Page 74 - TURKRptJun22

74 Opinion
bne June 2022
COMMENT
Sanctions are working, but the West risks isolating Russian reformers instead
of galvanising them
Mark Galeotti
Shortly after the UK government announced sanctions against Vladimir Putin’s family and financial network, Russia’s Ministry of Foreign Affairs advised citizens
to avoid travelling to Britain.
The official evidence proffered by the Russian government to illustrate the UK’s “unfriendly attitude towards our country” is a delay in issuing visas to Russian citizens. But critics say that the move was actually a direct response to the personal sanctions against Russia’s leader.
If this is true, it is a puzzling and disproportionate reaction, but it also indicates that sanctions are working.
Different types of sanctions
Before Russia invaded Ukraine, UK Foreign Secretary Liz Truss vowed that any incursion into Ukrainian territory would be met with “the toughest sanctions regime against Russia... ever”. She didn’t disappoint. Since the war began on February 24, Russia has been hit with successive waves of co-ordinated sanctions from the US, EU, UK and their allies. It has even usurped Iran’s title as the most sanctioned country in the world.
Whereas the sanctions imposed in the wake of Russia’s annexation of Crimea in 2014 were widely viewed as feeble and lax, the current sanctions programme has been swift, severe and relatively comprehensive.
Sanctions have targeted Russia’s elite and the government’s ability to fund and supply the military. Exports of dual-use goods which be used by Russia’s military have been banned by the US, EU and UK, as has all business with state- supported weapons manufacturers. Japan and the EU will also stop exporting high-tech components such as advanced semiconductors to Russia.
Other sanctions are designed to “constrict Russia’s economy”, in the words of US Treasury Secretary Janet Yellen. Freezing half of the $630bn foreign currency reserves held by the Central Bank of Russia (CBR) was one such measure, causing the ruble to plummet by 22% before the CBR intervened and imposed tight currency controls.
The total value of goods exports to Russia from China, Korea,
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Japan, Turkey, France, Germany and the US was down by nearly 40% year on year in March, according to the Bank of Finland Institute for Emerging Technologies. Before the war, those countries provided around half of Russian goods imports.
And Russia has also been largely cut off from western financial markets, with most major banks removed from financial messaging system SWIFT and excluded from western financial systems.
As confidence in Russia’s economy and its future flags, so does support for Russia’s war with Ukraine, which dropped by 7% in April, according to polling by Levada Centre.
Some sanctions are More Equal than Others
When it comes to personal sanctions, however, the West seems to have dropped the ball. Individuals sanctioned since the
“Whereas the sanctions imposed in the wake of Russia’s annexation of Crimea in 2014 were widely viewed as feeble and lax, the current sanctions programme has been swift, severe and relatively comprehensive.”
start of the war with Ukraine can broadly be arranged into two categories. The first group consists of oligarchs and the bosses of state companies; the second group is more complex, comprising mostly of executives and founders of modern, private companies.
The former are clearly beneficiaries and facilitators of the regime which is currently waging war on Ukraine – the likes
of Abramovich – but they remain underrepresented on the sanctions lists. Only nine of Russia’s 100 wealthiest individuals have been sanctioned by the US, EU and UK. Vladimir Potanin, Russia’s second-richest man, according to Forbes, has not been sanctioned by any of the three jurisdictions.