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Transatlantic Unity Makes Russia Sanctions More Effective

It has been a year since the United States, European Union, and other allies first sanctioned Russia for its illegal annexation of Crimea and aggression toward Ukraine writes Douglas Hengel. As Russia’s destabilization of Ukraine continued, the United States and Europe broadened sanctions in an effort to persuade Vladimir Putin’s government to change its behavior and to deter Russia from further belligerence in Ukraine and elsewhere in the neighborhood. The measures included asset freezes and visa bans on individuals considered to be responsible for actions against Ukraine’s territorial integrity (including several in Putin’s inner circle), and limits on business dealings with some Russian banks, defense companies, and energy firms.

Predictably, the restrictions imposed on Russia have been controversial, as sanctions regimes generally are. Some complain they are too weak, citing as evidence Russia’s continued lack of compliance with the Minsk agreements to ensure a ceasefire and stabilize eastern Ukraine. Others argue the actions are not only ineffective but counterproductive. They lead the Russian people to close ranks around their leaders, undermine efforts to integrate Russia into the global economy (setting back Russian political and economic reform), and cause other collateral damage to the long-term interests of the transatlantic community.

The debate about the effectiveness of sanctions is a hardy perennial. Some sanctions regimes have been judged to be more effective (e.g., South Africa, Burma, Iran) than others (e.g., Cuba, Zimbabwe). The international community is much better able now to target measures against specific rogue actors (so-called “smart” sanctions), but unintended consequences are almost always part of the equation. So, collateral damage is a cost that should be considered, while recognizing there is also a cost to doing nothing. Sanctions also take time to have their intended impact. The phenomenon of rallying around the flag is often the first reaction when sanctions are imposed on a country, but that tends to fade over time as costs mount, or as the citizenry better understands what is truly causing their economic distress, as in the case of Iran.

It is important to remember that sanctions are a tool meant to help gain a policy outcome. They are not an end in themselves, and are unlikely to be effective if they are the only instrument deployed. Sanctions are also much more likely to achieve the desired result when they are multilateral. This can mean the measures adopted are weaker in some respects than one might like, but the sanctions with the least impact are generally those imposed unilaterally (e.g., by the United States on Cuba). It is critically important that the United States and Europe remain united on Russia and Ukraine.

In that regard, the conclusions of the March 19 European Council are significant. The leaders of the EU agreed that the measures adopted against Russia “should be clearly linked to the complete implementation of the Minsk agreements.” This was agreed despite legitimate concerns by some European countries about the cost to them of the sanctions, as well as Russian efforts to divide Europe and Europe from the United States. Disunity would undermine transatlantic efforts and reward the Putin regime.

It is premature to judge the effectiveness of the restrictions imposed on Russia for its misbehavior in Ukraine. Russia is the largest economy on which punitive steps like these have been imposed, so new ground is being broken. The sharp drop in energy prices that occurred as sanctions were ramped up makes it difficult to isolate the particular impact of just the restrictive measures.

Key to judging whether the sanctions are effective will be whether the fragile ceasefire in eastern Ukraine holds and pro-Russian rebels refrain from moving on the key coastal city of Mariupol. Longer term, a key measure of the efficacy of sanctions will be Russia’s implementation of its commitments under the Minsk agreement. Nevertheless, it is clear that the restrictions in effect now on Russia are having an impact on particular individuals and companies, and Western signals about possible further sanctions may be a factor in current Russian restraint. Continued unity among the transatlantic community is critical in this regard.

It bears repeating, however, that sanctions alone are not enough. Sanctions can help focus Russia on implementation of the Minsk accords and the return to Ukraine of sovereignty over its entire territory, but the strongest long-term antidote to continued Russian mischief is a more democratic and prosperous Ukraine. Thus the United States and the EU are working with international financial institutions to strengthen the Ukrainian economy and support the implementation of needed reforms. Ukraine’s success depends above all on the choices of the Ukrainian people and their government, with the backing of the transatlantic community.

Douglas Hengel is a Senior Resident Fellow with The German Marshall Fund (GMF). This article was first publIShed by the GMF.

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