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19 April 2022

Don’t count on sanctions to push Putin from power

Isolating Russia economically may not have the intended effect, as the examples of Iraq, South Africa and Myanmar show.

By Ben van der Merwe

For politicians simply seeking to punish Russia, the spectacle of its painful and humiliating descent into poverty as a result of Western sanctions may be enough. For those seeking to help Ukraine, however, mere vandalism is insufficient.

Sanctions are unlikely to starve Russia’s military of basic supplies. Rather, the hope is that the suffering of ordinary Russians will pressure president Vladimir Putin to change course.

“History shows you can have a lot of economic pain without getting political gain,” says Lee Jones, a sanctions expert at Queen Mary University of London.

That’s especially true for regimes relatively insulated from popular pressure. Most notably, a near-total UN embargo on Iraq in the 1990s failed to topple Saddam Hussein, despite the economic and social devastation wrought.

Targeted sanctions might seem like a more powerful weapon against Russia’s politically connected super-rich, whose penchant for London’s banks and Paris’s shopping districts is well known. Since 2014, however, the West has imposed a slew of such measures to little effect.

“I’ve never really bought into this idea that the elite will be pressured into turning against Putin,” says Emily Ferris, a research fellow at the Royal United Services Institute, the defence and security think tank. “These are people who, without Putin, would not have been able to amass their money. They also do not have the kind of political influence that would be required to change Putin’s mind.”

Nikolai Petrov, a senior research fellow at the think tank Chatham House, believes sanctions may in fact tighten Putin’s grip on the oligarchs. “If all of your assets in the West are frozen, it makes you totally dependent on the Kremlin,” he says. “It incentivises absolute loyalty.”

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[See also: Sanctions are pointless if we’re rolling in Russian oil and gas]

Broad-based measures may also be backfiring. Europe has exempted Russia’s energy industry from major sanctions, but the country’s creative and technology sectors have been hit hard. Once the locus of support for Russia’s opposition, workers in those sectors are now leaving en masse. “That means the opportunities for the re-emergence of protests like we saw in 2011 are declining,” Petrov says.

As Jones details in his book Societies Under Siege, Western sanctions on Myanmar also disproportionately harmed the private sector. Surging Chinese demand for logs and minerals cushioned the impact on state-owned extractive industries but did nothing for the textile-focused private sector. Economic life consolidated around government-run mines and plantations, snuffing out a nascent trade union movement and independent bourgeoisie.

“That’s the long-term trajectory of any state that is sanctioned,” he says. “Greater state intervention into the economy and a greater dependency of private business on the state.”

That trajectory is already evident in Russia, where the state’s response to sanctions has included capital controls, nationalisations and the creation of homegrown alternatives to Visa and Swift, the international payments system.

[See also: Russia’s looming default is Putin’s choice]

When the UN sanctioned South Africa in the 1960s its regime responded in a similar fashion. The rapid development of domestic oil and arms industries, funded by a well-timed surge in commodity prices, produced a business class whose interests were bound up with their political connections and with sanctions themselves.

Those sanctions paved the way for more successful measures, however. By the 1980s isolation-fuelled economic crises and intensifying unrest had drained government revenues. When new sanctions were imposed, the government lacked the funds to ameliorate their impact. Russia’s descent into autarky is likely to be even more damaging, given its much higher level of integration with the global economy.

“Europe is already seeking to become much less dependent on Russian energy,” Petrov says. “And if the regime can no longer redistribute these huge rents, they’ll need to cut off certain businesses and parts of the state bureaucracy which benefit from them. It won’t be a coup, but I do think that internal fights between, say, different security agencies will lead to a weakening of the regime.”

[See also: Economic crisis helped Putin rise to power. It could also be his downfall]

This was the effect of sanctions on Iraq. When the oil stopped flowing the state’s coffers ran dry. Saddam Hussein’s regime was forced into austerity, scaling back its patronage networks and welfare state. That the government survived was due only to the weakness of the opposition. The main opposition group, the Iraqi Communist Party, had been liquidated in the 1970s. The rest were forced into exile, where they descended into sectarianism as their links to Iraq slowly withered.

Sanctions only exacerbated these tensions. The liberal faction’s support for the blockade alienated it from the rest of the opposition, while disputes over smuggling revenues sparked a civil war among the Kurds. Utterly atomised, ordinary Iraqis responded to their impoverishment not by revolting but by retreating into a daily struggle for survival.

In 1980s South Africa, by contrast, the strength of black trade unions meant that resentment over sanctions-induced mass unemployment could be channelled directly at the regime. “The key difference between South Africa in the 1960s and the 1980s is that by the 1980s the non-white opposition had become much more organised and mobilised,” says Jones. “In Russia, the trajectory is in the opposite direction. Opposition leaders have been jailed, parties shut down, media ownership consolidated in friendly hands.”

Even if Western sanctions succeed in fracturing Putin’s regime, in the absence of a unified opposition it’s not clear what would take its place. As Iraqis and Libyans can attest, such interregna produce morbid symptoms.

“We shouldn’t think that the sooner the regime weakens, the better,” says Petrov. “It’s impossible to imagine a regime like Putin’s will be defeated internally in the way people would like, and to corner a guy with nukes is a very dangerous enterprise.”

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