Doubling Down on Sanctions against Russia May Have a Surprising Effect

On February 21, 2023, in remarks on the anniversary of the Ukraine war, US President Joe Biden announced that Washington and its partners would not just maintain the largest-ever sanctions regime on Russia but would issue even more restrictions. These actions are expected to inflict further economic, political and social pressure on Moscow, making it more arduous for President Vladimir Putin to sustain the war. 

But sanctions could be counterproductive. Consider the case of American sanctions on Japan before the December 7, 1941, attack by Japanese forces on the US naval base in Pearl Harbor, Hawaii. Sanctions may not be the best option for forcing Russia to withdraw. 

Since World War II, Western developed countries have generally treated sanctions as a legitimate tool of foreign policy. As one of the main users of international sanctions for diplomatic reprisal and persuasion, the United States considers their employment as “a new kind of economic statecraft with the power to inflict damage that rivals military might.” The US has employed economic sanctions more than any other country. 

In recent years, Washington has not limited its sanctions list to so-called “evil” states such as North Korea, Cuba, and Iran but has included great powers such as China and Russia. Since the outbreak of the Ukraine crisis, Russia has become the most sanctioned country in the world, with more than 5,500 measures aimed against it. More than 30 countries including the US, the United Kingdom, members of the European Union (EU), Canada, Australia, Japan and Singapore have participated in this unprecedented sanction.

Evaluating the effectiveness of sanctions

In assessing the effectiveness of the US-led sanctions on Russia, there are three factors to consider:

First, sanctions are a way to send a message to the international community that the West, led by the United States, stands united in its unwavering support for Ukraine and firmly condemns Russia’s unjustified military aggression. Their use has enabled the US-led coalition successfully to put diplomatic pressure on Russia and satisfy the public in their countries that they were doing something to resolve the crisis.

Second, the question of whether sanctions inflict real economic pressure on Russia lies at the center of the debate surrounding their effectiveness. After the first raft of Western sanctions, the value of the ruble plummeted to less than 1 US cent. As of April 2022, Russian imports were 43 percent below pre-war levels. Considering the uncertainty caused by the war and sanctions, many multinational companies adjusted their business strategy. Since the crisis, over 1,000 companies have scaled back operations in Russia. According to a new study by researchers at Yale University, “the impact of business retreats and sanctions on the Russian economy has been nothing short of catastrophic, eroding the Russian economy’s competitiveness while exacerbating internal structural weaknesses.” 

Yet, despite the challenges they have posed to Moscow, to date, the sanctions have not delivered the economic “knockout” that many people anticipated. The International Monetary Fund (IMF) predicts that Russia’s economy will expand by 0.3 percent this year. Some might have expected that sanctions would have led to a full collapse of Russia’s economy and would have severely restricted Russia’s financial and technological capabilities for pursuing its war. Under sanctions, however, Russia’s economy has proven resilient. Arrayed against great powers, economic pressure has tended to be a weapon of attrition rather than deterrence. It generally takes several months or even longer for a large economy to feel the deprivation caused by sanctions.

Before the December 1941 Pearl Harbor attack, Washington imposed sanctions on Japan, freezing its assets in the US and cutting off access to oil (Credit: illustration – Willard Combes, 1940; photo – The Franklin D Roosevelt Presidential Library & Museum)

Current sanctions against Russia are not global, and Russia is seeking stronger economic ties with countries outside the sanctions coalition. Also, many countries in Asia and Europe depend on Russia’s oil and gas. Since the 2022 war started, Russia’s exports to China, India, Brazil and Turkey have increased by at least 50 percent compared to the previous year. Russia earned EUR 297 billion in revenue from fossil fuel exports, with EU countries purchasing for more than EUR 139 billion in supplies.

