Russia vs NATO: What Can Economic Sanctions Achieve?

Writing about web page https://www.youtube.com/watch?v=BqfHEedYv2c

Lukas Smith of the Vienna-based International Center for Advanced and Comparative EU-Russia-NIS Research (ICEUR-Vienna) interviewed me the other day about the present tensions focused on Ukraine (12 minutes 40 seconds here). Part of the interview was focused on what economic sanctions -- or the threat of them -- can achieve in managing the confrontation. Afterwards I wrote up my notes as follows.

In the context of the present dispute between Russia and NATO over the status of Ukraine and the stationing of NATO forces in Eastern Europe, I am in favour of the use of further economic sanctions to limit Russia's aggression. Promised sanctions can act as a threat and a deterrent, and they can be a countermeasure in the event of conflict.

But . . . there's a large "but."

I'm concerned that the public, and maybe politicians too, often lack clarity about what sanctions can achieve and what are the risks. When we contemplate sanctions, the starting point should always be: What is the adversary’s best response?

Too often we think: Economic sanctions will impose an unaffordable burden. The adversary will be deterred – end of story. In practice economic sanctions take time to work and can often be predicted. The adversary always has ways to work around the sanctions or to neutralize them. It’s true that the countermeasures may be costly. But, all too often, the costs of the countermeasures turn out to be quite affordable.

One way to think about this is that sanctions have an immediate effect and an ultimate effect. And the ultimate impact of sanctions is never the immediate impact as it seems at first sight. The ultimate impact will be to force the adversary to pay the cost of countermeasures, and generally the ultimate costs will be smaller than the immediate costs appear.

Another factor is that the adversary might become more ready to pay the costs than appeared beforehand. The reason is that an attack on the adversary’s economy is still an attack, and it is usually experienced as warfare. In the short run, at least, warfare tends to stiffen national feeling and makes people more ready to pay the price of war, even if they were unready beforehand. You can see this today. Because Russia has threatened NATO, the NATO countries today are more unified and more ready for war than they were yesterday. The question is: is Russia also becoming more ready for war?

What are the countermeasures to Western sanctions available to Russia? Russia’s leaders can make the Russian economy less dependent on the West for markets, currencies, payment systems, and internet technologies. They can strengthen ties with China. They can also wage economic warfare against us. They can frighten foreign investors out of Ukraine. They can blockade Ukraine on land and sea, and they can throttle back gas supplies to the EU. Most of these things are already happening or beginning to happen.

But Russia’s countermeasures might not be confined to the economy. There is also a military response: to escalate violence. To escalate, not de-escalate. History suggests a number of examples, but the clearest case might well be found in 1940.

In 1940, the United States wanted to stop Japan’s war of aggression and conquest in China. America imposed oil sanctions on Japan, which were expected to be extremely costly to the Japanese economy. The Japanese response is instructive. Japan’s leaders did not say to each other: “We cannot afford this. We must either wait for our war capability to be ground down, or we must give up now.” Instead, they launched a surprise attack on the United States in 1941 at Pearl Harbor. They knew that this was an outrageous gamble, and in fact the gamble failed, because the United States went on to win the war in the Pacific. The point is that Japan’s leaders preferred the gamble to the alternative, which was certain defeat.

As I said before, in the present context, I favour economic sanctions against Russia, especially if a wider war is realized. But we should understand that economic sanctions are not a cheap way to avoid military conflict. They are not a substitute for military force. They are a phase of conflict, not an alternative to conflict.

In particular, economic sanctions can contribute to deterrence only if they are combined with a strong military defence. If we wish to achieve our foreign goals without violence, strong defences are also necessary.

If we signal to the adversary, which today is Russia, that they are strong militarily but we are strong economically, the signal can have an unfortunate effect. We might make Russia’s leaders more likely to turn to their strength, which is the capacity to escalate the confrontation by violent means.

In short, the threat of sanctions has to be complemented by strong defences. Without those strong defences, the effect of sanctions can be exactly opposite to what what we wanted in the first place.

Mark Harrison : 16 Feb 2022 11:12 |  Tags: Economics Politics Russia Ukraine |  Comments (0) |  Report a problem