Why Russian Domestic Politics Make U.S. Sanctions Less Effective

December 7, 2018

The holiday season is here and the question on everyone’s mind is: What do you get the autocrat who seemingly has everything? Why, more sanctions, of course.

In the latest attempt to coerce a course correction in Russian foreign policy, the State Department announced in early November a new round of sanctions related to the attempted assassination of defector Sergey Skripal. Are new sanctions likely to work? The answer is ‘no,” although that has more to do with elite politics in Russia and the popularity of President Vladimir Putin’s foreign policy amongst the Russian public than with economics. Despite the high chances of failure, however, sanctions continue to represent the best of a poor set of options for the United States and the European Union if they want to signal their disapproval of Russia’s foreign aggression.

Why Sanctions Fail

At a broad level, Russia has not modified its behavior since the initial imposition of sanctions in 2014 over the annexation of Crimea. Since then, Russia has rescued President Bashar al-Assad through a brutal air campaign, conducted disinformation campaigns targeting U.S. and European elections, and tried to kill a defector on British soil with a nerve agent, all the while continuing its actions in Ukraine that provoked the original sanctions — including the detention of three Ukrainian navy ships in the Kerch Straits on Nov. 25. Domestically, Putin and his supporting cast of loyalists have largely cruised to election victories at all levels of government despite a slow-growing economy and unpopular social reforms.

Russia’s foreign policy actions have sparked more sanctions, many of which reach directly into the pocketbooks of some of Russia’s richest men. For example, in April, the threat of sanctions resulted in a 50 percent decrease overnight in the share price of Rusal, owned by former Paul Manafort client Oleg Deripaska. Dozens of Russian officials are barred from visiting the United States and E.U. member states. And sanctions have hamstrung the country’s ability to trade in a wide variety of goods.

Despite these individual impacts, sanctions’ overall effect on the economy is disputed. Bloomberg recently published a study estimating that Russia’s gross domestic product has grown 6 percent less than it would have without sanctions. It is difficult, however, to precisely untangle the sanctions’ effects from myriad other factors, such as vulnerability to commodity price shocks and inflation control measures imposed by the Russian Central Bank. Russia also has other outlets for some of the goods sanctioned by Western countries, dulling the pain on that front. For example, it continues to sign deals with countries like India and China to sell units of its S-400 anti-aircraft system, one of the most advanced air defense systems in the world.

More importantly, the sanctions are not working politically. The United States continues to levy sanctions over Russia’s aggressive actions in Ukraine, four years after the first Ukraine-related sanctions took effect. Sanctions also did not deter Russia from engaging in subsequent high-profile intelligence operations like election interference and the Skripal attack.

Of course, one can reasonably argue that sanctions have deterred Russia from taking even more aggressive actions. However, without a better look into Russia’s foreign policy decision-making, including how much it weighs potential sanctions in its cost-benefit analyses, we simply cannot know whether this proposition is true. Future researchers looking back at this moment may find evidence that sanctions have worked as a deterrent, but there are no cases where we can now say with certainty that sanctions have deterred Russia.

There are, however, cases where we can see that sanctions have not deterred. To put it crudely, the mere fact that Washington and Brussels continue to impose new sanctions because of new Russian actions strongly suggests that sanctions are not stopping Russian aggression.

Russia’s Domestic Politics Serve as the Ultimate ‘Anti-Sanction’

The nature of Russia’s current political system, more than economics, is the reason why sanctions are not working. While Putin clearly sits at the head of the system, there are two main groups — business and political elites and the Russian public — that he relies upon to keep his position. Putin maintains this system by giving elites access to rents in exchange for their support, threatening repression for those who step out of line, and appealing to his personal popularity amongst the people. The system might rely on Putin to maintain itself, but he relies on elites and the public to stay in power and, thus, needs to keep both constituencies happy.

Russia also highly regulates political opposition. Opposition inside the political system is largely cosmetic, maintained by faux-opposition parties that make a show of opposing certain policies in public before generally voting for them in parliament. Opposition to the system itself is marginalized. The “extra-systemic” opposition has few opportunities to contest elections, has almost no access to state-owned media, and is highly fragmented ideologically.

Foreign sanctions have been designed to undermine support for Putin’s foreign policy amongst one of the two groups that maintain this system: the elite. Since targeted sanctions are designed to exert pressure on actors who can influence foreign policy decisions, going after Russian elites would seem to be the most direct path to coercing Russia into a change.

