New Anti-Russian Sanctions: US, UK, and Russian Risk Analysis

New sanctions are due to be imposed at the end of May. But will they work? We talk to the experts   

Anti-Russian risk and SWOT analysis’ have been largely lacking over the past twelve months with political desires leading an uneven charge at Moscow with apparent backfiring along the way. But right now, the European Union and the United States are preparing another round of new sanctions against Russia, and possibly Central Asian nations. Their goal will be to solve the problem of circumventing previously imposed sanctions. Among the proposals under discussion is a ban on the transit of “many goods” through the Russian territory, as well as sanctions against shipping vessels that disable navigation systems. The new measures will be made public during the G7 leaders’ meeting at the end of May. We have collected analytical reviews on the effect of Western sanctions.

The impact of sanctions will gradually weaken over time, according to an analysis by the UK based Economics Observatory. “The history of sanctions is exactly this: they can be effective in the short term, but in the long term this effectiveness is reduced,” they note. In addition, anti-Russian sanctions have several directions of impact on the Russian economy: a decrease in foreign investment, a freeze of foreign assets of Russian companies and the departure of specialists, however, the economic situation in Russia will improve, albeit slowly, as supply chains are reoriented to other markets, especially in Asia.

Sanctions against Russia have reached their limit, according to an analysis by the American company Geopolitical Futures. “Kyiv wants more Western sanctions against Russia, but there are signs that the effectiveness of the sanctions campaign is approaching its limit. In early March, the European Union imposed its 10th round of sanctions against Russia, but numerous European businesses are still looking for ways to do business with the country. The most important example concerns oil. Europe continues to buy Russian oil, but it does so through intermediaries such as India, which exports 360,000 barrels a day to the continent. Even the International Monetary Fund said that after a sharp fall in the second quarter of 2022, the Russian economy managed to recover in the second half of the year. This suggests that the Russian economy is weathering the sanctions better than most observers expected.

Stanford Universities International Working Group on Russian Sanctions has released Action Plan 2.0, which sets out a roadmap for developing sanctions policy and new actions for 2023. “This new document sets out many new sanctions that should and can be imposed on Russia. The document includes sections: (1) tougher sanctions on oil and energy; (2) tightening sanctions on trade in non-energy goods; (3) increased military sanctions; (4) tougher technology sanctions; (5) tightening financial sanctions; (6) confiscation of Russian assets; (7) tougher individual sanctions; (8) Declaring Russia a State Sponsor of Terrorism; (9) tightening of information disclosure requirements; (10) Support for the withdrawal of business from Russia; (11) Strengthening law enforcement; and (12) Expanding the sanctions coalition,” said former US Ambassador to Russia Michael McFaul. His message was published by the Hoover Institution.

Sanctions have only a gradual impact on a target’s access to goods and capital, and the cost of countermeasures can be very high, Jeffrey J. Schott, senior fellow at the Washington-based Peterson Institute for International Economics, stated. “The cost of countermeasures imposed by a major target power in response to initial sanctions against it can be substantial, as Russia showed by blocking Europe’s access to its oil and gas exports. Such responses, targeting G7 consumers and industries, are designed to undermine domestic political support for keeping sanctions in place. Western policymakers need to offset these costs through domestic support or tax breaks in order to sustain political support for sanctions over time. Maintaining coherent and coordinated sanctions against the target country is critical to the effectiveness and longevity of the policy and requires continued cooperation to align the strategic interests and priorities of the G7 countries, as well as contingency planning for the future.”

Oil exports from Russia continue to grow despite sanctions, said Igbal Guliyev, deputy director of the International Institute for Energy Policy and Diplomacy at Russia’s MGIMO. “Western media are actively discussing the growth of tanker deliveries of Russian oil; at the end of April, the volumes exceeded 4 million bpd. The US and Europe are dissatisfied with the stability of exports from Russia. The adopted sanctions do not have the desired effect. China and India have increased imports from Russia to record levels, and Turkey is also showing rapid growth. The volume of Russian oil supplies to India exceeded the combined imports from Saudi Arabia and Iraq. India is already one of the key suppliers of diesel to Europe (which it receives by processing Russian oil). It is possible that India will soon overtake Saudi Arabia itself in the supply of petroleum products to Europe,” Guliyev noted.

Source: The Centre of Political Conjuncture

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