“API Geoeconomic Briefing” is a weekly analysis of significant geopolitical and geoeconomic developments that precede the post-pandemic world. The briefing is written by experts at Asia Pacific Initiative (API) and includes an assessment of burgeoning trends in international politics and economics and the possible impact on Japan’s national interests and strategic response. (Editor-in-chief: Dr. HOSOYA Yuichi, Research Director, API; Professor, Faculty of Law, Keio University; Visiting Fellow, Downing College, University of Cambridge)

This article was posted to the Japan Times on July 26, 2022:

https://www.japantimes.co.jp/opinion/2022/07/26/commentary/world-commentary/russia-ukraine-international-order-part-2/

API Geoeconomic Briefing

July 26, 2022

Why sanctions are failing to stop Russia’s attack on Ukraine

KS: In the previous installment, we discussed the characteristics of the Russia-Ukraine war and the role of the United Nations, which is said to be dysfunctional. All three of us came to the conclusion that the current U.N. is insufficient to create a world without war. In such a situation, the only thing that can stop the war is the power of deterrence.

But some say deterrence didn’t serve to stop Russia’s invasion of Ukraine.

Before the war began, the United States and other Western countries had made clear that they would not send troops to Ukraine. They were also clearly saying that they would impose economic sanctions if a war broke out, but that didn’t deter Russia either.

Failed deterrence

In that sense, we can say that economic sanctions didn’t work as a deterrence, but on the other hand, Russia seems overly afraid of interventions by the U.S. or NATO and is trying to avoid them.

At the same time, the U.S. seems to be avoiding as much as possible offering military assistance to Ukraine that could be taken as the U.S. attacking Russia. For instance, the U.S. has not provided weapons such as long-range missiles that allow Ukraine to attack Russian territories.

To that extent, we can see that both Washington and Moscow are acting in a way to avoid further escalation.

People may have different views on whether the deterrence worked to some extent or didn’t work at all, but deterrence should play an important role when international law or international institutions are not functioning sufficiently to stop war.

I would like to ask Mr. Jimbo, an expert on strategic issues including deterrence, to give an opinion on how the world will balance the rule of law and deterrence capabilities in the future. What is necessary to make deterrence effective?

KJ: Deterrence functions when you have capabilities and willingness to make others refrain from taking harmful actions against you. However, if the benefits of invasion are greater than the losses from the consequence of the action, it is difficult for deterrence to work.

On the other hand, if a country subject to sanctions recognizes that the losses from sanctions are much greater than the benefits, we can say deterrence is more likely to work.

However, calculations on the extent of net benefits and loss differ depending on the values of a country subject to sanctions.

As for Russia’s invasion of Ukraine, it is believed that Russia’s freedom of action was enlarged by the fact that Ukraine is not a NATO member and is outside the system of collective defense, and that the U.S. had made clear that it would not intervene militarily.

Moreover, Russia probably had hopes that Ukraine could be seized in a short period of time and underestimated the losses from the invasion. I think this is the reason why deterrence didn’t work to stop the war.

In order to learn a lesson and avoid the same situation occurring again, it is necessary to analyze the reasons why deterrence was not effective and review what could have been done to make it work or whether it would have even been possible to make it work in the first place.

I would argue that it was possible to deter Russia from invading Ukraine.

If the U.S. hinted at the possibility of military interventions and NATO members showed strong solidarity to fight against the invasion, Russia’s calculations might have been different.

The outcome could have been different if they forecast strong balancing acts — including a rise in European countries’ defense spending and more countries making a bid to join NATO — and made efforts beforehand to let Russia recognize the damage economic sanctions would have on its economy.

I know these are what-ifs, and I understand the view that it was practically impossible to make such deterrence work before the invasion took place.

But in order to prevent similar incidents from happening in the future, we must hand down to the future the significant losses and fatal consequences from invasions.

Cautious invasions

YH: I would like to think about this issue from historical perspectives.

Looking back on history, basically there have been no times when complete deterrence existed.

In any period in history, there were people who did unlawful or harmful things, and normally they — be it Nazi leader Adolf Hitler or Russian President Vladimir Putin — were very cautious in the beginning, taking actions little by little, just like when students do bad things at school and their actions escalate if they are not scolded as much as they expected.

