.edu/book/9780300238396/putin-v-people">“collective euphoria”</a> among Russian people, who have often vacationed along Crimea’s <a href="https://www.politico.com/news/magazine/2022/01/12/russia-ukraine-putin-war-526967">scenic coastline</a>.</p>
<p>But Russia’s other recent military actions, including its <a href="https://www.atlanticcouncil.org/blogs/ukrainealert/the-2008-russo-georgian-war-putins-green-light/">2008 invasion of Georgia</a> and its <a href="https://www.usip.org/publications/2021/02/what-russias-endgame-syria">intervention in the Syrian civil war</a> in 2015, were not met with the same enthusiasm. </p>
<p>Public support dropped following both of these military interventions. </p>
<p>Now, Russians have not expressed the same personal connection to the Donbas that they felt for Crimea. </p>
<p>Polls conducted since the annexation of Crimea in 2014 <a href="https://www.levada.ru/tag/donbass/">consistently show</a> that most Russians support the independence of the two self-declared republics in the Donbas. But they do not see them becoming a part of the Russian Federation. </p>
<p>I believe the unfolding conflict in Ukraine could result in <a href="https://www.independent.co.uk/news/world/europe/russia-ukraine-invasion-putin-nato-b2016781.html">countless body bags</a> of Russian soldiers returning to Moscow. </p>
<p>Russia’s ensuing military intervention in Ukraine may prove costly for Putin domestically, <a href="https://yalebooks.yale.edu/book/9780300238396/putin-v-people">undermining his legitimacy</a> and forcing him to spend more resources on <a href="https://carnegiemoscow.org/commentary/86306">quashing internal dissent</a>.</p>
<p>This comes as U.S. President Joe Biden <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/02/21/statement-by-press-secretary-jen-psaki-on-russian-announcement-on-eastern-ukraine/">announced “swift and severe”</a> sanctions <a href="https://news.yahoo.com/biden-ukraine-russia-invasion-putin-us-sanctions-195703429.html">on Feb. 22</a> that could harm Russia. Russia’s economy already faces high inflation and <a href="https://www.worldbank.org/en/country/russia/publication/rer">low projected growth</a>.</p>
<p>U.S. and <a href="https://www.newstalk.com/news/eu-announces-sanctions-against-russia-over-ukraine-1314566">European sanctions</a> could result in a <a href="https://www.npr.org/2022/02/21/1082172642/putin-invading-ukraine-would-cost-russia-billions-heres-a-breakdown-of-the-costs">subsequent economic fallout</a> that will overwhelmingly hurt Russians’ pocketbooks — and <a href="https://www.foreignaffairs.com/articles/2022-02-09/would-russians-embrace-war">further erode</a> Putin’s support.</p>
<p>[<em>Get the best of The Conversation, every weekend.</em> <a href="https://memberservices.theconversation.com/newsletters/?nl=weekly&source=inline-weeklybest">Sign up for our weekly newsletter</a>.]</p><img src="https://counter.theconversation.com/content/177302/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Arik Burakovsky does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Approximately 69% of Russians approve of President Vladimir Putin. But a costly war is likely to chip away at his popularity, history and data tell us.Arik Burakovsky, Assistant Director, Russia and Eurasia Program, The Fletcher School of Law and Diplomacy, Tufts UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1733272021-12-07T19:22:28Z2021-12-07T19:22:28ZWhy Biden’s threat to slap Russia with more sanctions is unlikely to deter Putin in Ukraine<figure><img src="https://images.theconversation.com/files/436409/original/file-20211208-142574-1lxg27b.jpg?ixlib=rb-1.1.0&rect=10%2C47%2C2248%2C1330&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Russian President Vladimir Putin meets with U.S. President Joe Biden via videoconference on Tuesday, Dec. 7, 2021. </span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/RussiaUS/99c3de11e8834198a680619c3b1ccac3/photo?Query=putin%20biden&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=602&currentItemNo=1">Mikhail Metzel, Sputnik, Kremlin Pool Photo via AP</a></span></figcaption></figure><p>The Biden administration <a href="https://www.reuters.com/world/europe/blinken-warns-high-impact-economic-steps-if-russia-invades-ukraine-2021-12-01/">is threatening harsh, “high impact” sanctions</a> against Russia if it invades Ukraine. </p>
