The world watches with bated breath as Russia and Ukraine collide. As Western superpowers and allies are imposing sanctions on Russia in a bid to stop it from invading Ukraine, there is speculation as to whether these will push Russia to cede their attack or whether these will simply not be of any use. This article explores the sanctions that are being imposed by western countries in view of the Russia Ukraine crisis, what these entail and whether these will bring about plausible effects.
Why were sanctions imposed in view of the ongoing Russia Ukraine crisis?
The sanctions that are imposed on a country are aimed at somehow modifying the behaviour of the said country and changing the regimes. While Western allies have been pushing for discourse to come to a peaceful solution, Russia announced a full-scale attack on Ukraine. In response to this, President of the United States Joe Biden said that the US would impose sanctions on Russia that exceed anything they’ve ever done.
The sanctions were put on Russia’s financial institutions, and other enterprises that are in Russian President Vladimir Putin’s control. Other sanctions include those put on the civilian purchases of US goods and products. To affirm that these would indeed have their effect, Biden said “Putin’s aggression against Ukraine will end up costing Russia dearly, economically and strategically. We will make sure of that.”
Biden continued, saying that several other nations had also imposed sanctions and that this would limit the country’s ability to do business. “Putin’s desire to take over Ukraine is a vision that the United States and freedom-loving nations everywhere will oppose with every tool of our considerable power.”
What are some of the sanctions imposed?
Here’s a list of some of the sanctions that have been imposed by the United States on Russia.
High tech imports
The United States produces some of the world’s best technology and curbing Russia’s access to it will be a deterrent to their advances. By not being able to import high technology Russia will face difficulties, especially in its military section. In addition to this, the country’s access to various devices such as smartphones etc. could be hampered.
Restrictions on corporations
Companies supporting the Russian economy have been targeted through sanctions. By doing this, Kremlin will find it tough to generate revenue and thus the Russian economy will be put into a sticky situation.
Sanctions on individuals
Sanctions over individuals essentially mean that the assets of those people in the United States will be frozen and they will be prohibited from making trips to America. “These are people who personally gained from the Kremlin’s policies, and they should share in the pain,” Biden said.
Blocking of banks
Cutting off financial institutions means putting an end to the flow of transactions between the United States and Russia’s economy. The assets of these banks that touch the United States’ financial system will be blocked.
Will the sanctions work to stop the Russia Ukraine crisis?
While the sanctions do seem promising in the sense that they will hamper Russia’s ability to have its economy function well, there are speculations about whether these will work.
In Peter Tchir, head of global macro strategy at New York-based financial firm Academy Securities’ opinion “So far, we’ve seen timid sanctions. Sanctions only work when they force behaviour change, but in Putin’s case they won’t.”
Other experts are of the opinion that sanctions have a history of failure. Steve Hanke, professor of applied economics at Johns Hopkins University says “The record of those actions is that they fail. There are always workarounds. Whoever is imposing the sanctions are viewed as the enemy.”
Are sanctions wise?
Experts say that Europe and Russia are closely joined and thus imposing sanctions on the latter will affect the former too in a big way. Elina Ribakova, deputy chief economist at the Washington-based Institute of International Finance says “In the short and medium-term, it is almost impossible for Europe to phase out Russia’s energy.” This is due to the fact that Europe gets a third of its natural gas from Russia and thus will be deeply impacted if this stops.
While the world is in fact moving to renewable energy, and Europe too is laying a focus on this, phasing in of the new energy is happening at a slower rate than the phasing out.
In addition to this, Russia too needs Europe. As the revenue from energy exports accounts for 40% of the country’s federal budget, if this is lost the economy would be deeply impacted.
While sanctions do put a damper on a country’s economy, with globalisation and the world coming closer, no country is isolated. And this means that the effects of sanctions would not only be seen on the country it is imposed on but the ripples would spread further.