This is why sanctions on Russia will have little impact
Washington, D.C. (AP) — Sanctions have historically been employed by the United States as a political and military tool to punish opponents and foes.
It can sometimes have the desired effect of causing economic turmoil in the target country.
However, at times, these punishments demonstrate the pitiless mentality of the political class on both sides.
That is, US sanctions have the potential to kill inhabitants of the country through starvation and exacerbate poverty in order to incite uprisings against the ruling class.
They may also be used as a weapon by the ruling class of the targeted nations to punish pro-US sympathisers or democratic movements while enriching those in power.
Nonetheless, Russia has constructed a structure in which such restrictions may not have a meaningful and immediate impact.
President Vladimir Putin appears to have learnt from prior US and European sanctions imposed on his administration and has prepared the country’s economy for substantial deficits.
Clay Lowery, Executive Vice President for the Institute of International Finance (IIF), today released the following statement on U.S. sanctions on Russia.
Impact of sanctions
“While the economic impact of these new U.S. sanctions on Russia is likely to be minimal in the short-term, President Biden was clear that they are just the first step, and is leaving the U.S. room to escalate.“
This announcement, says Lowery, boils down to three parts. First, the U.S. is sanctioning two Russian state-owned banks, second, sanctioning several individuals and their family members; and third, making it more difficult for the Russian government to borrow new debt on the global markets.
“In the short term, this is unlikely to have a major impact on Russia’s economy. But in the longer term, this action, combined with other actions from European countries, is likely to hinder Russia’s economic growth,” he says.
One pertinent reason he gives is that Russia has a more insulated and isolated economy today than it did a decade ago.
“This makes it less vulnerable to certain types of sanctions, but its increasing economic isolationism is hurting the country’s growth prospects in the long term.”