Bringing the Pain

On Wednesday, the United States announced an initial round of sanctions in response to the situation in Ukraine, imposing a visa ban on individuals who played a part in Russia’s military intervention. Advocates of economic pressure against Moscow clearly hope it’s not the last round. Since the occupation of Crimea, there’s been a slow rumble of calls from within and outside the Obama administration for using economic pressure to force Vladimir Putin’s hand in Ukraine. Certainly, as an alternative to the use of force, sanctions have their appeal. If U.S. and European-led sanctions against Iran brought that radical regime to the negotiating table, then surely a replay could do the same for Vladimir Putin’s Russia, right? The economist Anders Aslund is quite optimistic, telling the New York Times’s Peter Baker that, "Russia can be forced out of Crimea with the combination of financial sanctions plus straightforward hard diplomacy."

Is he right? I know a little something about sanctions, and so, in response to popular demand, I feel obligated to weigh in on whether economic coercion will work in this instance. But you won’t like my answer: even perfectly-designed economic sanctions won’t eject the Russians from Crimea, and what will be implemented in the coming days and weeks will be far from perfect. But the United States should impose sanctions anyway.

The first thing to understand about sanctioning Russia over its incursion into Crimea has nothing to do with the impact of the sanctions and everything to do with what is being demanded of Moscow. The United States wants Russia to withdraw military forces from a piece of territory they have long coveted. However much Russia has contravened international law over the past week, they’ve changed the facts on the ground. They control Crimea, and public opinion in that autonomous republic is pretty Russo-friendly. The current status quo for Russia is that they control that territory. In world politics, there is no greater demand to ask of a government than to make de facto or de jure territorial concessions. The domestic and international ramifications of such a concession are massive — especially after force was used to occupy the territory. So recognize that the demand being attached to the sanctions is so large that success is extremely unlikely.

The only case of economic coercion succeeding in a similar case in history was the 1956 Suez crisis. In that case, Britain, France, and Israel withdrew their forces from the Suez Canal following a U.S.-inspired run on the pound sterling. Except that the Suez case is not at all similar to Russia/Crimea. Britain was a treaty ally of the United States; not so much with Vladimir Putin’s Russia. The Suez was far away from British soil; Crimea is just across the Sea of Azov. And, perhaps most importantly, Britain was in a fragile economic state trying to protect a fixed exchange rate. Russia’s economy has its problems, but a shortage of hard currency reserves ain’t one of them.

So the conditions under which sanctions would force Russia’s hand in Ukraine are far from ideal. The proposed sanctions coalition is equally flawed, however, as my FP colleague Colum Lynch has noted. European Union leaders are not exactly keen on the idea of broad-based economic sanctions, for understandable reasons. Britain needs Russian finance capital; the rest of Europe needs Russian energy. France is traditionally the most hawkish country in Europe, but that country is too busy planning to export warships to Russia to organize European sanctions. As a result, there’s been nary a peep out of Paris. If Russia continues to jerry-rig a Crimean referendum to pry it free from Ukraine, then the EU, led by its eastern members, might come around to sanctions. But that will take time — both to organize and to take its toll on Russia — and the more time that passes, the more that Russia can do to try and "normalize" the status quo.

The United States, on its own, has limited levers on economic influence over Russia. Financial sanctions and asset freezes sound good, part of the newfound policymaker faith in "smart sanctions" as a way squeezing a country’s elite without hurting the population. It’s likely that targeted financial sanctions could, if well designed, impose some costs on Russia’s oligarchs and officials. But this assumes that Putin needs the support of Russia’s plutocrats rather than vice versa. The past 15 years of Russian history have demonstrated that the current Russian president has little compunction with exercising state power at the expense of Russia’s 1 percent. As for opening up U.S. energy exports as a way of diluting European dependence on Russian natural gas, it’s not a bad idea — it’s not going to generate much pain in the short term.

Sorry, but the fact remains that sanctions will not force Russia out of Crimea. This doesn’t mean that they shouldn’t be imposed. Indeed, there are two excellent reasons why the United States should orchestrate and then implement as tough as set of sanctions on Russia as it can muster. First, this problem is going to crop up again. Vladimir Putin has now invaded two neighbors in six years to destabilize regimes perceived to be hostile to him. Post-Crimea, any new Ukraine government will continue to be hostile to the Russian Federation. There are other irredentist areas in the former Soviet Union — *cough* Transnistria *cough* — where Putin will be tempted to intervene over the next decade. At a minimum, he should be forced to factor in the cost of sanctions when calculating whether to meddle in his near abroad again. President Obama was correct to point out the "costs" to Putin for his behavior — now he has to follow through on that pledge.

Second, while sanctions cannot solve this problem on their own, they can be part of the solution. Over the long term, Russia does need to export energy to finance its government and fuel economic growth. Even if planned sanctions won’t bite in the present, the anticipation of tougher economic coercion to come is a powerful lever in international bargaining. The closer the European Union moves towards joining the U.S. sanctioning effort, the more that Russia has to start thinking about the long-term implications of its actions. Any political settlement over the future of Ukraine will require compromise by the new Ukrainian government and its supporters in the West. Imposing sanctions now creates a bargaining chip that can be conceded in the future.

After decades of policymakers deriding the utility of economic sanctions inside the Beltway, there is a newfound enthusiasm for them. As someone who has made the cause for sanctions under certain circumstances in the past, this is a welcome change. However, no one should have any illusions about what economic coercion will accomplish in Ukraine. Russia will not acquiesce on Crimea because of financial sanctions. That doesn’t mean they’re a bad idea.