Sanctions, economic warfare alone won’t end the war in Ukraine
4 Min Read
Economic warfare alone won't put an end to the conflict in Ukraine, despite the huge costs that Western sanctions against Russia have placed on all parties.
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Sanctions won’t end the war in Ukraine.
The European Commission proposed on December 7 a new sanctions package on Russia. After the previous eight sanctions packages, the costs of the sanctions for Europe are mounting.
Europe is bracing for electrical outages, a lack of lights and heat, and brief interruptions in internet and mobile service as winter approaches, temperatures drop, and as a direct result of cutting off commerce with Russia. But the conflict goes on, with Russia launching a missile attack campaign on Ukraine's energy infrastructure.
In fact, Russia is able to avoid the brunt of the targeted economic hardship due to the communal nature of the sanctions—the process of their formation and implementation. Each member of the sanctioning coalition has the incentive to lessen the personal cost of breaking off economic ties with Russia.
In addition to giving Russia more time to prepare for future sanctions and encouraging Western businesses to enhance trade with Russia before sanctions are put in place, this decreases the effectiveness of the final deal.
Weaponizing international economic system
It costs the world money to weaponize the institutions of the global economic system, especially when significant economic actors are not on board. The demonstration effect inspires others to lessen their susceptibility by demonstrating how the system might be utilized to harm a single state.
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The benefits of a shared economic system's welfare gains are considerably reduced by the later demolition of institutions or the development of alternative structures.
Economic isolation of Russia
If the West was willing to shoulder the immense expenses of executing such a program, the complete economic isolation of Russia would weaken Russian military capabilities. This would indicate, however, according to The National Interest, that a nuclear-armed state's capacity to protect its own territory was rapidly eroding
Economic stifling significantly raises the risk of nuclear escalation and poses an obvious and immediate threat to state survival, despite Russia's repeated denial.
Challenges with collective sanctions
The most recent round of Western sanctions, as well as probably any additional rounds intended to limit Russia's capacity to finance its war effort in Ukraine, will undoubtedly cost the West a sizable amount of money.
Collective sanctions have distributional repercussions, notably the individual expenses each state must incur for the benefit of the whole. Every Western nation desires sanctions that cost Russia a lot, but ideally at the least expense to itself.
Therefore, Belgium still imports Russian diamonds; France, Hungary, Slovakia, and Finland still buy Russian nuclear fuel; and Greece is still fighting for the right to transport Russian oil.
Problems with the current course
Sanctions imposed by the West against Russia are also intended to be symbolic. "If you break the rules of international order, the response will be swift and severe," they warn the rest of the world. The demonstration of punishment should serve as a deterrent to states.
Now that the situation is more obvious, potential attackers will know exactly what to expect should they decide to go on the offensive.
The harm done to the global economic system is another outcome of this demonstrative effect and the subsequent measures states take to lessen the punishment. The current system is built on institutions, which depend on trust to provide high transaction costs, information sharing, and monitoring benefits.
That is why calls to nationalize frozen Russian property to form a recovery fund for Ukraine degrades trust in the institution of property rights.
Read next: EU sanctions on Russia hurt member states & reward Moscow: Hungary FM
Last week, Deputy Foreign Minister Alexander Grushko said, as quoted by Sputnik, that the European Union has decided to impose fresh sanctions on Russia, adding that these actions also jeopardize the interests of the member states.
"They [EU states] are abandoning market principles — in energy, finance, and in many other areas. This is their choice. But this choice, when implemented in concrete actions, undermines international economic relations in the form, in which they have been formed in recent years, and undermines the economic interests of these countries," Grushko said.
The official went on to say that it is obvious that the United States benefits from all of these sanctions, stressing that Russia will implement policies to secure its economic interests.
