The Russia Conundrum

It is well known that sanctions are an imperfect tool. Their impact can be hard to assess and often takes many years to become apparent; but that does not mean they should be discarded entirely. Correctly targeted sanctions are crucial for applying pressure on regimes that flout international law and treat their citizens like slaves. Sanctions can punish unacceptable behaviour and discourage further breaches. But they must be used carefully to be effective. This is because the first people to suffer from unfocused sanctions are the population generally, while the powerful people – the people who run the regime – can find ways of getting around them. Branko Milanovi´c, an international economist at the City University of New York, warned that the first effect of indiscriminate sanctions is to worsen social inequality, because their primary impact is on the people who have the least power and are the most economically vulnerable. ‘Blanket sanctions … are fundamentally wrong. Their objective is ostensibly to change the behaviour of a certain government. But … they punish people who actually don’t have any influence or very small influence on what the government does.’

In his annual telethon in June 2021, Vladimir Putin put a brave face on the ‘sanctions battle’, minimising the suffering of the Russian people and suggesting that the Russian economy had actually benefited. ‘We have not just adapted to the sanctions pressure. In some ways, they even did us good: replacing imported technologies with our own gave us an impetus to production … The world is changing and changing rapidly. No matter what sanctions are applied to Russia, no matter what they frighten us with, Russia is still developing, economic sovereignty is increasing, defence capability has reached a very high level and, in many important parameters, has surpassed many countries of the world, and in some of them, even surpassed the United States.’

It is true that the Kremlin’s embargo on the importation of Western foodstuffs prompted improvements in domestic agricultural production, in particular a broadening of the cheese and dairy sector. But ‘import substitution’ has fallen short of its targets and poor quality knock-offs of European favourites have failed to meet consumer demands. Overall agricultural production has increased, but not sufficiently to counter negative impacts. A 2019 study by researchers from the Russian Presidential Academy of National Economy and Public Administration (RANEPA) and the Centre for Economic and Financial Research (CEFIR) calculated that the Kremlin’s food embargo costs Russians $70 per person per year in higher priced fish, meat, cheese and vegetables, a significant sum in a country where many pensioners survive on little more than $200 a month. ‘Five years after the introduction of counter-sanctions,’ the study noted, ‘Russian consumers continue to pay for them from their own pockets. Although a few industries have experienced a positive impact from the import substitution policy, most of them are not effective enough to change general price dynamics.’ In short, the Kremlin’s ban on food imports has had little impact on the West, but continues to penalise ordinary Russians.

When people suffer, however, it is human nature to look for someone to blame, and this can be a less than rational process. The Kremlin has had success in manipulating people’s emotions, deflecting blame away from itself and pointing the finger instead at the ubiquitous ‘common enemy.’ Putin has created the narrative of a West motivated by irrational hatred of Russia and of the Russian people, and has applied it not only to sanctions, but to any criticism of his regime. Even the most factual critiques are dismissed as ‘Russophobia’. When Kremlin power brokers are targeted for personal sanctions as a result of their actions, they routinely attribute it to Western bigotry. ‘I have not heard anything about any violation of human rights,’ Yevgeny Prigozhin declared in a statement to the BBC when he was added to the sanctions list, ‘and I am sure that this is an absolute lie. My advice to you is to operate with facts, not your Russophobic sentiments.’

The suspension of trade in Russia by Western companies such as Starbucks, popular clothing brands, hotels and restaurants that followed Putin’s invasion of Ukraine, together with the exclusion of Russia from sporting events and Eurovision, had the potential to make ordinary Russians feel they were being victimised and to provide fuel for the Kremlin’s claims of Western Russophobia. The lesson for the West is that, in the longer term, sanctions will need to be finely tuned and their purpose clearly explained; they must target those who profit from the corruption and lawlessness of the Putin regime, while making clear to the Russian people what the aim of the measures truly is.