Continued Sanctions On Russia “Unlikely To Deliver A Knockout Blow,” Think Tank

After a year of war in Ukraine, a major think tank has come to the conclusion that sanctions won’t crush Russia’s economy. The authors also realize that sanctioning China may be more than a little tricky given how intertwined the U.S. is with the communist country’s economy.

The report from CSIS (the Center for Strategic and International Studies reads as follows (my emphasis.)

• “While the economic measures are harming the Russian economy, they have done less damage than many predicted—in part because of Russia’s continued energy exports—and are unlikely to deliver a knockout blow.”

In other words, the goal of completely crippling Russia and then bringing the war to a quick halt are now seen as unfeasible.

At least part of that realization came after Russia rebounded from a currency rout last year. One dollar fetched around 81 rubles on February 23 last year, but quickly the ruble weakened to $1=132 rubles in early March. However, the currency quickly rebounded and recently the dollar would fetch a mere 76 rubles, more or less where it was before the invasion. For many countries the strength of the currency reflects its health.

Still, the regained strength undermined what CSIS saw as an important goal of the sanctions: to crush the economy. The think tank piece stated the following:

• “Brief hopes of destabilizing Russia were dashed after Russia’s banking sector and exchange rate recovered. The primary goal is now to degrade Russia’s ability to sustain its war through economic attrition. The measures are doing that to some degree, but they are unlikely to be as decisive as battlefield outcomes.”

The key phrase in that passage is that the sanctions “are unlikely to be as decisive as battlefield outcomes.”

Put another way, sanctions won’t be near enough to change the tide of the war.

The Bigger Challenge

However, the more complicated challenge is what to do if China invades Taiwan, something it’s been promising to do for ages.

Enacting comparable sanctions and export controls on China would be far more difficult and disruptive to the global economy,” the CSIS report states.

Notably, the U.S. and China are joined at the hip with the former relying heavily on the latter for manufactured goods. Worse still, these are the two largest economies in the world, and anything that disrupts either or both will have consequences globally.

• But perhaps the most telling comment of the report is the following: “Economic deterrence [a.k.a. sanctions] should be considered a supplement to, but not a substitute for, military deterrence.’

Quite so!

Read more sanctions analysis here and here from this year and last.