The ongoing war in Ukraine is heading into its second month, with Russian forces largely stalled but still causing massive destruction. Other countries including the U.S. have avoided getting involved militarily, but nations around the world have imposed massive economic sanctions on Russia, in an attempt to pressure them to back off or make it financially difficult for them to press forward.

To what extent are those sanctions actually working?

97-9 The Hill’s Aaron Keck spoke recently with Navin Bapat, the Dowd Professor of Peace and War in Political Science at UNC and the chair of UNC’s Curriculum of Peace, War, and Defense. The author of Monsters to Destroy: Understanding the War on Terror, Bapat has also published numerous papers on the impact of economic sanctions.

Listen to their conversation.

 

Keck: First of all, your thoughts on the Ukraine situation in general and the way that it’s transpired.

Bapat: I’d say that the main thing to focus on is the tragedy of it. It is certainly something that is difficult to watch and certainly something that’s difficult to bear for the people that are going through it. And the tragic part of it, I think, shouldn’t be lost. It’s easy to forget that – at least from my perspective, when we talk about these things theoretically, and talk about these things in terms of data and numbers – but it is a human tragedy. So I think that’s something that’s not to be lost.

Keck: What do we know, what have you learned in your research about the impact of economic sanctions?

Bapat: Economic sanctions can have a wide variety of effects depending on what type of sanctions are used. So some sanctions are really (just) symbolic, and (other) sanctions have deep effects. In particular, American sanctions, given the centrality of the US dollar to the financial system, and given that the US now has the ability to track transactions in dollars at a very high level – those can be quite significant in introducing political risk, which undermines the ability of firms, states, (and) individuals to engage in transactions. And as a result of that, they tend to not engage in those transactions, which can have crippling effects on multiple economies, if they’re enforced to a very high level.

Keck: One of the big things that the Biden administration is focused on – I think in contrast to the Trump administration – is making it a point to be as multilateral as possible, versus acting unilaterally. So you saw Biden and administration officials spending several months building and rebuilding those relationships with other countries, so that when the sanctions came, they came from the US and the UK and France and Germany and all these other countries. To what extent does that add on to the impact?

Bapat: I think that’s significant. Based on my own research, multilateral sanctions tend to produce success at a higher rate than unilateral sanctions. And when I say success, that means (they) lead to a negotiated settlement or some form of capitulation. Usually it’s a negotiated settlement. So multilateral ones tend to work a lot better than unilateral ones. And if you think about why, it makes sense. If a firm is doing business in the United States with Russia and the US imposes sanctions, they can move operations around, they can move dollars around, they can try to use banks in other states or other financial institutions. But if (sanctions) are multilateral, that becomes much harder to do.

Keck: Just in preparation for this conversation, I was thinking about the different ways in which sanctions could be effective. And once you start listing those, there’s a whole bunch of possibilities. They could be effective just (in the sense of being) punitive against bad actors. It could be incentivizing people to act in ways that you want. It could be a deterrent to other potential bad actors to not do the same thing down the road. Or it could be trying to prevent – in this case Russia – to thwart their plans or to make it more difficult for them to do what they’re trying to do in Ukraine. And those are just four that I listed off the top of my head. So what are we going for, in terms of the sanctions that you’re seeing the US and other countries imposing on Russia now? And to what extent do you think those sanctions are going to be effective at doing that?

Bapat: I think that’s a great question. One of the first questions you should ask, when you look at whether or not sanctions work is, what do you want them to do? In this case, I think the goal is to try to make it difficult for Russia to prosecute its military operation in Ukraine. And they are doing that. They are making it very difficult for states to do business with Russia. They’re making it difficult for firms to do business with Russia. And if that’s the case, that’s going to (make it) difficult for Russia to attract capital in. And Russia has a limited amount of reserves that they can use to finance their operations, and some of them are no longer accessible due to sanctions. So at some point, in theory, Russia may start to run out of money.

Now, the sanctions are limited in that they don’t cover oil transactions, and (also) if some states don’t comply – (like) this recent information that China may be seeking to engage in military-to-military exchanges with Russia and sell equipment to them. So if that doesn’t work, they can still pull some revenue in – but sanctions make the rate at which you’re pulling revenue in a lot slower, just because they’re introducing this political risk. So in theory, if that works, at some point, Russia runs out of money and can’t finance the operation anymore – in which case they would have to sue for peace of some sort.

