As widely reported in the press last week, President Obama announced sanctions against Russian and Ukrainian officials. On Thursday, March 20, the “blacklist” was expanded to 2 banks and 20 officials, as detailed in this press release from the US Treasury. Separately, the EU imposed sanctions on 21 individuals, including Russian military commanders.
The U.S. goals, President Obama said, are “to isolate Russia for its actions, and to reassure our allies and partners” of American support. Under the U.S. Treasury’s ruling, assets belonging to designated individuals within U.S. jurisdiction will be frozen, and business between U.S. entities and the Russian parties in question will be halted. In retaliation, Russia imposed sanctions against nine officials, including Republican Senator John McCain and Speaker of the House John Boehner.
According to President Obama, the goal of US sanctions is: “[To] send a strong message to the Russian government that there are consequences for their actions that violate the sovereignty and territorial integrity of Ukraine, including their actions supporting the illegal referendum for Crimean separation .”
I have been studying multilateral sanctions for much of the past year, and the theory behind targeted sanctions in that context is that in order to change behavior, there must be an incentive to comply. As the sanctions expert Mikael Eriksson writes, “The typical goal of such measures is to influence decision-makers by engaging or isolating them through targeted financial restrictions, and travel bans and other measures . . . targeting involves different tactics, but in principal, pressure is exercised by a combination of punitive measures, incentives and conditionality to entice or coerce designated targets to change their behavior.”
Moreover, a 2007 report of the Security Council’s Working Group on Sanctions states: “Experience has shown that sanctions work best as a means of persuasion, not punishment: sanctions should include carrots along with sticks—not only threats, but inducements to elicit compliance. The target must understand what actions it is expected to take. And partial or full compliance should be met by reciprocal steps from the Council, such as easing or lifting sanctions as appropriate.” (UN Security Council, Letter Dated 12 December 2007 from the Permanent Representative of Greece to the United Nations Addressed to the President of the Security Council (December 13, 2007) UN Doc. S/2007/734, p. 3)
The only available sanctions against Russia are so called “unilateral” sanctions, by states like the US and organizations like the EU. Although the United Nations has a well-developed practice of targeting, and in fact has exclusively applied targeted sanctions since 1994, Russia’s unsurprising veto of a draft resolution on the Ukraine on Saturday March 15 foreclosed the opportunity to apply multilateral sanctions against the Ukraine or Russia. There is consequently no way to apply global sanctions against Russia. Nonetheless, there may be some useful lessons.
So far, the US sanctions are clearly designed to act as a “stick:” to indicate further consequences will follow any new incursions into the Ukraine, and to signal displeasure with supporting the referendum for Crimean separation. But do the US or the EU believe at this point that Russia will pull out of Crimea? It seems unlikely and if that is true, these are punitive measures to the extent they are focussed on the referendum and attempted annexation.
The US has an even bigger stick in the wings: more sanctions against sectors of the Russian economy. President Obama signed an executive order described here that would allow the administration to apply future sanctions against industries including financial services, metals and mining, energy, defense and related material, and engineering. These could have a huge impact on the Russian economy, as the New York Times explains, and would likely affect the economy of other countries in Europe as well.
I have seen nothing so far to indicate whether an incentives based strategy is at play here. I suspect this is partly a question of timing – it is too soon to entice compliance. After all, their effects are only starting to be felt. But for unilateral sanctions by the US and EU sanctions to be effective, it may be necessary to consider carrots. One of the most tried and tested incentives is to offer the lifting of sanctions. When a domestic polity backs a particular approach, this is easiest. Sometimes other techniques are employed as well, whether to include people at the bargaining table who would otherwise be barred, or to offer economic incentives. Neither of these techniques seems likely in the present situation because the individuals targeted are not outsiders, but part of Putin’s cohort.
As a result, these sanctions may be around for some time. Presently, it seems unlikely that the Russian ‘targets’ will comply of their own accord. Moreover, the surge in Putin’s popularity after the attempt to annex Crimea, suggests that there is little domestic opposition to recent developments.