UKRAINE CONFLICT: What’s left to sanction in Russia? Atlantic Council on GEO´
There are still some tools left for the West to escalate sanctions against Russia in response to its aggression against Ukraine—including an Iran-style approach.
The US and European sanctions imposed against the Kremlin so far have exceeded many expectations—including probably those of Russian President Vladimir Putin. Their impact has been to flatten the Russian financial system, crash the rouble, spur a likely sovereign default, and probably move the Russian economy into a depression. “Fortress Russia” is no more.
The impact on industrial production and critical imports, due to restrictions on semiconductor exports, may be profound. The Kremlin reaction has exacerbated Russia’s long-term isolation (and thus stagnation) by imposing capital controls on corporations and individuals, demanding that Russian companies turn over much of their foreign exchange to central authorities, and paying creditors in roubles (likely leading to default).
Most recently, the United States and United Kingdom announced that they would ban imports of Russian oil—the first major move against the Kremlin’s lifeblood—while the European Union is considering restricting its purchases of Russian natural gas. In less than two weeks, Putin’s war has vaulted Russia back to Soviet levels of economic isolation in a profoundly more integrated world. This will spell disaster for the Russian people.
While the Biden administration had prepared its sanctions well, it had run through its initial set of options by February 25—and a day later, escalated quicker than anyone had anticipated by locking down close to two thirds of Russia’s pre-war foreign-exchange reserves (about $630 billion). The remaining reserves (cash, gold, Chinese-held bonds) are insufficient to fill the massive holes already dug by Western sanctions.
Still, Putin’s forces are continuing their attack, including by targeting civilians and non-military infrastructure, while outrage is intensifying in the United States, Europe, and beyond. This is why the West needs to keep developing escalatory options for sanctions to keep pace with Putin’s increasing violence. There is still room for more targeting before these sanctions reach a level comparable to those against Iran or North Korea. Learn More