Should the U.S. Be Sanctioning Russia?

Western governments have responded to Russia’s invasion of Ukraine with swift and severe sanctions targeting the country’s financial institutions, state-owned businesses, wealthy individuals, and even President Vladimir Putin himself.

The hope is that the resulting economic pain will encourage the Russian public and elite to pressure Putin’s government into dialing back its war against its neighbor. But an inherent feature of this strategy is harming ordinary Russians who aren’t responsible for their dictatorial government’s war and who have few options for influencing its behavior.

As the pain of sanctions on the Russian people and the Russian economy mounts, and Western leaders propose tougher measures still, it’s worth asking whether these sanctions are effective or even justified.

On Thursday, the U.S. Treasury Department announced a number of “unprecedented and expansive” sanctions on Russia.

They include cutting off Russia’s two largest banks, the majority government-owned Sberbank and VTB Bank, from processing payments through the U.S. financial system. U.S. companies are also largely being prohibited from lending to or buying shares in state-owned companies ranging from Russia’s largest railroad operator to Rostelecom, the country’s largest telecommunication company.

These broader sanctions are being coupled with asset freezes and travel bans on a number of wealthy Russian individuals, or “oligarchs,” and their family members linked to Putin’s government. The Biden administration followed this up with sanctions on Putin personally today.

The U.S. Commerce Department is also banning the export of “semiconductors, computers, telecommunications, information security equipment, lasers, and sensors”, reports CBS. Congressional Democrats have proposed to go even further by jacking up tariffs on all Russian imports.

President Joe Biden has been quick to tout the impact of the sanctions his administration has imposed thus far.

“We’ve already seen the impact of our actions on the Russian currency—the ruble—which early today hit its weakest level ever,” the president said on Twitter yesterday. “The Russian stock market plunged today. And the Russian government’s borrowing rate spiked above 15 percent.”

We’ve already seen the impact of our actions on the Russian currency — the ruble — which early today hit its weakest level ever.

The Russian stock market plunged today.

And the Russian government’s borrowing rate spiked above 15 percent.

— President Biden (@POTUS) February 24, 2022

Bloomberg reports that Russia’s stock market fell some 30 percent as of yesterday, costing the country’s billionaires a collective $39 billion.

Thus far, it doesn’t seem like that economic pain will weaken the Russian government’s willingness to continue its war.

The sanctions are “unquestionably a cost. The question is that cost enough, and is it transmissible onto the desk of Vladimir Putin,” says Justin Logan, a senior fellow at the Cato Institute. Putin’s singular focus on Ukraine and the rapidly changing military situation inside the country make it doubtful these sanctions will sway him, says Logan.

“On areas where states feel vital national security concerns, they tend not to work,” he tells Reason, adding that their primary utility thus far is for Western governments to signal their displeasure with the Russian invasion.

In the absence of a serious chance that they’ll change Russia’s behavior, sanctions are more akin to “virtue signaling,” says Will Ruger, president of the American Institute for Economic Research and former President Donald Trump’s nominee for ambassador to Afghanistan.

“There’s some element that turns into an attempt at collective punishment. Liberals, left or right, should be very skeptical of the idea of collective punishment,” says Ruger. “You end up targeting those who aren’t necessarily in favor of that country’s policies. In fact, they could be opposed to that country’s policies.”

Indeed, sizable antiwar protests have erupted in several Russian cities, where thousands have risked arrest to express their opposition to their government’s invasion of Ukraine.

A recent article in Jacobin by two Russian activists cites public opinion surveys showing that some 40 percent of Russians do not support their country’s recognition of two separatist regions in Eastern Ukraine. Putin’s recognition of Donetsk and Luhansk precipitated his invasion of the country.

“While some signs of ‘rallying around the flag’ are inevitable, it is remarkable that despite complete control over major media sources and a dramatic outpouring of propagandistic demagoguery on TV, the Kremlin is unable to foment enthusiasm for war,” they write.

These antiwar protestors and ambivalent everyday Russian citizens won’t be spared the pain brought by international sanctions on their country.

Targeting sanctions at wealthy, government-linked individuals avoid that problem, says Eli Clifton, a senior advisor at the Quincy Institute.

“It’s happening to individuals who are closer to the decision-making principals, if they’re not decision-making principals themselves, in Russia,” he says.

Individually targeted sanctions at Russian oligarchs are also easier to enforce, he argues, given that many of the assets Western governments could go after are things like yachts and real estate holdings that are difficult or impossible to move or hide.

In contrast, broad-based sanctions are notoriously difficult to enforce, says Clifton. He notes that governments like China and India aren’t nearly as enthusiastic about punishing Russia for invading Ukraine as the U.S. and its allies are. China, in fact, is weakening its controls on Russian imports in response to Western sanctions.

While individually targeted sanctions avoid the problems of collective punishment, it’s still doubtful that making life more difficult for Russian oligarchs will produce changes in Russian policy vis-à-vis Ukraine, says Ruger. He adds that the U.S. ultimately has few good options for getting Russia to back off its unjust invasion of Ukraine, a country that also matters little for American security or prosperity.

“It doesn’t mean you can’t be the well-wisher. It doesn’t mean you can’t use the bully pulpit to say this is wrong,” he says. “But doing things that could help Ukrainians in this fight could have serious downside risks for the United States.”

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