Economic sanctions: how to use the instrument effectively
Vadym Chernysh, Head of the Center for Security Studies "CENSS"
The question of how the US and other democracies can help Ukraine rebuff Russian aggression is closely related to economic sanctions or, expressed correctly, restrictive measures.
A strategic view on utilizing economic sanctions against Russia and its national entities must be likened to a well-known military strategy approach. Accordingly, ends, ways, and means should be core elements of such strategy, which I would prefer to name “Economic Sanction Strategy.” Yet another analogy could be taken into consideration – deterrence, which can be one either by punishment or by denial. “Economic” deterrence by denial is unfeasible regarding possible intervention by militarily near-peer states; the military instrument of national power matters in such a case.
Russian occupation of the Crimean Peninsula in 2014 and Russia’s military actions in Ukraine’s eastern regions caused a sanction response from the US, EU, and other states for the first time. Russia made a strategic surprise for the US and its allies by capturing Ukrainian territories, which left no room for deterrence.
In July 2014, after the beginning of Russian aggression, then-President of the US Barack Obama spoke out on the sanctions imposed on Russia: “What we are expecting is that the Russian leadership will see once again that its actions in Ukraine have consequences, including a weakening economy, and increasing diplomatic isolation.” This could be seen as a form of “economic deterrence” to curb Russia’s future actions against Ukraine. It did not work: Russia continued its overt and covert action aimed at getting Ukraine back under Russia’s political control.
In December 2021, merely on the edge of imminent Russia’s full-scale invasion of Ukraine, US President Joseph Biden tried economic deterrence again. Unlike in 2014, the impending Russian attack was not a strategic surprise for the US and its allies at this time. President Biden stated that he “made it very clear” for Vladimir Putin that “if, in fact, he invades Ukraine, there will be … economic consequences like none he’s ever seen or ever have been seen, in terms of being imposed.” It did not work again.
What a pessimist can draw from the two examples is that economic sanctions do not work. That is not true; economic sanctions are not useless; they just were not effective as a deterrence tool. At the same time, economic sanctions demonstrate effectiveness as a grinder of Russia’s economy and affect Russia’s military capacity. Weakening the economy, sanctions deprive Russia of resources needed for all other tools of national power, including the propaganda machine.
We can learn some lessons from the two early-mentioned examples of using economic sanctions against Russia. First, one of the primary goals of economic sanction has to affect the aggressor’s economy to instigate it to spend more money on “butter” instead of “guns.” If the aggressor chooses “guns,“ it faces additional internal threats from the population and will be compelled to redirect at least a part of the “guns” inward instead of outward. Second, another primary goal is to ruin supply chains for Russia’s military industry, which causes a decrease in military capacity. Third, economic sanctions should block the aggressor’s access to new technologies and keep it from innovations. Fourth, to meet the goals, sanctions must be planned and executed as a mid-term or even long-term set of holistic and reinforcing actions. Fifth, economic sanctions must be accompanied by relevant trade policy toward Russia.
Any state that wants its goal to be achieved by sanctions should give power to the appropriate authority to coordinate others for effectiveness, efficiency, and promptness. Good interstate coordination should be provided for the same reasons.
DIMEFIL concept of instruments of national power can give us some hints on how to reinforce the economic instrument of power by the others. Intelligence agencies can provide information about Russia’s economic vulnerabilities and supply chains of goods for its armed forces and military industry. In this regard, I must note that Russia’s intelligence agencies are specifically assigned to obtain so-called “scientific-technical” intelligence information by the President of Russia. Law enforcement agencies should close the door to those violating sanctions regimes domestically or internationally by cooperating with their counterparts. Diplomats shall do their best to establish supportive measures by third states to prevent evading sanctions regimes.
Allow us to return to the military strategy analogy I mentioned initially. Using economic sanctions as a tool requires a strategic vision: ends (goals), ways, and means must be clearly defined. Therefore, a good way for a state is to have an Economic Sanction Strategy (ESS) or a similar document. To prepare the strategic document, different governmental agencies must be involved, and all known vulnerabilities of a targeted state should be thoroughly considered.
The performance of implementors and the effectiveness of the ESS should be regularly assessed. Monitoring the impact of sanctions and the aggressor's response to them is crucial, but this task is not trivial because of the closeness of the Russian state as such. Once again, the intelligence agencies have the ability to help understand how effective sanctions are. Such efforts of the intelligence agencies can add value to the efforts made by the economic authorities of states trying to stop Russian aggression.
Currently, Ukraine does not have any strategic document referring to the ends, ways, and means of utilizing the sanctions tool, a designated high-ranking official, or a governmental body responsible for implementing its sanctions policy. At the same time, it is Ukraine that must be an example of how to use a sanctions instrument to decrease Russia’s ability to continue the war and wage it in the future.