Debunking Moscow’s Myths About Western Sanctions

Uncategorized August 14, 2015 0

The United States and the European Union levied sanctions against Russia after it invaded invaded Crimea in 2014. But according to Russian state TV,...

The United States and the European Union levied sanctions against Russia after it invaded invaded Crimea in 2014. But according to Russian state TV, those sanctions are laughable. According to the Kremlin party line, the sanctions have little effect, hurt the West more than they hurt Russia and are actually strengthening its economy.

But such myths are just that — myths. The reality of the sanctions’ effects are much more complicated.

Luckily, Oleg Buklemishev — an economist writing for the Carnegie Moscow Center think tank — studied the sanctions and just published an analysis debunking the most pernicious of Moscow’s myths.

The Western notion that sanctions will drive the population to overthrow a ruling regime and change course is unrealistic. History has shown that autocratic governments find it quite easy to blame foreign powers for the real and imagined hardships of the general population, which usually suffers the most from sanctions. This pressure allows regimes not only to consolidate their political base, but to earn a “mobilization bonus” such as the Kremlin’s current 85 percent level of support.

But the sanctions in Russia aren’t typical — they’re targeted toward the elite.

We are now seeing these ‘smart sanctions’ in action against Russia. The growing discontents inside the Russian elite shows that this attempt is having some effect. There is more to this than the fact that some members of the Russian ruling class are being forced to schedule routine medical operations in Israel rather than in Germany, or the seizure of bank accounts and real estate assets that are fairly unimportant for their owners.

What about the idea that sanctions hurt Western business as much, if not more than, Russian business? After all, in response Russia is halting some imports including food from U.S. and E.U. producers.

A new study published by the Austrian Institute of Economic Research (WIFO) estimates that the Ukraine-related sanctions and counter-sanctions could cost the economy of the European Union up to 100 billion euros and two million jobs.

Yet …

The authors do not disclose their research methodology, but their figures appear to be greatly inflated. First of all, all of Europe’s overall losses from the Russian economic crisis are being lumped into this figure, although many of them are unrelated to the sanctions. Mercedes sales, for example, are clearly falling for other reasons. Secondly, the luxurious repertoire of European food on offer in Moscow restaurants suggests that many of Russia’s counter-sanctions are not actually working and are therefore doing little harm to European agricultural producers.

And even if the counter-sanctions were effective, then it would be bad news for Moscow, not the West.

The higher the value that Russia attaches to Europeans’ economic losses, the greater the threat that the EU feels from Russia and the greater the importance it attributes to sanctions as a means of containing this threat.

Buklemishev’s article is a succinct and fascinating look into the surreal logic of the Kremlin’s propaganda machine. He goes on to note that the sanctions are likely to be long-lasting and that Russia can survive an economic recession.

But there’s little doubt the recession will continue.

Read the rest of the report here.