A Game of Russian Roulette? The West's Dangerous Sanctions Play against Russia

"Russia can inflict even more economic pain on Ukraine than it has, leaving the West to pick up the tab."

Current Western policy toward Russia, as it pertains to the Ukraine crisis, rests on several premises, each of them flawed.

The first is that President Vladimir Putin's progressive political isolation will persuade him to retreat and to settle the Ukraine crisis on terms favored by the West and the Ukrainian government.

The second is that Western economic sanctions will force Putin to change course and will hurt Russia but not Europe, or that they will hit Russia much harder. The bottom line is that the sanctions strategy assumes that Russia will cry "Uncle" first.

The third assumption underlying Western policy, and it is unstated because the official line of Washington and Brussels is that they support a political settlement, is that the Ukrainian army will soon overcome the insurgency by force of arms—that Kiev’s military is on a roll and that the trend will continue and culminate in a triumph.

There is no evidence whatsoever to support the first two premises—and the third deserves scrutiny because it is shaky.

Let’s start with the effects of international isolation.

There’s no denying that Putin has paid a political price, particularly in the West, and especially after the downing of MH17. But that downside hasn’t been accompanied by an erosion of popularity at home.

Indeed, so far, the crisis over Ukraine has improved Putin’s standing among Russians compared to last year, with over 80 percent opining this summer that he is doing a good job as president.

It may be hard to discern what Russians “really” think about what their government is up to in Ukraine, and it’s a safe bet that not a few of them are worried about how the sanctions will affect their personal budgets and even about the risks of war.

But Putin doesn’t face the pressure of public opinion in the way that European governments do; and if the hope among Western governments is that mass dissatisfaction might spark street protests that force the Kremlin to rethink its policies in Ukraine, it’s almost certainly misplaced.

Moreover, it’s a mistake to assume that Putin’s pronouncements on Ukraine and his defiant attitude toward sanctions are divorced from the sentiments of most Russian citizens.

For now, anyway, the standard rally-around-the-flag effect is what sanctions and ostracism have produced among Russians. Besides, so significant is Ukraine to Russia—and in multiple ways—that Putin may be prepared to pay a bigger price for defending Russian interests there, as he sees them, than is the West.

It’s inconceivable that he annexed Crimea and still supports the Donbas separatists without having factored in the probability of sanctions, which, diplomatic demarches aside, are the only realistic means the West has available.

If we know one thing about crises, it’s that they are not shaped by the calculations of accountants. Honor, prestige and hubris—all emotions not easily factored into equations and hence predictions, but no less real for that—take center stage; and there proves to be a lot of ruin in countries.

Now to the effects of economic punishment.

Far from having induced Putin to back off, they have prompted him to up the ante by slapping sanctions of his own on the EU, specifically on agriculture and food products, the exports of which netted EU economies nearly $16 billion last year. That’s not a colossal sum perhaps but it’s enough to pinch particular sectors and particular countries, such as Poland, Germany and the Netherlands, among the top EU food suppliers to Russia.

Thus sanctions have become a two-way street. And the cost to the EU will exceed the cost to the United States, which shipped only $1.6 billion worth of food items to Russia last year, about 4 percent of all such American exports.

This asymmetry matters because Europe's economies are still ailing and because Europe does far more trade with Russia (about $326 billion in 2013) than the United States does (which was $38 billion last year). How long before the EU becomes far less enthusiastic about squeezing Putin than the United States does?

The average unemployment rate in the Eurozone economies is 11.6 percent. In ten EU countries, it exceeds 10 percent, and in five (Spain, Croatia, Cyprus, Portugal, and Slovakia) over 14 percent. That’s compared to 6.2 percent in the United States at the end of last month.

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