<p>U.S. intelligence officials say Russia <a href="https://slate.com/news-and-politics/2021/12/us-intelligence-russia-planning-invasion-ukraine.html">has been preparing for a potential invasion</a> by amassing tens of thousands of troops along the border and engaging in other aggressive tactics. President Joe Biden and his Russian counterpart Vladimir Putin <a href="https://www.nytimes.com/live/2021/12/07/world/biden-putin">held a virtual summit</a> on Dec. 7, 2021, to discuss the matter. </p>
<p>The new measures would come on top of a <a href="https://sgp.fas.org/crs/row/IF10779.pdf">wide array of already existing sanctions</a> against Russia imposed both earlier this year and over the past several in response to Moscow’s criminal cyber activities, its takeover of Crimea – a peninsula in the Black Sea that was a part of Ukraine – and its support for rebel groups in eastern Ukraine. </p>
<p><a href="http://abc7news.com/politics/sec-of-state-tillerson-says-north-korea-sanctions-working-at-stanford-lecture/2960149/">Policymakers claim</a> that sanctions are an effective means of achieving policy goals. But is that true? Are new measures against Moscow likely to be successful?</p>
<p>Research on sanctions <a href="https://keough.nd.edu/profile/david-cortright/">that I</a> and <a href="https://scholar.google.com/scholar?hl=en&as_sdt=0%2C31&q=economic+sanctions&btnG=">others</a> have conducted has shown that yes, they can sometimes be effective. </p>
<p>But there are serious problems with additional U.S. sanctions on Russia.</p>
<h2>Unilateral sanctions rarely work</h2>
<p>While it’s unclear what new sanctions the U.S. might unleash, <a href="https://www.bloomberg.com/news/articles/2021-12-06/biden-weighs-russian-banking-sanctions-if-putin-invades-ukraine?cmpid=BBD120721_MKT&utm_medium=email&utm_source=newsletter&utm_term=211207&utm_campaign=markets&sref=Hjm5biAW">early reports suggest</a> they may target Russia’s financial system, including its biggest banks and ability to convert rubles into dollars. Such sanctions would be meant to punish Russia’s economy, Putin allies and the country’s wealthier residents. </p>
<p>For these or similar sanctions to be effective the United States would need allies. Past U.S. measures against Russia <a href="https://www.csis.org/analysis/us-sanctions-against-russia-what-you-need-know">have often been unilateral</a> and without the support or participation of other major states or the United Nations.</p>
<p>Such unilateral sanctions are seldom successful. In an increasingly globalized world economy, unilateral sanctions face huge obstacles – even when imposed by the <a href="https://www.investopedia.com/articles/investing/022415/worlds-top-10-economies.asp">world’s largest economy</a>. </p>
<p>A landmark study published in 1997 by the Peterson Institute for International Economics found that unilateral U.S. sanctions achieved their foreign policy goals <a href="https://piie.com/commentary/testimonies/evidence-costs-and-benefits-economic-sanctions">only 13% of the time</a>. More recent <a href="https://dataverse.harvard.edu/dataset.xhtml?persistentId=doi:10.7910/DVN/SQF8PX">quantitative research</a> shows that multilateral sanctions involving several countries are more effective than unilateral measures. </p>
<p>The rare instances when unilateral American sanctions worked involved countries that have extensive trade relations with the U.S., <a href="https://oec.world/en/profile/country/rus">clearly not the case with Russia</a>. <a href="http://fortune.com/2014/03/18/u-s-russian-trade-relationship-there-really-isnt-one/">Russia is low</a> on the list of <a href="https://www.census.gov/foreign-trade/statistics/highlights/toppartners.html">U.S. trading partners</a>, and previous sanctions on Moscow have further reduced commercial relations with the U.S. Russia is not dependent on U.S. trade and thus is unlikely to submit to American economic pressure. </p>
