Mariya Grinberg on the Crisis in Ukraine

The US, UK, and EU have placed three types of sanctions on Russia as a result of the invasion of Ukraine. While these sanctions work based on different logics to increase pressure on Russia, all three are unlikely to affect the Russian capability to carry on the war effort in the short term.

First, there are "smart" sanctions, which are levied against individuals to punish the people responsible for foreign policy decisions as opposed to punishing the population of the target state. This is where the West started their sanctions efforts. Asset freezes and travel bans were placed on various Russian oligarchs, Russian parliament members, the Russia security council, and Putin himself. Largely meant to be symbolic, "smart" sanctions are typically used as signals of resolve or solidarity. If they are to increase pressure on the target state, it is by angering influential people enough to demand that their leaders change foreign policy. As this has become a popular tool of Western diplomacy, it was the easiest item to predict in the sanctions package against Russia.

Second, the West imposed commercial sanctions on Russia. These sanctions prohibit the export to Russia of military capabilities and military adjacent products. The US banned the export of high-end US technology in defense, aerospace, and maritime sectors. The EU banned the export of aircraft and spare parts for them; it also prohibited companies from doing business with several Russian firms involved in defense and arms manufacturing. Commercial sanctions, on products the target state requires and cannot get elsewhere, can cause exceptional pressure on the target state. This pressure increases the longer the sanctions are in place. However, in the short term, the target state still has stockpiles of necessary products which can be relied on to conduct the war effort. Commercial sanctions require time to produce an effect.

Finally, financial sanctions target the Russian ability to raise sovereign debt in the West, prevent certain banks from transacting in the US dollar and the pound sterling, remove seven Russian banks from the SWIFT system, and freeze Russian Central Bank assets held in the West. Financial sanctions produce an almost immediate effect on the target state. However, these are one-shot tools. If the target state survives the initial shock to its economy, the damage is done, but no additional pressure can be squeezed from the financial sanctions. On the one hand, these measures have hurt the Russian economy – the value of the ruble has fallen substantially. On the other hand, Russia had time to prepare for this storm. It had built up a substantial war chest. While the sanctions against the Russian Central Bank target these reserves, the West can neither touch the reserves held in gold nor the assets held in non-Western states. As for severing Russian banks from SWIFT, the current measures are incomplete: they block some, but not all, Russian banks. In essence, the West is choosing domestic winners and losers in Russia, but not fully preventing Russia from transacting with the West. There is little appetite to sever Russia fully from the payment system because that would effectively prevent Europe and the US from accessing raw materials from Russia – chief among which are oil and natural gas.

March 9th