Q&A: The impact of Western sanctions against Russia

Russia’s war on Ukraine sends shockwaves across Europe and the wider world. This Clingendael Spectator Q&A series explores the wider geopolitical consequences with key analysts from across the globe. In the third episode Chris Miller (Tufts University) elaborates on the Western sanctions against Russia.

The Western sanctions and – no less importantly – export controls have been designed to punish Russia, degrade its defense industry over the long run and impose substantial costs on the Russian economy, thereby complicating the Russian government’s ability to sustain the war and pursue its foreign policy over the coming years.

Though some media analysts talk about sanctions as a tool of regime change in Russia or as a policy intended to induce Russia to leave Ukraine immediately, most Western policymakers saw sanctions as a longer-term tool that were unlikely to have an immediate impact on Russian foreign policy decision-making. The efficacy of sanctions must be judged in that light.

Russia tried somewhat to prepare for sanctions, but its preparations were largely ineffective. The country prepared for financial sanctions by talking about alternative payment mechanisms. Nevertheless, Russia had taken relatively few substantial steps in this sphere before the war started and consequently faced massive disruptions from its major banks being cut out of the SWIFT payment system and American correspondent banking networks. The Russian government also prepared for sanctions by accumulating substantial foreign exchange reserves in advance of the war, though it made the mistake of storing these reserves in Europe and Japan, where they have been frozen by G7 sanctions.

After 2014, Russia undertook a limited import substitution campaign for industrial equipment, replacing foreign imports with domestic production. However, the magnitude of political statements about import substitution vastly outstripped the practical results.

Russia’s most effective preparation for sanctions was developing the ability to impose costly sanctions against Western allies. Because of Western countries’ willingness to become dependent on Russia for gas, refined petroleum products like diesel, and critical minerals like titanium, the Kremlin has had an easier opportunity to impose costs on the West than it otherwise would have.

The ‘international community’ is a phrase that has no correlation with reality. No such community exists, unfortunately. The United States, Europe, Japan, and their close partners have imposed sanctions. Besides this, other countries have followed sanctions only in instances where the costs of violating sanctions exceed the benefits of continuing trade and cooperation with Russia.

In instances where G7 sanctions have provided no incentive for third parties to comply, other countries have happily worked around sanctions, for example, by buying cut-priced Russian oil. The West, and Europe in particular, should consider ways it can develop more coercive leverage to induce third parties to abide by their economic rules.

Universities that are providing technical training or scientific expertise to Russia (or China for that matter) should be forced to cut ties. Most academic ties to Russia that pose a risk are now severed. At the same time I suspect Europe has still yet to fully assess its research linkages with Chinese universities and the extent to which specific programmes may be transferring militarily relevant technology. Otherwise, academic exchanges with no broader military, scientific or technical ramifications pose no risk to the West and should be continued.

It will be time to lift some sanctions when Russia withdraws from Ukraine’s territory, although this seems far away at the moment. Any ‘temporary ceasefire’ between Russia and Ukraine that sees Russia continuing to occupy Ukrainian territory would de facto amount to an acceptance of Russia’s conquest of Ukrainian territory. Even after the war ends, export controls that limit Russian military modernisation and development of advanced manufacturing and high-tech industries should be maintained.