<p>Furthermore, when a targeted country faces sanctions, it can seek commercial ties elsewhere. This <a href="http://www.americanforeignrelations.com/E-N/Embargoes-and-Sanctions-Cold-war-sanctions.html">was the case with Cuba</a>. When the U.S. imposed an embargo on its former trading partner after the revolution in 1959, Havana turned to Moscow for help and became a part of the communist bloc. Sanctions had no impact in changing Cuban policy. </p>
<p>In recent years, Russia has been increasing its commercial relations and energy <a href="https://www.globaltimes.cn/page/202111/1239852.shtml">cooperation with China</a>, which will make it less susceptible to U.S. economic pressure.</p>
<p><a href="https://www.ft.com/content/b287f2e3-3b8b-4095-b704-c255a943c84c">There are reports that European allies have been convinced</a> by U.S. intelligence assessments that the threat of more sanctions is warranted – but whether all EU members will agree to go along with them is another matter. </p>
<p>Russia is the <a href="https://ec.europa.eu/trade/policy/countries-and-regions/countries/russia/">European Union’s fifth-largest trading partner</a>, while the EU is Russia’s biggest. Moscow’s extensive commercial ties with states in the EU would allow it to mitigate the impacts of sanctions that do not have full European support and cooperation. Russia <a href="https://www.bloomberg.com/news/articles/2021-11-10/how-europe-has-become-so-dependent-on-putin-for-gas-quicktake">supplies Europe with much of its natural gas</a>, assuring access to trade and revenues regardless of U.S. measures. </p>
<p>Germany and other European countries <a href="https://www.dw.com/en/germany-france-condemn-ukraine-escalation-call-for-restraint/a-57095476">have expressed concern</a> about Russian activity against Ukraine. And the EU <a href="http://www.consilium.europa.eu/en/policies/sanctions/ukraine-crisis/">has imposed some sanctions</a> against Russia after the takeover of Crimea.</p>
<p>But in recent years, the European Union has favored <a href="https://www.europarl.europa.eu/RegData/etudes/ATAG/2020/646203/EPRS_ATA(2020)646203_EN.pdf">diplomatic strategies</a> rather than economic sanctions to decide the future of Ukraine.</p>
<h2>It can’t be all stick and no carrot</h2>
<p>This raises a second factor influencing the effectiveness of sanctions: the importance of combining penalties with diplomatic bargaining.</p>
<p><a href="https://sanctionsandsecurity.nd.edu/news/the-sanctions-decade-assessing-un-strategies-in-the-1990s/">My research</a> with <a href="https://politicalscience.nd.edu/faculty/faculty-list/george-lopez/">economic sanctions expert George Lopez</a> shows that sanctions work best when more coercive measures are coupled with some kind of a carrot to incentivize compliance. </p>
<p>The offer to lift sanctions can be an effective bargaining chip for persuading the targeted regime to alter its policies. This was the case in the <a href="https://www.britannica.com/event/Dayton-Accords">1995 Dayton Peace Agreement</a>, when the offer to lift sanctions served as an inducement for Serbia to end its aggressive policies against Bosnia and accept a political settlement in their long-running conflict.</p>
<p>[<em>Like what you’ve read? Want more?</em> <a href="https://theconversation.com/us/newsletters/the-daily-3?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=likethis">Sign up for The Conversation’s daily newsletter</a>.]</p>
<p><a href="https://www.sipri.org/sites/default/files/YB05%20629%2014.pdf">Offers to lift sanctions</a> and open diplomatic and commercial relations also worked successfully in the 1990s and early 2000s to induce the government of Libya to halt is support for international terrorism and give up its program for developing weapons of mass destruction.</p>
<p>The use of sanctions and incentives <a href="https://theconversation.com/us/topics/iran-nuclear-deal-15757">was also successful in achieving</a> the 2015 nuclear deal with Iran. Rigorous U.S., United Nations and EU sanctions were combined with an offer to lift sanctions if Iran complied with demands to restrict its nuclear program and accept intrusive inspections. </p>
<p>The <a href="http://www.tehrantimes.com/news/421491/IAEA-reaffirms-Iran-s-compliance-to-nuclear-deal-for-10th-time">International Atomic Energy Commission verified</a> that Iran kept its side of the bargain and significantly curtailed its nuclear program, and U.N. sanctions were removed in 2016.</p>
