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If Sanctions Against Russia Are Failing, Whats Next>? [Copy link] 中文

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Post time 2015-12-25 01:47:23 |Display all floors
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On December 18, European Union envoys  agreed to extend sanctions on Russia, continuing the restrictions placed on Russian businesses and citizens following Russia's 2014 invasion of Crimea and aggression in eastern Ukraine.

The sanctions prevent some of Russia's largest companies from raising capital in the West, restrict the export of technology and technical services for unconventional oil and gas drilling, and freeze the assets and travel of Russian elites.

Unfortunately, as I show in a study published in the January/February edition of Foreign Affairs, sanctions on Russia have been largely unsuccessful. The Russian economy is certainly hurting, but most of this damage was done by the extraordinary drop in oil prices over the last year:

The ruble's exchange rate has tracked global oil prices more closely than any new sanctions, and many of the actions taken by the Russian government, including the slashing of the state budget, are similar to those it took when oil prices fell during the 2008 global financial crisis.

And economic damage itself isn't necessarily the best measure for sanctions success. Ultimately, sanctions are a tool of economic coercion and statecraft. If they do not cause a policy change, they are failing:

After the initial round of sanctions, the Kremlin's aggression only grew: Russia formally absorbed Crimea and increased its financial and military support for pro-Russian rebels in eastern Ukraine (including those who most likely shot down the Malaysia Airlines flight).

The performance of modern targeted sanctions which promise that damage will be narrowly focused on elites rather than the population in general is also questionable in the Russian case, where the Kremlin has effectively redirected the economic burden of sanctions onto the population.

By restricting access to international financing during a recession, the sanctions have compounded the fall in oil prices, requiring Moscow to slash spending on health care, infrastructure and government salaries, which has created economic hardship for ordinary Russians.

The crash of the ruble, meanwhile, has not only destroyed savings but also increased the monthly payments of those who hold mortgages denominated in foreign currencies.

Perhaps worst of all, the sanctions are costing U.S. and European companies billions of dollars in compliance costs, lost business and broken contracts.

The brunt is being borne by Europe, where the European Commission has estimated that the sanctions cut growth by 0.3 percent of gross domestic product in 2015. According to the Austrian Institute of Economic Research, continuing the sanctions on Russia could cost over 90 billion euros in export revenue and more than 2 million jobs over the next few years.

The sanctions are proving especially painful for countries with strong trade ties to Russia. Germany, Russia's largest European partner, stands to lose almost 400,000 jobs.

Ultimately, as I argue in the article, the success of sanctions can be judged by a variety of standards. Yet by virtually all of them, they are failing.

This is a blow for those myself included who seek restrained policy options to resolve the crisis in Ukraine. Yet given the costs to U.S. businesses, it's probably time for policymakers to consider whether continuing sanctions on Russia is really the best option, or whether there are more effective diplomatic or economic policy tools we can use instead.

You can read the whole article, with more data and policy recommendations, at Foreign Affairs.

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Post time 2015-12-25 03:05:33 |Display all floors
"""or whether there are more effective diplomatic or economic policy tools we can use instead.""""

Whether sanctions work or not, there is no other option.....

This is the only option in dealing with Russia.

I think one cannot just look away.

It is good to have some principles., and to take the long term view.


I've made my living, Mr. Thompson, in large part as a gambler. Some days I make twenty bets, some days I make none. There are weeks, sometimes months, in fact, when I don't make any bet at all because ...

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Post time 2015-12-25 09:57:49 |Display all floors
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Post time 2015-12-29 09:20:23 |Display all floors
More sanctions are needed to Russia and those that do business with it.

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