The effect of the sanctions disappointing

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Wolfgang Hansson

The effect of the sanctions disappointing

PUBLISHED: LESS THAN 3 HOURS AGO

This is a commenting text. Analysis and positions are the writer's.

COLUMNISTS

The Russian currency, the ruble, is stronger today than when the war started. No economic collapse in Russia is in sight. Putin has no shortage of money.

The effect of the sanctions against Russia is disappointing.

Not a fiasco but also not the success that many hoped would force Putin to stop fighting.

I'm not surprised.

The sanctions were imposed shortly after the war broke out.

The sanctions were imposed shortly after the war broke out.

Photo: AP

Sanctions against Russia were imposed at almost the same time Putin invaded Ukraine on February 24.

Preparations in the West had been going on for as long as the Russian troops had been amassing on the Ukrainian border.

The measures were presented as the toughest ever directed at a major country. Among other things, a number of Russian banks were excluded from the international payment system Swift and half of the Russian currency reserve was frozen.

In economic terms, it was like dropping an atomic bomb on Russia.

The general consensus among economic experts was that the impact would be fairly immediate. Within a few weeks or at most a month, Russia's economy would collapse.

President Joe Biden warned the Americans not to pass judgment on the sanctions too quickly. After a month he promised they would bite hard.

- It won't take long.

After six months, one thing can be ascertained.

The sanctions were not the quick-fix to end the war that many hoped. The Russian economy shows no signs of imminent collapse.

The Russian currency, the ruble, is stronger today than when the war started.

The Russian currency, the ruble, is stronger today than when the war started.

Photo: XE

Shopping trips

The few foreign correspondents still able to work in Russia report that restaurants and bars in cities such as Moscow and St. Petersburg are packed. The store shelves are fairly well stocked, even if some western brands are missing. But new Russian replacement products appear all the time.

Shopping trips are organized to, for example, neighboring Kazakhstan, where goods that cannot be obtained in Russia can be bought.

Ever since 2014, Putin has been preparing Russian society to endure harsh Western sanctions.

The ruble, which plummeted by 30 percent when the sanctions were imposed, has not only recovered. The exchange rate against the dollar is higher today than immediately before the outbreak of war. Russia has managed to circumvent Swift in various ways.

The magazine The Economist has made a review of the effects of the sanctions. They give a very mixed rating.

About 1,500 of the Russian elite, including some of Russia's richest men, the so-called oligarchs, can no longer travel to Europe or the United States. But freezing their assets has been more difficult than expected. The Swedish economist Anders Åslund, who has worked in both Russia and Ukraine, calculates that only 50 billion dollars of the 400 billion in assets that are blocked on paper are actually frozen. Sanctions are circumvented with various schemes.

The sanctions were not a quick-fix to end the war.

The sanctions were not a quick-fix to end the war.

Photo: AP

Earn more money

The outside world hoped to make the elite turn against Putin when they can no longer go on vacation to the Riviera or to the Alps and not sail on their luxury yachts. But so far no such signs are visible.

Despite the fact that the United States and Great Britain have banned all imports of Russian oil and tried in various ways to make Russian exports difficult, Russia now collects more money from its oil exports than in 2014 when it annexed Crimea.

The main reason is that the recoil after the pandemic and the sanctions against Russia raised the price of oil. So even though Russia is forced to sell the oil to China and India instead at a discount, they make just as much money.

The sanctions have had the greatest effect on Russian industry, which is dependent on parts and components from the West. The car industry is almost at a standstill but has instead started selling cars without airbags, automatic brakes and other safety features.

Perhaps Putin's biggest problem is that many advanced Russian weapons are dependent on microchips and other components from the West. But the Russians have solved it to some extent by buying in the products smuggled in.

Degraded slowly

As so many sanctions against other countries have shown throughout history, there are always those who are prepared to stand up as pawns if the payment is right. See how countries like Iran and North Korea have survived decades of sanctions without budging.

NATO country Turkey has not even imposed any sanctions against Russia. The US fears that a lot of prohibited goods pass into Russia that way.

The same experts who predicted at the end of February that the sanctions would take effect quickly now say it may take a long time before they really bite.

As The Economist magazine puts it:

- The economists were wrong about an immediate crash. What Russia gets instead is a one-way ticket to nowhere.

Slowly, the Russian economy is eroded and degraded and thrown back in time. But it is based on the West continuing with its harsh sanctions for a long time even when it costs us ourselves. As with electricity prices this winter.

Even then, we cannot be sure that it will be enough to persuade Putin to stop the war.