<p>The Trump administration <a href="https://www.nytimes.com/2018/05/08/world/middleeast/trump-iran-nuclear-deal.html">unilaterally abandoned the agreement</a> in 2018, however, and imposed new “maximum pressure” sanctions on Iran. The deal collapsed, and Iran resumed its <a href="https://www.theguardian.com/world/2019/nov/05/iran-announces-injection-of-uranium-gas-into-1044-centrifuges">prohibited enrichment</a> activities. </p>
<p>Negotiations are underway now to <a href="https://www.nytimes.com/2021/11/21/us/politics/iran-nuclear-standoff.html">restore the agreement</a>. The U.S. has offered to ease sanctions if Iran accepts renewed restrictions on its nuclear program, but the two sides have not been able to reach agreement. The U.S. policy of withdrawing from the Iran deal and reimposing unilateral sanctions abandoned a multilateral diplomatic approach that was working.</p>
<p>Biden’s threat of new sanctions on Russia is unlikely to have much of an impact on Putin’s behavior unless European states support and participate in the decision. An alternative approach might be to support European <a href="https://quincyinst.org/report/ending-the-threat-of-war-in-ukraine/">attempts to negotiate a solution</a> to the Ukraine crisis, using the offer to ease current sanctions as an incentive for reducing the pressure on Kiev. </p>
<p><em>This is an updated and expanded version of an <a href="https://theconversation.com/new-sanctions-on-russia-and-iran-are-unlikely-to-work-heres-why-100431">article originally published</a> on Aug. 1, 2018.</em></p><img src="https://counter.theconversation.com/content/173327/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Cortright is affiliated with Win Without War. </span></em></p>The Biden administration has threatened severe sanctions if Russia were to invade Ukraine. An economic sanctions scholar explains why they probably won’t be effective.David Cortright, Director of Policy Studies, Kroc Institute for International Peace Studies, University of Notre DameLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1524402021-01-29T13:30:04Z2021-01-29T13:30:04ZEspionage attempts like the SolarWinds hack are inevitable, so it’s safer to focus on defense – not retaliation<figure><img src="https://images.theconversation.com/files/380939/original/file-20210127-13-1menla9.jpg?ixlib=rb-1.1.0&rect=0%2C26%2C5991%2C3961&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The U.S. Justice Department was among many federal agencies and private companies whose networks suffered intrusions from Russian hackers.</span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/FederalAgenciesHackedSupplyChain/e4a937d917c44c3c8a779c55308cbe7b/photo">AP Photo/Jacquelyn Martin</a></span></figcaption></figure><p>In the wake of the major espionage operation in which people alleged to be Russian government agents <a href="https://www.theverge.com/2021/1/2/22210667/solarwinds-hack-worse-government-microsoft-cybersecurity">infiltrated the digital networks of the U.S. Defense, Treasury and Homeland Security departments</a> – as well as other government agencies and private companies – President Joe Biden is considering how to respond.</p>
<p>It’s not clear exactly what data the hackers actually stole in the time they had access, <a href="https://www.zdnet.com/article/solarwinds-the-more-we-learn-the-worse-it-looks/">roughly from March through December 2020</a>, but they exploited software made by the Texas-based firm SolarWinds to gain <a href="https://www.nytimes.com/2021/01/02/us/politics/russian-hacking-government.html">access to key research and security information</a>, including research for future nuclear weapons.</p>