In the case of Hitler, Nazi Germany went out of control at an accelerated pace after the United Kingdom and France turned a blind eye to the 1936 remilitarization of the Rhineland — which began when German military forces entered an area that had been given permanently-demilitarized status under the 1925 Locarno Treaties — and to the German annexation of the Sudetenland — an area in western Czechoslovakia inhabited by a large number of ethnic Germans — in 1938 with the aim of dismembering the country.

I believe it becomes possible to guess Putin’s intentions behind Russian military movements in recent years if we compare him with Hitler.

As for the Syrian civil war that started in 2011, U.S. President Barack Obama’s administration said in 2013 that the U.S. would intervene militarily if a “red line” — the use of chemical weapons by Syrian forces — were crossed, but ended up not doing so.

Moreover, when Russia invaded and subsequently annexed the Crimean Peninsula — Ukrainian territory — from 2014 through 2015, the Obama administration avoided military intervention, although it showed a strong stance against Russia’s moves and imposed economic sanctions.

I think this was a kind of an appeasement policy.

The crucial incident was the fall of Kabul in August last year. At that time, U.S. President Joe Biden repeated that his country would not intervene militarily.

The three incidents must have made Putin feel convinced that the U.S. would not intervene militarily in international conflicts.

Just as Hitler began expanding his moves to neighboring countries while checking how the U.K. and France would react and then went out of control after feeling confident that the U.K. would not intervene, repeated nonintervention by Washington in conflicts in various areas led to Putin’s conviction that the U.S. would not intervene militarily in the years to come.

I think such conviction resulted in the latest war.

KS: In the post-Cold War era, the U.S. played a major part in stabilizing global order.

But the U.S. grew increasingly inward-looking since the Obama administration and made clear its policy of nonintervention in resolving international conflicts.

I think it is important to note that such a stance by Washington made Putin escalate his actions.

I also think the effectiveness of deterrence had been affected by Russia’s miscalculation that the Ukrainian government would be toppled swiftly.

Why sanctions don’t work

Deterrence is an issue of calculating gains and losses, so it is extremely important to convey the message that those who violate international rules must pay the price.

In that sense, deterrence could have worked if Russia received a strong enough message about how much damage economic sanctions would have on the country.

Let’s discuss economic sanctions a little more.

We won’t be able to see the realities unless we look at the issues of international order and security not only from militaristic perspectives but also from an economic viewpoint.

Countries around the world are currently invoking a variety of economic sanctions to restrict Russia’s actions. But such sanctions don’t bring about immediate effects, and it is unlikely that the war will end soon.

On the other hand, economic sanctions are a double-edged sword, and those who impose them also suffer losses.

For instance, prices of crude oil and grains are rising sharply. There are factors besides sanctions that triggered the hikes, but it is true that sanctions are spurring further price increases.

Then arises the question of whether it is really possible to stop the war with economic sanctions.

On one hand, can the sanctions cause enough losses for Russia to change its actions and stop the war?

On the other hand, can those invoking the sanctions endure the economic losses resulting from the moves?

Limits to economic measures

YH: Since the Russia-Ukraine war broke out, professor Suzuki has been warning of the danger of depending too much on economic sanctions like a panacea. I think the warning was right.

Because international relations are basically founded on interdependence and self-interest, economic sanctions naturally have their limits.

Historically speaking, the League of Nations tried to cope with the territorial ambitions of Japan and Germany and maintain security only by depending on economic sanctions and international opinion without resorting to military action, but failed to stop those countries from going out of control.

Economic sanctions are, so to speak, an “easy way out” to achieve something while avoiding use of military force and shedding blood.

Because governments decide on policies based on the realities of international politics, which are the interdependence and self-interest of each country, they are reluctant to impose economic sanctions that would cause serious damage to themselves.

No matter how loudly they condemn certain acts, we know from what the League of Nations went through that in reality their economic sanctions are hollow and don’t function well.

KJ: How we evaluate economic sanctions depends on where the objective of the sanctions is set — whether they are aimed at changing Russia’s actions or changing the country’s regime by ousting Putin.

If the current economic sanctions on Russia are targeted at having an effect to the extent of disrupting the running of the country and making Putin recognize that his decision was a failure and that he needs to change his actions, I think it is important to think why the sanctions are not likely to bring about such results.

For instance, the ruble temporarily fell against other currencies but quickly bounced back.

