Home Argentina economy Europe’s Energy Balance – Project Syndicate

Europe’s Energy Balance – Project Syndicate


Sanctions are an important and powerful weapon, and they put some pressure on the Kremlin. But unless the West uses them wisely, Russian President Vladimir Putin, who seems to believe in his paranoid propaganda and oversees the world’s largest nuclear arsenal, could conclude that his regime has nothing to lose.

MADRID — The gruesome scenes left after Russia’s withdrawal from Bucha, where Ukraine accuses Russian troops of torturing and massacring civilians, have intensified pressure on the West to provide more offensive weapons to Ukraine and for Europe to ban Russian energy imports. But beyond the legitimate question of Europe’s willingness to pay such a high price on behalf of Ukraine lies the stark reality that sanctions are no silver bullet.

Calls for sanctions began long before the invasion. When Russia was massing troops near the Ukrainian border, the Ukrainian government — and some U.S. lawmakers — urged the United States and Europe to impose pre-emptive sanctions and provide Ukraine with stronger security guarantees. But Western leaders hesitatedarguing that sanctions would hamper their ability to reach a diplomatic solution.

Of course, in geopolitics as in life, the hindsight is 20/20: we now know that these diplomatic efforts were in vain. What we don’t know is whether pre-emptive sanctions would have motivated Russian President Vladimir Putin to rethink his plans, especially since the pre-emptive sanctions probably wouldn’t have been as severe as the package of measures imposed after the launch of the invasion by the Kremlin.

This package, after all, is the most comprehensive and coordinated punitive action taken against a major power since World War II. Overcoming initial reservations, the European Union joined the United States in cutting off Russian banks from the arteries of global finance within days. The West also froze a large part of the foreign exchange reserves of the Russian central bank – a unprecedented step this surely triggered a red alert in China, with its $3.25 trillion in official reserves.

At first, the sanctions seemed to have the desired effect. Within a week the ruble had fell by a third against the US dollar. Falling stock prices forced authorities to suspend trading on the Moscow Stock Exchange for almost a month. Russia’s GDP is expected contract by 10 to 15% this year.

But, even as the noose of sanctions continue to to squeeze, the Russian markets seem to be stabilizing. Thanks to vigorous intervention by the authorities, the ruble is now trade close to pre-war levels, and the stock market recouped some losses. With violence showing no signs of abating, Western governments must be clear about what sanctions can and cannot achieve – and how much sacrifice is acceptable.

Sanctions, first used in the Peloponnesian Wars, have been an instrument of foreign policy for around 2,500 years. While their sophistication and complexity have increased over time, the basic mechanic has remained the same: inflict enough economic pain to force the target to change its behavior.

But the most Full analysis of the use of sanctions, conducted by researchers at Drexel University, revealed that the objectives of the sanctions were completely achieved in only 35% of cases. Where sanctions have had an impact, as in South Africa during apartheid, they have been combined with other measures to advance a specific foreign policy objective.

Moreover, even well-targeted sanctions and asset freezes have limited effectiveness against autocracies. Since North Korea for Iran, dictatorial regimes protect themselves and their cronies from economic hardship through convoluted schemes to evade sanctions. Putin’s regime – including his cronies – has proved to be skillful to ensure that the sanctions do not affect them.

Instead, ordinary Russians will pay the price for today’s sanctions. And, contrary to the hopes of some in the West, it is unlikely to lead to fall from power. Dictators are not particularly vulnerable to changes in public opinion. And a revolution does not seem imminent, not least because of the work of growing repression and the powerful propaganda machine of the Kremlin.

By “cancelation“Russian Culture and Editing”unprovoked“attacks on the country’s economy, according to the Kremlin narrative, the West is trying to destroy Russia – just as Putin had long warned. Anyone in Russia who opposes the “special military operation” in Ukraine is a “traitor» or a « gnat », ready to « sell his own mother ».

With no independent media to refute these stories, Russians seem largely convinced. A recent survey by the Levada Center indicates that 83% of Russians approve of Putin’s actions in Ukraine, up from 69% in January – a relevant statistic, complex realities in Russia notwithstanding.

As Putin’s regime has insulated itself from the pain of sanctions, Europe faces high costs of its own. In today’s economically interdependent world, sanctions often involve high costs for both parties. Although Western economies are not particularly dependent on Russia as a whole, Europe depends on it for much of its energy. Thus, while the U.S. Congress voice to ban all Russian energy imports, EU leaders have only targeted russian coalno oil or gas.

A complete ban on Russian energy imports to Europe would undoubtedly increase pressure on the Kremlin. But such a decision should be approached with caution. As German Chancellor Olaf Scholz recently warned, the economic and social costs of a sudden embargo would be enormous. It will take time to wean Europe off Russian natural gas while maintaining European social and economic stability.

Equally important, sanctions are an integral part of a larger negotiation strategy. Once the West has unleashed all of its greatest economic weapons, it will have no leverage. There must be room for escalation in response to Putin’s actions, particularly the deployment of chemical or tactical nuclear weapons.

The West’s arsenal in Ukraine is clearly limited. Sanctions are an important and powerful weapon, and they put some pressure on the Kremlin. But given their limitations – and the costs that must be borne by both the West and ordinary Russians – they must be used wisely. Otherwise, Putin, who seems to believe in his paranoid propaganda and oversees the world’s largest nuclear arsenal, might conclude that he has nothing to lose.