The Utility of Sanctions on Russia

The Biden-Harris administration is prepared—or so it says—to impose additional, broad-reaching, and heavy sanctions on Russia, if the latter follows through on its impending invasion of Ukraine. Russian President Vladimir Putin has made efforts to sanction-proof his nation’s economy:

padding the country’s foreign reserves, buying gold, and pivoting some exports to China.

On the other hand, Biden-Harris threatens those additional sanctions:

Senior administration officials said the US could ban the export to Russia of various products that use microelectronics based on US equipment, software or technology, similar to the US pressure campaign on Chinese telecom giant Huawei Technologies Co. US officials have previously said that measures under consideration also include cutting off Russian banks’ access to the dollar and possible sanctions on Russian energy exports.

Leave aside the question of whether Putin’s moves would work against these new sanctions. Leave aside, also, the delayed effects that even unopposed economic sanctions have before they start to bite and that Putin already will have conquered and occupied Ukraine before those effects begin.

There are problems for Biden-Harris and for Putin regarding the new and improved sanctions.

For Biden-Harris, the problems will center on the porous nature of the sanctions’ imposition. People’s Republic of China President Xi Jinping will enthusiastically move to bypass the sanctions and increase PRC trade with Russia.

Worse will be Europe’s…imperfect…compliance with the sanctions. Germany, in particular, will ignore the sanctions, however secretive it tries to be about it. Germany has moved itself into far too great energy dependency on Russia and will trade for Russian oil and gas quite freely. Additionally, French President Emmanuel Macron has shown himself entirely willing to compromise with Putin on the matter of Ukrainian relationship with Russia and with western Europe and on Russia’s relationship with the European Union. Also, France’s own need for Russian energy, while not as great as Germany’s, is quite significant. Together, these two economies are strong enough to create large holes in the sanctions.

The problem for Putin centers on that PRC move to ignore the sanctions. Putin already has made a critical resource exploitation deal with Xi that allows the PRC to move citizens into central and western Siberia to develop the oil, gas, timber, and metals resources there. That’s a move that tacitly allows the PRC to colonize Siberia, which mainland Chinese governments for centuries have considered Russia to have stolen.

Beyond that, Russia and the PRC have the combined (if heavily weighted to one side) economic power and overall resource self-sufficiency to be independent of the West’s economic regime. However, whether or not they combine efforts that closely, the closer economic ties that Putin will need—and get—from the PRC, pushed by those added Biden-Harris sanctions, will emphasize the relative economic sizes of Russia and the PRC: a GDP of $4.3 trillion in purchasing power parity vs $29.4 trillion. Putin will be running the very serious risk of reducing Russia to the equivalent of satrap of the PRC.

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