Income from crude oil and natural gas occupies 40% of the Russian government’s revenues, but China and India continue to purchase fuel from Russia and it takes time for European countries to cut Russian supplies, natural gas in particular.

Moreover, since Russia is self-sufficient in crude oil and food, banning exports to Russia does not have that much effect.

According to research on the effectiveness of economic sanctions, out of 115 cases of economic sanctions invoked since the 20th century, only five can be clearly regarded as successful.

One such case is the economic blockade imposed by India against Nepal in 1989 over the latter’s growing closeness with China, which led to Nepal’s democratization.

It is said that there are three conditions for economic sanctions to work.

First, the international community should be working together so as not to create any loopholes.

Second, the country subject to sanctions should be highly dependent on imports, having an economic structure that would suffer damage from the measures.

Third, the country subject to sanctions should be lacking governance over its people’s dissatisfaction.

In addition, economic sanctions will work successfully if those invoking them suffer less damage than the country subject to sanctions, which means they receive less backlash from imposing sanctions.

In that sense, my view is that it is rather difficult, structurally, for economic sanctions on Russia to work.

Effects of economic sanctions

KS: Economic sanctions can be effective if the economy of those invoking sanctions is big and the economy of the country subject to sanctions is small.

The case of India imposing sanctions on Nepal, which Mr. Jimbo mentioned, is a typical example.

While the Nepalese economy depended heavily on the Indian economy, India relied on Nepal only for electricity.

This is true for Japan and North Korea. It is easier for Tokyo to implement sanctions on Pyongyang because Japan would suffer little damage.

This is why economic sanctions tend to be regarded as an “easy way out,” as Mr. Hosoya said.

On the other hand, if the relationship between those invoking sanctions and the country subject to sanctions is relatively equal, the effectiveness of the sanctions will be limited, since those taking the measures cannot avoid suffering a backlash.

It is difficult for them to take decisive actions because that could give rise to dissatisfaction among their people.

But economic sanctions work if a country subject to sanctions has an established system, such as democratic elections, to absorb public dissatisfaction.

A typical example is Iran in 2013. Iran is often considered to be an authoritarian regime where democracy is not functioning, but actually elections are held in the country, which means public dissatisfaction can directly lead to changes in the administration.

At that time, the U.N., the U.S. and others had been imposing economic sanctions on Iran over its nuclear development program. And in the presidential election, incumbent President Mahmoud Ahmadinejad, an anti-American conservative who advocated the program, lost against Hassan Rouhani, who pledged to open the way for lifting of the sanctions, leading to a change of government.

Vice versa, sanctions don’t work so effectively in a country that suppresses people’s dissatisfaction.

Conditions have not been sufficiently met for economic sanctions on Russia to work, considering there are loopholes and its dependence on imports is small.

Particularly, the latest sanctions have been imposed by Western countries and not by the United Nations, so only a little more than 40 countries have joined the move.

In addition to China and India, European countries continue to purchase natural gas from Russia, making it difficult to make Moscow suffer overwhelming pain.

Moreover, although Russia has an election system, it can’t be called a democratic system that absorbs people’s dissatisfaction or reflects their voices.

Because of such factors, I don’t think we can expect economic sanctions to work toward a change of policies or a change of government in Moscow.
 

Funds and bullets

However, I believe there are two economic sanctions that will be effective even in such a situation.

One is financial sanctions that make it difficult for Russia to finance the war.

It might be possible to force the country to change its actions by blocking the means to procure funds to continue the war.

The other is to stop supplies of components for various weapons, including semiconductors.

Regarding semiconductors, China might be able to offer replacements, but Russian weapons such as precision guided munitions are made up of European- or U.S.-made devices and components, so halting supplies of such products can be effective.

This is because it is difficult to quickly change the suppliers of such components or change the weapons themselves, considering the need to train troops. The measure will leave Russia unable to produce missiles and tanks.

Simply put, sanctions that can work to end the war need to create a situation to strip Russia of funds and bullets.

If that works, we can expect Russia’s ability to continue the war to decline.

Certainly Russia has stocks for such products, so the effects won’t come immediately, but I think there is hope.

Disclaimer: The views expressed in this API Geoeconomic Briefing do not necessarily reflect those of the API, the API Institute of Geoeconomic Studies or any other organizations to which the author belongs.