So far, there is no evidence that this is working. Russian elites might be unhappy about missing trips to Miami or the South of France, but they do not appear to be challenging Putin’s foreign policy direction. Analysts arguing the sanctions are working point to recent critical remarks by Accounts Chamber Chairman Aleksey Kudrin, who warned that sanctions’ effects might push Russia into a recession next year. Kudrin, however, is hardly a bellwether of the Russian elite on national security and foreign policy. Despite being a Putin confidant, he is a long-time skeptic of high military spending, a stance that places him outside the mainstream of elites close to the Kremlin. Others may be pushing Putin behind the scenes, but there is little incentive to publicly challenge him and harshly clear incentives to avoid doing so .

The perks and protection that Putin can offer his subalterns are currently enough to secure the loyalty of sanctions’ targets. For example, the Russian government so far has financially supported companies affected by sanctions. Additionally, the price for individuals challenging Putin’s current course is potentially quite steep. It includes steps like the withdrawal of state support for their companies, politically motivated corruption investigations, and even imprisonment. Russian elites are also riven by internal rivalries, which makes any potential collusion against Putin difficult to organize even if there was the desire to do so.

Of course, this focus on the elite ignores the second key group in Russian politics, the public. While it is true that the public’s formal ability to constrain public policy is weak because of Russia’s tightly controlled elections, they still exert an informal check in the form of potential protests over unpopular policies. The best indicator that this potential power exists is the Kremlin’s obsession with its popularity and standing in public opinion polls. Those polls are currently telling them that there is no significant public opposition to its current foreign policy.

Majorities of the Russian public blame the sanctions on the desire of Moscow’s enemies to weaken the country rather than as measured responses to Russian aggression. Majorities also claim that the sanctions are having little or no effect on their daily lives. Russia’s expensive deployments to Syria, subsidies and infrastructure building in Crimea, and increasing fears of confrontation with NATO have not provoked a rejection of Putin’s foreign policy among the public.

Putin’s popularity has dipped recently, but this is due to the deep unpopularity of the government’s decision to raise the pension age. Connecting this reform to the costs of the sanctions is the one political move that might cause public opinion to turn against Putin over his foreign policy but, so far, few people in positions of power have made this case. Kudrin has come the closest of any public figure, but his reputation as a dove has blunted the effect of his criticism.

That returns us to the elite problem. Politicians in Russia’s loyal opposition publicly oppose the pension reform, but tying it to Putin’s foreign policy priorities is politically dangerous. Extra-systemic opposition activists have argued that foreign policy adventurism is hurting the public welfare, but their claims have failed to gain any traction in the broader public because of the restrictions discussed above. In any event, Putin’s foreign policy actions that have provoked sanctions have been either popular or blamed on the West. After all, as we know from Russian state media, Russian planes are killing terrorists — not innocent civilians — in Syria, Crimea is Russia’s, and MI6 most likely poisoned the Skripals as a provocation.

Sanctions Still Might Be Better Than Nothing

So, what is the alternative to sanctions? There is no good one. As scholars have long noted, sanctions tend to function as a nebulous “at least we’re doing something” alternative between complete inaction and war. Neither of those actions are viable alternatives to the current course.

There are not any obvious ways to change sanctions tactics, either. Adding more and more individuals to sanctions lists has not worked so far, and many of the obvious targets have already been sanctioned. Broadening the scope of sanctions would draw pushback from Western firms that would be affected and might encourage the defection of E.U. countries, such as Italy, that are already skeptical. It would likely backfire inside Russia, as well. Public opinion regarding existing sanctions views them as products of aggressive U.S. policy; More draconian steps are much more likely to reinforce rather than change that dynamic.

So, the United States and European Union are most likely stuck with pursuing their current policies. Supporters of those policies argue that sanctions are a long-term process and that it is unrealistic to expect immediate effects. This is perhaps true, although the long-term nature of the process also allows time for the Kremlin to adjust policies to mitigate the sanctions’ effects and reduce the perception of sanctions’ impact amongst ordinary Russians. To paraphrase one Russian critic of Putin, Russians have to see Putin’s foreign policy as a dead end. That is not something that outsiders can easily make happen.


Thomas Wonder is a recent political science PhD graduate from Indiana University, where he researched nationalism and authoritarianism in contemporary Russia. He maintains a blog about Russian politics, nationalist political movements, and data analysis at biznesslanch.com.

Image: kremlin.ru