If the goal of this week’s G7 summit in the quaint Bavarian town of Schloss Elmau was to ensure the world’s wealthiest countries remained united on behalf of Ukraine, then it appears to have been a success. The U.S., U.K., Germany, France, Italy, Canada, Japan, and the European Union all agreed to explore additional ways to ratchet up the sanctions pressure against the Russian economy, including through higher tariffs on Russian goods. But if the Western-led sanctions regime against Russia was meant to push Vladimir Putin toward ending his war of aggression in Ukraine or sitting down for negotiations with the Ukrainian government on a possible settlement to the conflict, then the measures have failed—and they will continue to fail.
Officials in Washington and Brussels may not want to hear it, but the facts are clear: Putin is as committed to prosecuting the war in Ukraine today as he was on the first day of the invasion. The Russian president has calculated that calling it quits in Ukraine would deal a threatening blow to Russia’s geopolitical position and can therefore not be tolerated, even at the cost of a years-long recession.
This is difficult for many in the West to understand, let alone accept. In terms of the economic realities, there is little doubt the Western-led sanctions campaign is having a negative impact on Russia’s business climate. Over 1,000 multinationals have either curtailed operations in Russia or have left the country entirely. The coordinated decision by the U.S., the E.U., and Japan to wall off as much as half of Russia’s massive $640 billion in foreign reserves was an unprecedented move against a major economy. Russian billionaires tied to Putin are increasingly persona non grata in the international financial system—$30 billion in Russian assets have been frozen, including yachts, luxury homes, and personal planes. Export controls on U.S. technology like microchips will hurt Russia’s ability to stay competitive in the global marketplace and dent innovation for a long time to come.
The sour economic outlook in Russia has also driven thousands of highly-skilled IT workers to pack up and leave, leading to a brain drain in one of the world’s most lucrative industries. In part due to the U.S. and E.U. sanctions, 15 years of Russian economic growth is projected to be erased. Moscow also defaulted on its foreign debt for the first time in over a century.
The problem, however, is the economic bad news is not making a dent on Putin’s strategic calculations with respect to the war. After a relative lull, Russian air and missile attacks resumed in Kyiv this week, despite the fact Russian forces withdrew from the area in April. On June 25, dozens of Russian missiles rained down on multiple targets in western and northern Ukraine. In a particularly heinous attack on June 27, Russian bombers fired at a crowded shopping mall in the central Ukrainian city of Kremenchuk, killing at least 13.
Russian forces are also making slow but indisputable progress in the eastern Donbas border region, now their main line of effort, hoping to press their advantage at a time of high stress for the Ukrainian army. The capture of Severodonetsk after weeks of unrelenting artillery fire, as well as the Russian army’s ongoing attempt to encircle Ukrainian defenders in Lysychansk, are preludes to an even bigger Russian offensive on Kramatorsk and Slovyansk. Five months into the war and facing hundreds of casualties a day, the Ukrainians are at a difficult moment—and Putin knows it. Additional sanctions at a time when Putin’s forces are finally exhibiting some momentum will not force a course-correction.
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Russia has also taken steps, both before and since the war, to shield its economy. Increasingly cut off from Europe, Moscow is diversifying its customer base and exporting more oil to energy-hungry China and India, two countries that aren’t bound by the Western-led sanctions regime. The Russians are offering discounts on oil of as much as 30 percent, and those deals are too good to pass up at a time when inflation and high prices are top of mind.
Moreover, the sanctions aren’t cost free for the rest of the world, particularly for poor countries that rely on Ukraine and Russia for grain or wheat. Russia’s ongoing blockade of Ukrainian ports, in addition to financial restrictions on Russian cargo vessels, has spiked global food prices. For some African countries, this is simply unsustainable, and it’s why much of Africa is more interested in ending the war as soon as possible instead of punishing Putin.
None of this is to suggest the sanctions are unjust. Washington’s options are quite limited. Diplomatic responses like stern press statements, expulsions, and U.N. Security Council Resolutions are toothless and mainly an exercise in virtue signaling. Deeper military involvement beyond sending weapons and providing intelligence would broaden the war into a widespread regional conflict with nuclear overtones. Economic sanctions are one of the lower risk options available for Western policymakers. Freezing assets and blocking a targeted entity from accessing U.S. financial institutions is a relatively quick and easy way to punish bad behavior (it’s why U.S. sanctions designations have increased by 933% over the last 20 years).
Sanctions, though, don’t address the causes of the behavior, and therefore fail to solve the problem at hand. They haven’t compelled North Korea to eliminate its nuclear weapons program, pushed Syria’s Bashar al-Assad into resigning, or pressured Venezuela’s Nicolas Maduro to cede his office. And they most certainly won’t be responsible for ending the war in Ukraine. Only the battlefield geometry and the risk tolerance of the combatants will do that.