Third, one may contend that there are two strategic objectives of sanctions – convince Russia to end its invasion of Ukraine and withdraw its troops, and promote the collapse of Putin’s regime. Some argue that the key to the outcome of the Ukraine war lies in the effectiveness of the economic conflict. This strategic objective appears unrealistic in the short term as Russia’s economy remains resilient. Russia seems to have the economic, financial, and military strength to continue the war for quite some time. Others expect (or wish) that sanctions could result in the collapse of Putin’s regime. As with US sanctions against most authoritarian regimes, however, achieving this strategic goal through sanctions seems unlikely. And Washington and its allies do not appear to have a strategy for regime change in Moscow. 

Sanctions against Japan before the Pearl Harbor attack

As Russia continues its assault on Ukraine, the US will upgrade its Russia-related economic sanctions and tighten restrictive technological exports to Russia. But what is the worst-case scenario for the US and its allies in continuing to apply these onerous sanctions? 

When looking back at the case of Japan and the US in the 1940s, the US escalating sanctions and embargos on Japan before the Pearl Harbor attack, to some extent, parallels the current situation with Russia.

In the 1940s, Washington had attempted to flex its economic muscles to coerce Japan to stop regional aggression. The Japanese government, however, considered economic pressure a stranglehold that threatened its survival. Japan heavily relied on imports of oil, gasoline, iron, machine tools and other equipment and resources to support its economic and military expansion. For Tokyo, the US sanctions further convinced it of the necessity to occupy Southeast Asia and aim to destroy the US Navy. 

As a result, Japan, an island state with an economy and navy dwarfed in size by the world’s most powerful country, attacked the US Pacific naval headquarters at Pearl Harbor. The surprise attack was a direct response to US sanctions. Economic restrictions failed to have a deterrent impact on their target but resulted in high costs for the country imposing them. The escalating economic coercion not only failed to prevent Japan’s military expansion and aggression but accelerated it.

Sanctions from the target’s perspective

Although Washington declared that sanctions against Russia are “unprecedented”, the current escalating Russia-related restrictions are not vastly different from those imposed on Japan in the last century. After the US boosted military support for Ukraine and hosted President Volodymyr Zelensky on a historic visit to Washington, the Kremlin accused Washington of fighting a proxy war against Moscow with the US and NATO seeking to weaken and even destroy Russia. This narrative is underpinned by the fact that the US is by far the largest supporter of Ukraine, with a commitment of EUR 73.18 billion. 

The long-term impact of the ongoing war and international sanctions on Russia may lead to a different scenario than the end of the conflict. As Western countries continue to provide military assistance to Ukraine, upgrade sanction measures, reduce energy reliance on Russia, and restrict technology exports (including chips vital to advanced weapons and military technologies), they may leave Russia diminished in economic, technological, and military terms. Russia’s continued military failures in Ukraine, combined with worsening economic deprivation, rising casualties, and growing domestic anti-war sentiment could strengthen Moscow’s belief that the West is intent on prompting the overthrow of the Putin regime.

An unpredictable endgame for the Russia-Ukraine war

The ongoing Russia-Ukraine war has raised concerns about the collapse of the world order and the outbreak of a Third World War. How will the war end? While it is impossible to predict an outcome, many anticipate that the crisis could continue as a war of attrition for months or even years. 

The Kremlin overestimated its military capabilities to achieve its strategic ambitions in Ukraine and underestimated Ukraine’s resolve to resist Russia’s invasion and the West’s solid support for Ukraine. Under sanctions, Russia might not have enough supply of advanced weapons and military technologies, and at the same time, Ukraine continues to receive lethal weapons from the West. 

As in many cases of sanctions imposition, however, target states may find alternative ways to circumvent restrictions and obtain products from a third party. Given the “no-limit” partnership between Beijing and Moscow, China is a potential provider of support. Washington has warned Beijing not to provide military weapons to Russia. Due to its concerns about escalating tensions with the US and its commitment to a negotiated solution, Beijing will be cautious about providing any assistance to Moscow, which could leave Russia in a tenuous position. How will it react?

History is not destiny. The comparison between the sanctions against Japan before the Pearl Harbor attack and the current limits on Russia should prompt a re-evaluation of Western sanctions against Russia. Even if it faced a much-diminished arsenal of advanced conventional weapons, Russia is a nuclear power that, feeling cornered, could turn to the last resort and shock the world.