Do sanctions really make a difference?

In response to its brutal war of aggression against Ukraine, the West imposed a barrage of sanctions against Russia, from freezing the assets of oligarchs to preventing the Russian Central Bank from accessing its foreign reserves to help support the rouble. Yet the EU has refrained from stopping flows of Russia's largest exports oil and natural gas, revenue from which accrues directly to the Kremlin-controlled state energy firms.

To get some perspective on whether sanctions are up to the Herculean task of stopping the Russian war machine, we turned to Tyler Kustra, an assistant professor at the university who has provided expert commentary on sanctions for the BBC, Bloomberg, and CNN.

Date: 23 Mar 2022 15:01 - 29 Sep 2022 14:01

Since the second world war governments around the world have turned to sanctions to solve their foreign-policy dilemmas on more than 700 occasions.

Recorded history notes sanctions going back as far as ancient Greece, when the Athenians banned merchants from nearby Megara because the Megarians had farmed land that was sacred to the Athenians and killed an Athenian herald. Megara enlisted the aid of Athens’ arch-rival Sparta, allegedly sparking the Peloponnesian War which brought Greece’s golden age to an end.

The League of sanctioners

But it was another cataclysmic conflict, the First World War, that brought the use of sanctions back into vogue. After the Armistice that brought the fighting to an end – and searching for an alternative to the violence that had claimed over 14 million lives – the leaders of the victorious powers devised the League of Nations to maintain international peace and empowered it with the right to prevent trade with any country that might threaten that peace.

As US president – a major player in the establishment of the league – Woodrow Wilson proclaimed: "A nation that is boycotted is a nation that is in sight of surrender. Apply this economic, peaceful, silent, deadly remedy and there will be no need for force. It is a terrible remedy. It does not cost a life outside the nation boycotted but it brings a pressure upon the nation which, in my judgment, no modern nation could resist."

The League achieved success in using sanctions to end conflicts between Yugoslavia and Albania, and Greece and Bulgaria. But it is their sanctions against Italy after its invasion of Abyssinia in 1935 (now known as Ethiopia) that are most remembered. Too weak and too tardy to stop the fascist aggression, they were widely seen as token resistance. The British government even went so far as to inquire if Mussolini would object to oil being included in the embargo. When Il Duce said he would, oil was exempted.

As former prime minister David Lloyd George said, the sanctions “came too late to save Abyssinia, but they are just in the nick of time to save [Her Majesty’s] Government”.

The Cold War brought a series of sanctions between the capitalist and communist worlds – but, because for the most part these two blocs did little trade with one another, the sanctions were typically more of an expression of displeasure than a policy with a plausibility of success. Moreover, sanctioned states could typically turn to rivals of the sanctioning countries who would be more than happy to trade with them.

Alumni insight - Francis Lee-Saunders (Politics and International Relations, 2018)

“Sanctions have undoubtedly significantly impacted the Russian economy since the invasion of Ukraine. Credit ratings have been downgraded, inflation is tracking at roughly 15% and economic analysts are predicting the economy will default on its debts in the coming weeks.

Whether these are shaping the Kremlin’s calculus and objectives in Ukraine is another question. So far, we have seen no indication that they are, at least not publicly. Indiscriminate bombing of cities and US warnings that Russia could deploy chemical weapons, indicates President Putin likely assesses achieving the political and military goals of the invasion outweighs the economic drawbacks.”

Francis is Associate Europe and Eurasia, at Dragonfly Intelligence, a geopolitical and security intelligence service for the world’s leading organisations.

Weapon of mass starvation?

Then, just as communism was collapsing, Saddam Hussein invaded Kuwait. The invasion unified the United Nations (which was usually divided along ideological lines) against Iraq. Consequently the security council imposed what it said was the most comprehensive sanctions regime in history, requiring all members of the UN to block all trade with Iraq, except for food and medicine.

The goal of the sanctions was to convince Saddam to leave Kuwait but they were continued after the first Gulf War over concerns, subsequently shown to be baseless, that he was developing weapons of mass destruction.

To gain public support for lifting sanctions that were strangling his budget, the Iraqi government fabricated data suggesting that sanctions-induced malnutrition had claimed the lives of half a million children. Claims of causing civilian suffering were also made about the sanctions imposed on Haiti after the military coup that ousted the elected president, Jean-Bertrand Aristide.

Smart sanctions

This started the campaign for targeted sanctions. Previously, sanctions were applied haphazardly to entire economies with little thought for how they would affect the innocent civilian population. But the idea that sanctions designed to constrain ruthless despots were actually killing some of the very people they were meant to protect caused a sea change. Sanctions went from focusing on general prohibitions on imports and exports to focusing on asset freezes and travel bans of dictators and their henchmen.

But the effectiveness of this sort of sanctions have yet to be demonstrated. Autocrats are typically clever enough not to open accounts in their own names at banks under the jurisdiction of governments that are likely to sanction them. Nor are they often interested in vacationing in hostile territory, preventing these sanctions from having any bite.

SWIFT and severe

Nonetheless sanctions were being called upon to deal with the US and the EU’s most pressing foreign policy concerns, including preventing the Iranian government from obtaining a nuclear weapon. That’s when the western powers realised the leverage they really had.

International sanctions on Iran, which particularly targeted the country’s oil exports, have been instrumental in bringing the country to the negotiating table.

While the US did little direct trade with Iran, international financial transfers for almost every country in the world ran through the SWIFT financial network, headquartered in Belgium. If Iranian banks were cut off from SWIFT it would be much more difficult for Iran to receive payment for its oil.

On 23 March 2012 the Council of European Union ordered Iranian banks disconnected from the service and the Iranian economy went into freefall. Nonetheless it took over three more years for Iran to agree to a nuclear deal.

Fast forward 10 years later and these sanctions and more have not (yet) been able to bring a peaceful resolution to this horrific war.