US hawk admits: ‘Russia sanctions ultimately didn’t work the way we wanted’

In the wake of Navalny’s death, US President Joe Biden, when asked if he intended to impose new sanctions on Russia, replied that he was considering a number of options. But why wasn’t he so clear?

The EU may claim that sanctions against Russia are working, but even hawks in the US seem to disagree.

In particular, Howard Satz, an economist at the American think tank RAND, known for the analyzes with which it supplies the established American foreign policy, believes that the sanctions are not having the effect that the US dreamed of.

“The sanctions have an effect, but certainly not as big as we hoped,” he says.

“Russia undertakes a massive spending increase to pay for its war, with the federal budget deficit in 2023 the third highest on record.”

He explains that what the sanctions did was to force Russian companies to turn their activities – which he said was costly – to the East, especially China.

This has made Russia much more dependent on China for goods, funding and international support.

But even the redirection of Russian operations does not seem to have been all that devastatingly expensive.

“It may seem surprising that Russia could so quickly replace so much of its trade with the US, Japan and the EU,” comments New York Times economic editor Anna Swanson. “But the rest of the global economy—especially China’s—is big enough that the shift didn’t last long.”

As the American publication states, “China already produces much of what Russia needs and can buy much of what it sells. Trade between China and Russia reached an all-time high last year as Russians turned to Chinese cars, electronics and weapon parts,” it says.

“China has largely softened the pain,” said Eswar Prasad, an economist at Cornell University.

Regarding sanctions on high-tech warfare systems, EU Financial Stability Facility chief David O’Sullivan also noted to POLITICO that the EU has had “limited success, an area that is absolutely critical to the defense of Ukraine.”

American sanctions may have brought countries like Cuba, Iran and Venezuela to their knees – to a degree again – but as mentioned in the recent New York Times report, Russia is better integrated into world trade. “It exports products that other countries need, such as steel and fertilizers, and it still provides much of Europe’s energy.”

Better than nothing

Of course, Satz also raises the question from the opposite side, regarding the effectiveness of sanctions: How well would Russia be if there were no sanctions?

Sullivan, along the same lines as Satz, had stated that “sanctions are a kind of slow puncture of the Russian economy. Maybe not the blowout that some initially predicted, but … the air is leaving the tire and sooner or later the vehicle won’t move.”

However, even these do not sound very convincing.

As revealed in January by the Center for Research on Energy and Clean Air (CREA), despite the sanctions imposed by the EU and the G7 on Russian oil exports, very large quantities of Russian crude exported to EU countries were insured in the London insurance market and therefore legal.

According to CREA’s estimates, Russia’s revenues from exports of energy products (oil, coal, natural gas) amount to 579 billion euros. Russian exports to the EU were just over €185 billion.

Thus Satz comes to find that “sanctions may be hollow and Russia may have found solutions, but a Russia without sanctions would certainly be better than what it is now.”

Comfort to the sick one would conclude, as “the pain aimed at Russia” would eventually “be felt far beyond its borders” as Swanson aptly commented.