Patience: Russia Sanctions
will Take Time to Bite (Polityka, Poland)
today 'drunk' over their 'recovery' of Crimea. They applaud Putin and
don't think twice about relations with the West. In the long, though, Russia
cannot live in the atmosphere of a besieged fortress and with its global
reputation in tatters. For its modernization and development, it is Russia who
needs Europe and America - not the other way round. In Russia, where Putin has
strong support today, forces will emerge which understand that."
New sanctions on Russia, imposed by the United States and
the European Union, are undoubtedly the harshest Western move against Moscow
since the end of the Cold War. Among the companies affected are three banks,
which will have serious problems gaining access to Western capital, as well as -
potentially - companies in the oil and armaments sectors, which will have to cut
back on their investment plans.
Experts tracking the Russian market argue that since the beginning of the year, sanctions
have already led to an almost 8 percent decline in the value of the ruble. Moreover, the Central Bank of Russia had to spend
almost $30 billion in order to soften the fall. Finally, the International
Money Fund calculates the capital flight from Russia at almost $100 billion in
the current year.
Yet so far, there has been no visible change in Vladimir Putin's
policies toward Ukraine. Observing events with a cool eye, one could argue that
the tragic shooting down of the Malaysian Boeing 777 could have been used by
the Kremlin to lower tensions. Putin could have explained that innocents died as
a result of a monstrous error, that the separatists had gone too far, so Russia
could not support them any longer. The Russian president, however, has become a
prisoner of his own rhetoric. Having immediately blamed the shooting on the
Kiev authorities, it is difficult for him to change his position now.
Sanctions aren't bringing quick results for three reasons.
First, Russia's participation in the global economy is quite small. Supposedly an
empire, Russia accounts for only 3 percent of global GDP.
Second, the energy sector - which has more links to the
global economy – is situated largely beyond the reach of sanctions. In this
area, it is much more difficult to cut Russia off, because Europe not only
needs Russian raw materials, but it plays an important role in their extraction
and transport. For instance, two Western giants, BP and Exxon Mobile, are
partners with Rosneft; while German, Dutch and
British companies have sunk considerable resources into the construction of the
Nord Stream Pipeline. To disregard such investments is, simply put,
Third, the history of sanctions employed against other
countries, for instance, apartheid South Africa, or Iran for its nuclear
program, show that years are required to see results. Meanwhile, politicians
and Western public opinion, not to speak of Ukraine itself, need to spur more
Yet pessimism isn't entirely justified. Experts point out
that while Putin is surrounded by oligarchs who earn most of their money on the domestic
market, there are others whose businesses and personal lives are more closely
tied to the West. The interests of these two groups diverge, and discord can
occur between them.
Most importantly, Putin and his Russia have already lost the
propaganda and image war to the West. Public opinion surveys in Germany testify
to this. Only three months ago, Germans were cautiously-disposed to sanctions,
while now, according to the polls, a majority support them,
even if they cause harm to the German economy.
Russians are today "drunk" over their "recovery"
of Crimea. They applaud Putin and don't think twice about relations with the West.
"No? - well fine, then!" they seem to be saying. In the long run,
though, Russia cannot live in the atmosphere of a besieged fortress and with
its global reputation in tatters. For its modernization and development, it is
Russia who needs Europe and America - not the other way round. In Russia, where
Putin has strong support today, forces will emerge which understand that.