How to make V. Putin’s life impossible

February 23 due to the death of Alexei Navalny and the two-year anniversary of Russia’s war of aggression once morest Ukraine, additional harsh sanctions were imposed on the Kremlin.

The White House has imposed a package of measures on more than 500 individuals and companies. It was described as the biggest package of sanctions since 2022. February, when the full-scale war began, and targeted private individuals, sanctions evaders around the world, and Russia’s defense industry.

“While the new package is welcome, there are many and valid complaints that sanctions are not working as expected and that more needs to be done,” Ash notes.

Former Chief Economist of the Institute of International Finance (IIF) Robin Brooks on February 22. in the newspaper “Financial Times” said that the impact of the sanctions was dampened by compromises made to various interest groups – R.Brooks singled out the Greek shipping oligarchs who helped soften Russia from 2022. December. oil price restrictions.

“Let me outline our position and suggest some decisive improvements,” says the analyst.

According to him, the Western sanctions hurt the Russian economy, but did not destroy it. As a result, its military machine may have weakened, but not to the extent that Putin’s desire to go to war with Ukraine would change.

And yet, compared to earlier expectations, the West has actually gone further with the sanctions than anyone — perhaps including Putin himself — expected before the invasion. Few expected that sanctions would be applied to energy, many Russian banks would be removed from the SWIFT system and more than 300 billion dollars. USD central bank assets will be frozen.

The fact that these actions haven’t had a bigger impact reflects a number of factors, the analyst says.

First, V. Putin probably planned a large-scale invasion of Ukraine a long time ago, perhaps as early as 2014. annexing Crimea. Over the years, Russia has built up reserves, including accumulated more than 600 billion. USD foreign exchange reserves, and at the same time repaid the debt. This has given the Russian economy strength in the face of Western sanctions.

Second, the West applied sanctions once morest Russia too cautiously, always fully aware of the potential impact on the Western economy. Some argue that it ultimately reflected a fundamental and persistent failure to take the Russian threat seriously, and thus an unwillingness to pay for the imposition of sanctions on Russia.

Third, the West sought a united political front once morest Russia. The result is sanctions packages that have been agreed upon by the lowest common denominator. This meant compromises on the timing, scope and severity of sanctions.

Compromises were constantly made to keep as many countries as possible in the sanctions club. This meant that many exceptions were made, as R. Brooks points out, allowing Greek shipping magnates to facilitate the trade of Russian oil at sea. The Kremlin has been given time to adjust to the sanctions and has been given a number of loopholes.

Fourth, and related to the above, the West, while seeking to isolate Russia as much as possible internationally, has been slow and gentle in fulfilling its commitments.

Russia used huge loopholes (eg importing dual-use technology through third countries) and used third countries to circumvent sanctions. This is evident from the fact that trade between Russia and the peripheral countries of Central Asia, Transcaucasia, Turkey and the Middle East has greatly increased.

“In my view, the West has tightened the secondary sanctions it applies to a growing number of companies and individuals in Russia’s trading partners, from China to India, the Middle East and Turkey, too late. The above should help, but what else might the West do in terms of sanctions?” the analyst asks.

What to do?

First, the most obvious blow to Russia and win for Ukraine is to finally take steps to freeze, seize and distribute outstanding Russian assets on Ukraine’s behalf.

More than 300 billion US dollars held in Western jurisdictions might replace funding for Ukraine’s war and reconstruction. It is also a significant blow to Russia’s balance sheet, which will backfire on the Kremlin.

Arguments regarding risks to reserve currency status, retaliation and the impact on the rule of law in the West are redundant, especially if we consider them in the light of the argument of need. Simply put, if frozen Russian assets are not used to finance Ukraine, where else will the funds be found?

Second, when trying to close the loopholes in sanctions, we may have to think outside the box, says the expert. One way, suggested by Nigel Gould Davis of the International Institute for Strategic Studies (IISS), would be to completely ban Western trade with Russia until some future date, except for special licenses for really important products.

It would force companies to apply for special licenses to trade with Russia and require them to demonstrate why a particular device they manufacture is so important to global markets. A long implementation period for such a policy – ​​say two to three years – might be set to allow enough time for key licenses to be obtained and to limit disruption to global markets.

“This would prevent Russia from entering most of the non-essential areas of import and trade and, I think, would accelerate Russia’s international isolation in business,” says T.Ash.

This would raise the cost of Russia’s international business, further increase import costs and further damage the balance of payments, he said. Moreover, it would serve as a stark warning to Russian politicians that continuing the aggressive war will make everything, every aspect of life, even more difficult if she does not change her policy and return to the ranks of civilized nations.