The US Department of State released a video on YouTube on Thursday, outlining what sanctions really are and their impact on the Russian economy. These sanctions – including visa bans, asset freezes, and business restrictions – were imposed by the US and its allies on several Russian individuals and institutions after Moscow-backed separatists occupied several cities in Eastern Ukraine.
The video boasted of the adverse impacts that the sanctions had on the Russian economy. These include the decline in Russia’s economic growth rate, devaluation of the Russian currency, and the resulting increase in inflation and interest rates.
While it is understandable, and almost palpable, that the sanctions will be detrimental to Russia’s economy, the important question to consider here is whether or not they will get the job done.
The supporters of the sanctions hurl the Iranian example in the face of critics. According to them, the US sanctions on Iran due to its nuclear program brought the country to the negotiating table. As the Iranian people bore the brunt of the economic meltdown, the government agreed to negotiate with the world powers over its nuclear program.
However, it is significant to keep in view the undeniable fact that Russia is no Iran.
A comparative analysis on the western sanctions against Russia and Iran brings a lot of interesting factors into light, three of which are most important to be considered:
The duration of the sanctions: The US imposed sanctions on Iran in 1979 after the hostage crisis. Further sanctions by the international community were imposed in 2005 after Iran resumed its uranium-enrichment program. Compared to Iran, sanctions against Russia are relatively recent and significantly frugal.
Size of the Russian economy: Russia has the eighth largest economy in the world. Its purchasing power parity (PPP) ranks sixth in the global economy. While commenting on the effectiveness of sanctions against thecountry, Morgan Stanley's Russia economics and strategy team stated it is “a large country, with extensive resources, accounting in 2012 for 2.8% of global GDP, 4.7% of international merchandise trade and 13% of internationally traded oil. Typically, sanctions have been applied against much smaller countries, such as Iran, Iraq, Libya and North Korea, with significantly fewer resources".
Dependency on Russian oil: The global dependency on Russian oil is much greater than Iranian oil. This may be one of the important factors rendering the sanctions utterly ineffective. Compared to the daily Russian oil exports of 9 million barrels, the Iranian one million barrels seem almost insignificant. Moreover, the dependency of European Union (EU) on Russian oil makes it even more difficult for European states to impose stringent energy sanctions.
The efficacy of economic sanctions in international relations is subject to much deliberation, particularly when the aggressor state is economically sound.
Sanctions against Russia seem to be driven more by moral obligations rather than a strategic imperative to do so. The increase in inflation rates are nothing new, but still a burden on the backs of the people of Russia. This is even more painful considering the fact that millions of US dollars are still somehow making their way into the pockets of the Russian elite.
As Washington echoes the rhetoric of US policy achievements, the fact still remains that sanctions against Russia are inflicting more harm than good.