Wednesday, August 15, 2018

The Impact of Anti-Russia Sanctions on Russians

Washington's current weapon of choice in dealing with Russia is the imposition of economic sanctions.  While we often hear the word "sanctions" tossed around, what is the point of sanctioning a government or a nation?  We will start this posting by looking at a definition of sanctions and the reasons for their use followed by an examination of a poll of Russians, looking at their feelings about the impact of American-led sanctions against their nation. 

Economic sanctions are defined as a withdrawal of customary trade and financial relations and are viewed as a middle course of action when compared to diplomacy and all out war.  Sanctions take two forms:

1.) Comprehensive sanctions which affect all commercial activity with a nation, for example, the United States and its decades-long embargo of Cuba.  These sanctions affect the entire civilian population of the sanctioned nation.  It would also include the current sanctions on Iran, Sudan and Syria.

2.) Targeted or smart sanctions which target certain businesses, groups or individuals within a nation, sparing the civilian population from the impact of the sanctions.

Sanctions can take the form of asset freezes, arms embargo, foreign aid reductions, trade restrictions, capital restraints and travel bans.

Why do governments choose to use sanctions?  Economic sanctions are imposed to punish, coerce, deter or shame other governments/entities/states into changing behaviours that are deemed to violate international behavioural norms.  Economic sanctions have been used to achieve foreign policy goals like promoting human rights, promoting democracy, weapons nonproliferation, counterterrorism,  counternarcotics and to resolve geopolitical conflicts.  All that said, economic sanctions are used as a stick to prod the citizens of the targeted nation to be miserable enough that they will choose to put pressure on their government to change its behaviour. 

Thanks to the Council on Foreign Relations, here is an interesting graphic showing the global sanctions regimes in 2016:

Here is a graphic showing the U.S. sanctions programs currently in place showing how long some of them have been in existence:

Since the focus of this posting is on the sanctions against Russia, let's look at the document from the Office of Foreign Assets Control (OFAC) which outlines the U.S. Treasury Department's Russia sanctions program:

Just in case you missed it, here are the penalties for violating the Executive Orders behind the Russia sanctions program:

"Civil monetary penalties of up to the greater of $250,000 or twice the amount of the underlying transaction may be imposed administratively against any person who violates, attempts to violate, conspires to violate, or causes a violation of E.O. 13660, E.O. 13661, E.O. 13662, E.O. 13685, or the Regulations. Upon conviction, criminal penalties of up to $1,000,000, imprisonment for up to 20 years, or both, may be imposed on any person who willfully commits or attempts to commit, or willfully conspires to commit, or aids or abets in the commission of a violation of E.O. 13660, E.O. 13661, E.O. 13662, E.O. 13685, or the Regulations." (my bold)

With this background, let's look at the impact of the current American-led sanctions against Russia for its moves in Ukraine and alleged interference in the 2016 U.S. presidential election from the viewpoint of Russians as outlined in a recent poll from Russia's VCIOM.

When the Russian respondents were asked if they personally had interest in news related to sanctions, VCIOM got the following responses:

Likely yes - 57 percent
Likely no - 41 percent

When asked what kind of impact the sanctions had on Russia's economy, here are the responses:

Likely positive impact - significant - 15 percent
Likely positive impact - insignificant - 19 percent
Likely negative impact - insignificant - 11 percent
Likely negative impact - significant - 19 percent
No impact - 20 percent
Don't know - 16 percent

When asked what positive impacts have been felt by the Russian economy thanks to the imposition of sanctions, VCIOM got the following responses:

Economic development - 50 percent
Import substitution - 20 percent
Revival throughout the whole country - 4 percent
Development of military - industrial complex - 4 percent
New jobs - 2 percent
Development of small- and medium-sized businesses - 2 percent
Support for domestic manufacturers - 2 percent
New technologies/innovations - 2 percent
National cohesion/patriotism - 2 percent
Other - 11 percent

When asked what negative impacts have been felt by the Russian economy thanks to the imposition of sanctions, VCIOM got the following responses:

Price/tax increases - 22 percent
Economic recession - 9 percent
Fewer foreign goods - 7 percent
Worsening relationship with the West - 5 percent
Dollar exchange rate increase - 5 percent
Fall in income - 5 percent
Deterioration in quality of life of ordinary citizens - 3 percent
Rise in gasoline prices - 3 percent
Problems leaving Russia. 3 percent

One of the most important questions asked was whether the sanctions have had any impact on the families of the respondents:

Significant positive impact - 1 percent
Insignificant positive impact - 1 percent
Insignificant negative impact - 12 percent
Significant negative impact - 12 percent
No impact whatsoever - 67 percent

When asked if Russia should not pay attention to sanctions and conduct its foreign policy as before, 73 percent of respondents said yes compared to only 17 percent of respondents that felt that Russia should be willing to make concessions in order to get sanctions lifted.

Lastly, when asked if Western sanctions were harmful or beneficial to Russia, here were the responses:

Harmful to Russia - 32 percent
Beneficial to Russia - 50 percent

When asked if Western sanctions were harmful or beneficial to the nations that imposed them, here were the responses:

Harmful to the imposing nations - 78 percent
Beneficial to the imposing nations - 7 percent

With the imbalance in reportage in the Western/American media when it comes to Russia, we rarely hear what Russians think about the key issues that are impacting their lives in this time of anti-Putin/anti-Russia sanctions and how they feel about their new geopolitical reality.  The poll by VCIOM shows us that the current sanctions have been rather unsuccessful in changing Russians' opinions toward their political leadership and their actions in Ukraine and during the 2016 American election.  In any case, the four year-old sanctions have done absolutely nothing to produce the hoped for result of getting Russia to totally remove itself from the "Ukraine issue" or to get it to promise that it will never again interfere with an American election....allegedly, at least.


  1. The Russians are reaping the benefit of sanctions which ironically are the opposite of 'protectionism'. While most of the world uses trade and interaction with other countries through diplomacy and tourism to name only two of many, then the USA bullying only has the opposite effect. Compare the sanctions in South Africa against apartheid and see how many indigenous industries were set up to replace imported goods such as military hardware, construction, local materials and may others that would still not be in business today without those sanctions. It took somewhere in the region of 25 years before South Africa and indeed longer for Rhodesia (Zimbabwe) to end so called 'white rule'. Russia will reap the benefits as many in the EU who would trade with Russia and Iran among others are now angry at the US sanctions and are, as they say. 'the worm is turning'.

  2. @Robbie B

    t took somewhere in the region of 25 years before South Africa and indeed longer for Rhodesia (Zimbabwe) to end so called 'white rule'.

    Plus both countries had active insurgences amounting, at times, to minor invasions, sometimes with foreign support. Cuba's support for the ANC during the Angolan War was a significant factor, I believe, in ending Apartheid.

    There may be some examples of cases where a pure sanctions approach succeeded but I cannot recall one at the moment.

  3. What drives economic growth? SALES. What drives sales? CONSUMPTION. What drives consumption? INCOME. If Russia wishes to increase it's productivity, it must get money into the hands of consumers so they can spend, spend, spend. And once consumers spend, where does the money go? BACK TO THE INVESTMENT CLASS WITH PROFIT. The quickest way to choke an economy is to bottleneck money at the top...while starving the working class with low wages and austerity.