Keck: Do you ever see sanctions working as a deterrent on others? I think one of the things that people were concerned about initially was, oh, if Russia succeeds at this, then China’s going to start looking at Taiwan. Is what’s happened a strong enough signal to China, if they were thinking along those lines, to say, don’t do that or else all this will happen?

Bapat: I think this is a very significant signal, because these sanctions are very comprehensive. They’re very broad based, they’re multilateral, et cetera. And one of the things that is, I don’t think, appreciated about sanctions is that if we look at the data, sanctions alone don’t seem to work, but it’s because we’re only looking at the cases where they’re imposed. If we think about the cases where the threat of sanctions exist, that can actually be significant in deterring states from engaging in particular types of offensive behavior. So states don’t just set off nukes every time they want, because they know that that will likely lead to some form of sanctions. So the threat aspect of it is, I think, significant. And in China’s case, I think they have observed the significant response of the United States and its European allies to Russian behavior. And I would have to imagine that that would factor into their calculus to make it a less palatable option to engage in aggression against Taiwan.

Keck: But you also just mentioned in there that sanctions aren’t always, or aren’t often effective. So when are sanctions ineffective?

Bapat: So sanctions tend to be ineffective when they’re not enforced. There are many sanctions that are created in law, but not typically enforced. They don’t tend to be as effective when they’re unilateral, (and) they don’t tend to be as effective when there’s a vague thing that they’re asking for. So if I impose sanctions to tell you to “improve your human rights record,” that doesn’t really have any significant meaning. That could mean a whole bunch of things. So there’s a couple of different conditions where sanctions are less likely to succeed.

(But) increasingly since the financial crisis and since the COVID pandemic, they’ve actually become more effective, given that the US has more data on banking transactions, and they have the ability to pinpoint individuals that are engaging in offensive behaviors and punish people around them, which deters anyone from dealing with them. So sanctions have gotten more effective in terms of imposing punitive costs, and therefore having a deterrent effect over time.

Keck: So all of that being said, you’re observing the sanctions that have been imposed on Russia. Do you see them as being effective, and to what degree and in what way?

Bapat: I think the effective part is that they’re likely to harm Russia’s ability to prosecute its war. And I think the second-order effect is that will have really significant painful consequences on the Russian population. Again, the goal is to harm Russia’s military ability, but this is a cost that – you know, we’re seeing divestment, we’re seeing firms move out, and the Russian people are going to suffer as a result of that.

What I think it does do is, because it’s slowing the rate at which Russia can pull in revenue, replenishing the (military) operation won’t necessarily go as fast. So if the operation gets bogged down, it’s gonna be difficult for Russia to sustain it. I think the concern there is that Mr. Putin doesn’t seem to be able to accept anything less than some form of victory, so he will likely become more indiscriminate in his violence. So in that sense, the harming of the revenue streams might actually lead Mr. Putin to become more violent, which is, I think, a significant concern.

Keck: So if you’re standing in the Oval Office right now and you’ve got the President’s ear, what’s your advice?

Bapat: I think actually the president has done a very good job of mobilizing this coalition. I don’t think the president has any interest in getting directly involved in the conflict, because that could potentially mean Armageddon. So I think that’s being avoided. Given that, this is imposing significant cost. And I think the hope is that Mr Putin will, if he’s running out of money, he hopefully will try to gain some off ramp and engage in some negotiation where he can get a face-saving solution and the Ukrainians can get a face-saving solution, which is in a sense (to) maintain their sovereignty. So I think that the goal is to try to push Mr. Putin to some settlement.

Keck: Do you see that as a likely outcome?

Bapat: Uh, I’m not really sure. I have heard that there were some talks between the Russians and the Ukrainians that went more positively than before. I’m hoping that can build into something. But again, I am concerned that in the interim, Mr. Putin will become more desperate and start to resort to more indiscriminate attacks, which I think that’s the real tragedy of this.

Chapelboro.com does not charge subscription fees, and you can directly support our efforts in local journalism here. Want more of what you see on Chapelboro? Let us bring free local news and community information to you by signing up for our biweekly newsletter.

Related Stories
None