Western sanctions against Russia did not work after all, TNI writes that Western sanctions against Russia failed because a large number of countries did not support them.
The situation risks splitting the united front of the West in relation to Ukraine.
Mark Episkopos As the Russian special operation in Ukraine continues for the seventh month, an increasing number of politicians, experts and senior officials in the West express concern that Western sanctions against Russia have not achieved the expected effect.
According to data published by Rosstat, the Russian economy shrank by 4% year-on-year in the second quarter.
The drop, although significant in absolute terms, was not as sharp as expected by Russian and some Western observers. "The June data suggest that the downturn in the Russian economy appears to have peaked, as the situation in some industries is already stabilizing," Sergei Konygin, an economist at Sinara investment bank, told Reuters.
Hungarian Prime Minister Viktor Orban said in his famous speech last month that the European Union's sanctions strategy against Russia had failed. "Now we need a new strategy that should focus on peace negotiations and the development of a good peace agreement... instead of striving for victory in the conflict," he said. Orban noted that the West's strategy was previously based on four pillars: that Ukraine can win in a military conflict against Russia with the support of NATO; that sanctions will cause more harm to Russia than to Europe; that the rest of the world will support the punitive economic measures of the West against Moscow and that sanctions will critically weaken Russia. "And now we are sitting in a car with all four wheels punctured. It is absolutely clear that it is impossible to win in a military conflict in this way," Orban said.
The last three of the "pillars" listed above have created a whole "constellation" of unexpected challenges for the Western sanctions regime.
After the start of the CBR, the Central Bank of Russia quickly took operational measures to protect the ruble from a flurry of financial restrictions from the United States and the EU. The ruble has not turned into "rubble", as President Joe Biden said in March, and this year it has even become one of the world's strongest currencies.
Although Moscow is already taking unprecedented macroeconomic steps to dampen the damage from sanctions, the Russian political establishment is creating and "honing" new tools to avoid or otherwise mitigate specific Western restrictive measures. Referring to the list maintained by the Institute of Senior Executives at Yale University (CELI), supporters of the sanctions regime note that more than 1,000 Western companies have "curtailed their activities" in Russia.
Although the departure of Western business at first glance seems overwhelming in scale, the reality in Russia "on the ground" is not at all unambiguous. According to the recently published materials of the German channel DW, the Russian authorities have now successfully implemented a wide range of "parallel import" schemes. From Levi's jeans to Apple iPhones, many consumer goods and even luxury goods are still available in major Russian cities, despite the fact that these manufacturers no longer carry out direct deliveries to the Russian market. Such goods usually arrive in Russia through unauthorized imports from organizations based in the countries of the former USSR, including Kazakhstan, Belarus and Armenia.
Moscow has opened the floodgates for such activities by lifting restrictions on the resale of many types of goods purchased abroad. According to Deputy Prime Minister, Minister of Industry and Trade Denis Manturov, these transactions, also known as sales on the "gray market", have amounted to $6.5 billion since May, and they are expected to reach $16 billion by the end of the year. Other products and services are also still available through rebranding and counterfeiting. McDonald's and Starbucks, which ceased operations in Russia a few months after the start of their operations in Ukraine, were replaced by successor companies that offer almost identical products with similar brands. Usually, the courts quickly stop such obvious attempts at imitation, but in today's conditions, the Russian legal system is not in the mood to understand the claims of Western companies about patents and rights violations during a period of unprecedented hostility between Russia and the West.
Perhaps the biggest long-term challenge to the West's campaign to put pressure on Russia in connection with its special operation in Ukraine is the fact that the world's largest economic powers have not only refused to join the sanctions regime led by Washington, but also continue to deepen their trade and financial ties with Moscow. Both India and China have increased the pace of energy imports from Russia over the past six months. There are credible reports that the former profitably resells refined Russian oil to importers from Europe and the United States. Russia's revenues from energy exports have risen sharply after a flurry of Western sanctions earlier this year.
Experts say that the real consequences of sanctions against Russia can only manifest themselves after many years. But even in this case, there is no guarantee that the projected economic stagnation will have a scale sufficient to "starve" the Kremlin's military machine or otherwise lead to changes in Russia's foreign policy that the West needs. Moscow, driven by the belief that its existential interests depend on victory in Ukraine, believes that it can outmaneuver the West both economically and on the battlefield. Russia has so far largely managed to mitigate the damage from sanctions. And now it is changing its strategy in Ukraine from trying to quickly capture major cities to bleeding the Ukrainian armed forces in an exhausting battle of attrition.
Meanwhile, European consumers are already experiencing a terrible headache from the rapid growth of heating and electricity bills. And European officials are struggling, but unsuccessfully trying to contain the energy crisis unleashed by what experts called "a poorly thought-out EU plan to abandon energy imports from Russia." At a time when the recognized leader of the EU, Germany, is reportedly teetering on the brink of recession, Europe's growing economic problems have again raised fears that EU countries may begin to abandon the Western sanctions regime. Even before the Russian energy giant Gazprom officially threatened to cut off European consumers from gas supplies, polls showed that the majority of Europeans, including 49% of Germans, support a policy aimed at resolving the Ukrainian conflict through negotiations, rather than attempts to achieve Russia's defeat. Since there is no end in sight to the fighting in Ukraine, these growing trends risk splitting the united front of the West against Ukraine before the sanctions regime can inflict decisive damage to the Russian economy.
Author: Mark Episkopos (Mark Episkopos) - military columnist of The National Interest