<p>Since taking office, Biden has ordered a thorough <a href="https://www.cyberscoop.com/biden-solarwinds-russia-intelligence-assessment/">intelligence review</a> of Russian aggression around the world, which includes hacking, <a href="https://www.npr.org/2020/08/18/903616315/senate-releases-final-report-on-russias-interference-in-2016-election">election interference</a>, <a href="https://www.cnn.com/2020/12/21/europe/russia-navalny-poisoning-underpants-ward/index.html">poisoning political opponents</a> and <a href="https://www.nytimes.com/2020/06/26/us/politics/russia-afghanistan-bounties.html">posting bounties for killing U.S. soldiers</a>. And on Jan. 21, his first full day in office, Biden received a <a href="https://www.solarium.gov/public-communications/transition-book">report</a> from a congressional cybersecurity commission with 15 recommendations expected to prevent another major cyber breach. Those included boosting America’s cyber capabilities by increasing funding for U.S. Cyber Command and establishing a civilian reserve group that draws on cybersecurity talent in private industry and cybersecurity companies.</p>
<p>His administration faces pressure <a href="https://www.cnn.com/2021/01/23/politics/solarwinds-hack-biden-pressure/index.html">from members of Congress in both parties</a> and former government officials to respond forcefully to the SolarWinds breach.</p>
<p>He is <a href="https://www.reuters.com/article/usa-cyber-breach-biden/bidens-options-for-russian-hacking-punishment-sanctions-cyber-retaliation-idUSKBN28U0DV">reportedly considering</a> retaliatory cyberattacks against Russia and targeted financial sanctions against the individuals involved.</p>
<p>But the U.S. government may not be able to stop future intrusions into American computer systems. Scholarship describes how difficult it can be to effectively <a href="https://doi.org/10.1093/cybsec/tyv003">deter cyberattacks</a> or <a href="https://doi.org/10.1017/aju.2019.34">punish those responsible</a>. In fact, as a <a href="http://willakoto.com/">scholar of cyber conflict</a>, my research strongly indicates that retaliation – in whatever form it might take – will almost certainly invite counterhacks from Russia, <a href="https://doi.org/10.1177%2F0022343320964549">worsening tensions</a> between the countries and potentially escalating into the offline world.</p>
<h2>A sophisticated attack</h2>
<p>The SolarWinds hack was more advanced than previous ones: The hackers actually <a href="https://www.cnn.com/2020/12/16/tech/solarwinds-orion-hack-explained/index.html">compromised software updates</a> that the network management company regularly provides to the businesses and government agencies that use its software. The hackers inserted malicious code into the official updates, which countless administrators trusted and installed on nearly 18,000 systems across the country.</p>
<p>Once installed, the malicious software connected to servers controlled by the hackers and gave them access to key data about government and corporate research and operations.</p>
<p>This isn’t the first major digital attack on the U.S. And its severity shows that past efforts to discourage cyberattacks have not been effective. </p>
<p>Under President Barack Obama, for instance, the U.S. leveled economic and diplomatic sanctions against the people and governments responsible for cyberespionage, including <a href="https://www.bankinfosecurity.com/us-imposes-sanctions-on-north-korea-a-7746">North Korea</a> <a href="https://www.nytimes.com/2016/12/29/us/politics/russia-election-hacking-sanctions.html">and Russia</a>. The Trump administration likewise imposed sanctions against <a href="https://www.rferl.org/a/u-s-places-sanctions-on-hacking-group-with-alleged-ties-to-iranian-intelligence/30844587.html">Iranian</a> and <a href="https://www.reuters.com/article/us-northkorea-usa-sanctions/u-s-imposes-sanctions-on-north-korean-hacking-groups-blamed-for-global-attacks-idUSKCN1VY1RB">North Korean</a> hackers for a range of cyberattacks targeting U.S. companies, universities and government agencies.</p>
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<p>Several scholars, including <a href="https://doi.org/10.1177%2F1065912919837608">my collaborators and me</a>, have shown that though economic sanctions do hurt their targets, they also hurt the country imposing the restrictions – in this case, the United States – which misses out on business opportunities in the targeted countries. Newer rounds of sanctions also bar U.S. companies from <a href="https://www.natlawreview.com/article/president-trump-imposes-sanctions-companies-doing-business-iran-s-construction">doing business with third-country firms</a> that operate in targeted countries.</p>
