The economic sanctions that the West has imposed on Russia have been unprecedented in their speed, scale, and scope. Within just a week of Russian President Vladimir Putin’s attack on Ukraine in February, the United States and its allies prohibited their people and companies from doing business with the Central Bank of Russia, the largest entity targeted since U.S. sanctions against Japan before Pearl Harbor. They also levied an array of other penalties, including sanctions on state-owned Russian banks and controls on critical technology exports to Russia. By any measure, the West delivered on the “swift and severe consequences” that U.S. President Joe Biden had threatened before the invasion.
But these sanctions are not yet comprehensive, nor are they imposing enough economic costs to have any hope of changing Russia’s short-term calculus. Just one of Russia’s five biggest banks, VTB, is under full blocking sanctions, which freeze its assets and ban U.S. firms and individuals from transacting with it, and is cut off from the SWIFT interbank messaging service. Outside the financial sector, none of Russia’s biggest state-owned enterprises—such as the oil giant Rosneft, the gas behemoth Gazprom, and the defense-industrial conglomerate Rostec—are under full blocking sanctions. And Russia’s oil and gas sales—the lifeblood of Putin’s economy, accounting for half of the country’s export revenues and roughly 40 percent of its budget—remain largely untouched.
The only way to keep the pressure on Putin is to ratchet up sanctions.
Claims that Russia is the world’s most sanctioned country—based on simply counting the number of individual targets—are misleading. Compare the penalties applied to Russia with those enforced on Iran. Every major Iranian bank and state-owned enterprise is under full blocking sanctions. The United States maintains a complete financial and trade embargo on Iran. And Washington has spearheaded a global campaign against Iran’s oil exports, backed with the threat of secondary sanctions—penalties on third parties that transact with Iran. This international effort has devastated Iran’s oil sales.
As the horrific scale of Russia’s atrocities in Ukraine, including the reported massacre of civilians in the Kyiv suburb of Bucha, comes to light, the gaps in the sanctions that permit ongoing business with Russia are becoming hard to justify. Some argue that it’s important to keep sanctions arrows in the quiver so that they can be used to deter further Russian aggression. But Russia is already bombarding Ukrainian cities, and there’s no evidence that the prospect of harsher sanctions is holding Putin back. With the gaps in sanctions that remain, Putin earns roughly $1 billion each day selling energy. Russia is also finding ways to adjust to the initial rounds of sanctions, so new measures are needed to keep up the pressure.
Read the full article from Foreign Affairs.
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