Sunday Newsletter: The Impact of Sanctions as Russia Invades Ukraine
Every week in our Sunday Newsletter, Noa editor Lisa Kennedy writes an explainer column to provide background information on a developing news story.
On Thursday, Russia invaded Ukraine by land, air and sea (for more context, you can read our previous newsletter about the relations between the two countries).
Earlier in the week, the U.S. and Europe responded to President Putin’s previous actions in Ukraine by imposing economic sanctions. While these measures didn’t prevent Russia from invading, if used properly, they may prove effective in the longer term.
However, under certain circumstances, economic sanctions can also be counterproductive.
The Background…
Economic sanctions are financial prohibitions, usually enforced by one country against another. They include the removal of customary trade and financial relationships and can take the form of travel bans and trade embargoes, among other measures.
Sanctions can be introduced for a variety of non-economic reasons, such as achieving political or military goals.
The Story…
When Russia deployed troops into Donetsk and Luhansk (two separatist regions of Ukraine) for what it called ‘peacekeeping’ reasons earlier this week, the U.S. retaliated on Tuesday with sanctions against Russian banks and wealthy individuals. Europe has also imposed sanctions. The purpose is to put pressure on those at the higher echelons of Russian society — particularly, those in Putin’s inner circle.
While it seems that, thus far, this has failed to deter Russia, following Thursday’s invasion the U.S., U.K., EU and several other countries imposed a fresh round of harsher sanctions. It remains to be seen if they will be punishing enough to de-escalate the situation.
What’s important to note is that sanctions that would prove most severe against Russia would also have consequences for Europe — particularly when it comes to energy, as Europe is very dependent on Russia for accessing oil and gas (Europe gets a third of its natural gas from Russia).
And in turn, Russia’s economy relies on Europe’s money from this trade. The sanctions may ultimately hurt poorer communities in Russia more than they hurt the wealthy — which in turns risks recreating an old pattern, wherein sentiment in these communities turns against the countries imposing the sanctions.
Our Coverage…
If you want to learn more about the purposes and efficacy of economic sanctions as the conflict between Russia and Ukraine develops, Noa has it covered in this Series.
