WASHINGTON — Waves of sanctions imposed by the Biden administration after The Russian invasion of Ukraine have not dealt Moscow’s economy the devastating blow some had expected. In a new report, two researchers offer reasons why.
Oleg Itskhoki of Harvard University and Elina Ribakova of the Peterson Institute for International Economics argue that sanctions should have been imposed more forcefully immediately after the invasion, rather than gradually.
“In retrospect, it is clear that there was no reason not to impose all possible decisive measures against Russia from the very beginning when Russia launched the full-scale invasion in February 2022,” the authors say in the paper. Still, “the main conclusion is that sanctions are not a panacea,” Ribakova said this week during a call with reporters to preview the study.
The researchers say Russia was able to brace for the financial sanctions because of lessons learned from sanctions imposed in 2014 after it invaded Crimea. Their impact was also weakened by the fact that the sanctions could not include more countries, which did not include economic powerhouses such as China and India.
The report states that “while the number of sanctions is high, the tangible impact on the Russian economy is less clear” and that “global cooperation is indispensable”.
The question of what makes sanctions effective or not is important, even beyond the war between Russia and Ukraine. Sanctions have become crucial tools for the United States and other Western countries. to put pressure on opponents to reverse actions and change policies without leading to direct military conflict.
The limited impact of sanctions on Russia has been clear for some time. But the report provides a more detailed picture of how Russia adapted to sanctions and what this could mean for the effectiveness of US sanctions in the future.
The article will be presented next week at the Brookings Institution.
Since the start of Russia’s invasion of Ukraine in February 2022, the US has imposed sanctions on more than 4,000 individuals and companies, including 80% of Russia’s banking sector by assets.
The Biden administration recognizes that sanctions alone cannot stop the Russian invasion. It has also roughly $56 billion in military aid to Ukraine since invasion in 2022And many policy experts say the sanctions are not tough enough, as evidenced by the growth of the Russian economyAmerican officials have said that Russia has turned to China for machine tools, microelectronics and other technology that Moscow uses to produce missiles, tanks, aircraft and other weapons for use in war.
A Treasury Department representative pointed to comments made by Treasury Secretary Janet Yellen in July at the Group of 20 finance ministers’ meetings, where she called the actions against Russia “unprecedented.”
“We continue to take a hard line against Russian sanctions evasion and have strengthened and expanded our capabilities to target foreign financial institutions and anyone else around the world who supports the Russian war machine,” she said.
Yet Russia has managed to avoid a $60 price cap on its oil exports, imposed by the US and other G7 democracies that back Ukraine. The cap is enforced by banning Western insurers and shipping companies from handling oil above the cap. Russia has managed to avoid the cap by assembling its own fleet of outdated, used tankers that do not use Western services and transport 90% of its oil.
The U.S. pushed for the price cap as a way to cut Moscow’s oil profits without pulling large amounts of Russian oil off the world market and driving up oil prices, gasoline prices and inflation. Similar concerns kept the European Union from imposing a boycott on most Russian oil for nearly a year after Russia invaded Ukraine.
The G7 leaders have agreed on a $50 billion loan to help Ukrainepaid for by interest earned on profits from the Russian central bank’s frozen assets, most of which are held as collateral in Europe. However, the allies disagree on how to structure the loan.
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Associated Press reporter Dave McHugh in Frankfurt contributed to this report.