January 03, 2019

How to Hit Russia Where It Hurts

A Long-Term Strategy to Ramp Up Economic Pressure

By Peter Harrell

Russia’s 2014 annexation of Crimea, its war in eastern Ukraine, its interference in the 2016 U.S. presidential election, and other aggressive acts against the United States and its allies demand a strong Western response. For the past four years, that response has been dominated by sanctions and other coercive economic measures. U.S. and European officials have hoped that the economic measures would not only exact a cost for such actions but also deter the Kremlin from escalating its assault on American and European interests.

The economic pressure has certainly had an effect. The IMF estimated that the sanctions linked to the 2014 invasion of Ukraine cost Russia 1 to 1.5 percent of its GDP by mid-2015. The sanctions also hurt the Russian treasury’s bottom line, since Russia had to make up for lost Western capital by spending billions of dollars to prop up large companies that depended on Western funds. The more recent sanctions announced in April 2018 in response to Russia’s interference in the U.S. election rattled Russian financial markets and put pressure on the value of the ruble. Specific people and companies have also felt the squeeze: the net worth of Oleg Deripaska, the pro-Putin oligarch, for example, has tumbled because of U.S. sanctions.

And yet sanctions have done little to change Moscow’s ways. Not only has Russia refused to make concessions on its military intervention in Ukraine but, in November 2018, it seized three Ukrainian naval ships transiting the Kerch Strait. According to a recent report by U.S. Director of National Intelligence Dan Coats, sanctions did not stop Russia from interfering in the U.S. midterm elections in 2018, and, indeed, Coats said that China and Iran tried to interfere as well. Nor have they dissuaded Moscow from abetting North Korea’s efforts to bypass international sanctions, propping up Syrian President Bashar al-Assad, or using a military-grade nerve agent in the Salisbury attack on Sergei Skripal, a Russian exile living in the United Kingdom.

Read the full article and more in Foreign Affairs.

  • Reports
    • January 28, 2020
    Rising to the China Challenge

    An independent assessment for Congress as mandated by the FY2019 National Defense Authorization Act....

    By Ely Ratner, Daniel Kliman, Susanna V. Blume, ​Rush Doshi, Chris Dougherty, Richard Fontaine, Peter Harrell, Martijn Rasser, Elizabeth Rosenberg, Eric Sayers, Daleep Singh, Paul Scharre, Loren DeJonge Schulman, ​Neil Bhatiya, Ashley Feng, Joshua Fitt, Megan Lamberth, Kristine Lee & Ainikki Riikonen

  • Commentary
    • Foreign Policy
    • January 14, 2020
    Trump Has Made Sanctions a Path to Strikes

    U.S. President Donald Trump’s decision to kill the Iranian general Qassem Suleimani, the architect of Iran’s political and military influence in the Middle East, and the Irani...

    By Elizabeth Rosenberg & ​Neil Bhatiya

  • Commentary
    • Forbes
    • January 14, 2020
    Watch Out for Iranian Info Wars Funded By Crypto

    With tensions rising between Washington and Tehran in the wake of the U.S. killing of Iranian general Qasim Soleimani earlier this month, U.S. officials should expect more Ira...

    By Yaya J. Fanusie

  • Video
    • January 8, 2020
    Iran attacks U.S. troops in Iraq base

    Neil Bhatiya joins Bloomberg's Daybreak Asia by phone to discuss the latest developments in heightened tensions between the United States and Iran. Watch the full conversatio...

    By ​Neil Bhatiya

View All Reports View All Articles & Multimedia