How to rethink Russia sanctions
Since 2012, Russia has become subject of ever more Western sanctions. Some have been unilateral U.S. sanctions, while Western allies have joined in others. Currently, the United States has about 15 different sanctions programs for Russia, and several others have been proposed. Sensibly, the Biden administration has called for a review of U.S. Russia sanctions.
Sanctions should be effective. They should deter, punish and hopefully reverse bad behavior. Narrowly targeted and clearly defined sanctions are usually more effective than broad sanctions that, for example, aim at regime change. The more countries that participate, the more effective sanctions tend to be. Therefore, the Biden administration is right in its intent to return to far-reaching coordination with European allies in its Russia sanctions.
The first American sanctions on Russia after the Cold War was the Sergei Magnitsky Rule of Law Accountability Act of 2012. It targets violators of human rights and corruption in Russia. Over 50
Russian officials and private helpers and some entities have been sanctioned, according to this law. The acts of these culprits are illegal according to Russian law, but the Kremlin defends its criminal officials and is upset over the Magnitsky sanctions, which vouches for their efficacy
The Global Magnitsky Human Rights Accountability Act followed, applying the same principles globally, targeting corrupt and tyrannic top officials and tycoons. The two Magnitsky Acts seem ideal forms of sanctions. They have become popular with the NGO community, while being feared by big crooks. The United States should sanction the seven top officials and tycoons that Russian opposition leader Alexei Navalny has proposed.
Another group of sanctions concerns other countries, notably Iran, Syria, North Korea and Venezuela. Often, Russian companies, state- owned or private, are involved in these illicit operations, but these sanctions programs do not belong to a Russia sanctions discussion.
The two big U.S. sanctions programs are linked to Russian aggression in Ukraine, first towards the Russian occupation of Crimea in February-March 2014 and then against the Russian military aggression in eastern Ukraine from July 2014. Both have been coordinated with the EU and some other allies, and they are being maintained and gradually updated.
The U.S. and EU sanctions on Crimea since March 2014 are straightforward: Sanction all the main political culprits and companies that do significant business with Crimea to maximize the cost to Russia of its occupation of Crimea. This is a sensible and well-functioning sanctions program that should be maintained and policed. The United States also sanctioned Putin's old business friends from St. Petersburg, who pursue dubious business with him. Putin complained loudly how unfair that was, showing that these sanctions hit hard.
In July 2014, Russia sent its special forces into Ukraine, as the East Ukrainian rebels were collapsing militarily. On July 16, the United States responded with new far-reaching sanctions. Two weeks later the EU followed suit. Apart from applying to the people and entities responsible, they included sectoral sanctions on finance, oil technology and defense technology.
The financial sanctions had great obvious impact, forcing Russia to pay back its foreign credits. Its total foreign debt shrank from $729 billion at the end of 2013 to $470 billion at the end of 2020, while other emerging economies attracted more foreign credits. This partly explains why Russia's GDP has not grown since 2014. These sanctions are targeted and work as intended. They can easily be expanded. The United States and the EU should threaten to do so in a specified fashion unless Russia withdraws from eastern Ukraine.
In 2017, after Donald Trump had become president, the U.S. Congress adopted the Combating American Adversaries Through Sanctions Act (CAATSA) with overwhelming majority support. It wanted to defend the U.S. sanctions against Trump, who opposed them and praised Russian President Vladimir Putin. The most exciting section in this law prescribed the sanctioning of oligarchs close to the Kremlin.
The Trump administration hesitated, but by April 2018 the political embarrassment became too great, so it sanctioned seven major Russian oligarchs. For the first time, Moscow was shocked, and the stock exchange fell by 10 percent in one day.