<p>Sanctions don’t actually deter future attacks.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/380940/original/file-20210127-15-isilv9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A Justice Department briefing detailing Russian hacking" src="https://images.theconversation.com/files/380940/original/file-20210127-15-isilv9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/380940/original/file-20210127-15-isilv9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/380940/original/file-20210127-15-isilv9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/380940/original/file-20210127-15-isilv9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/380940/original/file-20210127-15-isilv9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/380940/original/file-20210127-15-isilv9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/380940/original/file-20210127-15-isilv9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Federal officials have charged several Russian government agents with cybercrimes, including these six, who were added to the ‘wanted’ list in October 2020.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/RussianHackersCharged/317447dbec46406190362fce3ae97862/photo">AP Photo/Andrew Harnik, pool</a></span>
</figcaption>
</figure>
<h2>Government actions haven’t been enough</h2>
<p>Beyond punishing hacker countries with sanctions, the U.S. has undertaken operations to directly attack the digital capabilities of those nations. For instance, <a href="https://www.cybercom.mil/">U.S. Cyber Command</a>, the arm of the military charged with defending the U.S. in cyberspace, cut off a <a href="https://www.nytimes.com/2019/02/26/us/politics/us-cyber-command-russia.html">key Russian agency’s internet access</a> during the 2018 congressional midterm election. The U.S. has also sent military cybersecurity experts overseas to <a href="https://www.nytimes.com/2020/11/02/us/politics/cyber-command-hackers-russia.html">learn more about Russian, Chinese and Iranian capabilities</a>. It’s also possible that Cyber Command has secretly undertaken other responses.</p>
<p>None of this has dissuaded hackers from repeatedly targeting American firms and government agencies. Indeed, <a href="https://www.tandfonline.com/doi/abs/10.1080/0735648X.2019.1692423">prior research</a> confirms that the threat of formal sanctions has very little effect on deterring cyberattacks in lab settings.</p>
<h2>If deterrence won’t work …</h2>
<p>Ignoring cyberattacks, of course, is not a solution either. But I believe the challenge is to determine how to make clear to the perpetrators that large-scale cyber intrusions will not be tolerated – and to do so without escalating the online conflict. I believe there is only one way to prepare – and it’s to accept that hackers will keep trying to attack.</p>
<p>There are some ways to adjust to this new reality, just as there are with other complex and intractable problems. For instance, governments seek to mitigate harm from climate change by limiting greenhouse gas emissions and discouraging new construction in flood zones. </p>
<p>The cybersecurity equivalent could be building and programming computer systems that can <a href="https://doi.org/10.1007/978-3-319-16486-1_31">withstand faults, failures and hacking</a> while still performing essential functions and protecting data security. The ultimate objective would be not to prevent systems from being breached, but to <a href="https://www.raconteur.net/sponsored/rise-of-cyber-resilience-and-how-to-achieve-it/">limit the damage and speed the recovery</a> when they are broken into. My research, and others’, indicates this could be an effective way to address the new reality of state-sponsored hacking while realizing there is no way to truly prevent future attacks.</p><img src="https://counter.theconversation.com/content/152440/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>William Akoto does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A scholar of cyber conflict sets out why retaliation doesn’t prevent future attacks, and explains what might have a better chance.William Akoto, Assistant Professor of International Politics, Fordham UniversityLicensed as Creative Commons – attribution, no derivatives.