Tragedies are triggered by action — and are often compounded by what is not done. The wave of sanctions unleashed by the US, the EU and the UK has not deterred Russia. Kyiv is under siege. Volodymyr Zelensky, a stand up artist is standing up to Russia and a people left to fend for themselves by the world seek refuge in neighbouring Poland or make Molotov cocktails to face the invaders.
The distance between the optics and the reality of sanctions on the ground is instructive. On Thursday, the US Government imposed ‘severe sanctions’. President Joe Biden declared that they are aimed to turn Vladimir Putin into an ‘international pariah’. The announcements came at around 1.30 pm EST. In less than an hour, the price of crude dipped below the pre-sanctions level. Stock markets moved from deep red to bright green territory. By the end of the trading day, the Dow Jones Industrial Average moved up 800 points, the NASDAQ Composite moved from 3.5 per cent loss to 3.8 per cent rise. The no-pain scenario symbolised the perception of the inadequacy of significant and expected pain on Russia.
A day later, the European Union unveiled a new set of sanctions following those of the US and UK. Beyond shutting off the spigots of finance for Russian entities, ban on aircraft parts and access to important technology, the EU sanctions sought to freeze the assets of Putin and Russian Foreign Minister Sergey V Lavrov. Nobody quite knows if they have assets outside Russia or indeed why they would keep assets in their own name.
The so-called consensus for sanctions was born out of compromises. It is widely believed shutting Russia out of the SWIFT banking system is critical. The UK wanted Russia to be booted out of the SWIFT system. The US balked and Germany and Hungary opposed it outright. Italian Prime Minister Mario Draghi successfully carved out Italian luxury goods and Belgium fought hard to keep diamond trade out of the sanctions package. The duplicity is manifest — the freedom to peddle Gucci loafers and high-value sparklers to Russian oligarchs was more important than the freedom of the people of a sovereign nation under invasion.
Facts are unaffected by sentiments. Theoretically, sanctions can work but history shows its effect is at best tardy. And the Russian experience reveals the inefficacy. After Russia annexed Crimea in March 2014, the US and allies imposed economic sanctions. Since then Russia has de-dollarized its public finance, has the lowest debt to GDP ratio and its reserves have touched $ 650 billion dollars. Along the waym it enabled the Assad regime in Syria to sustain power. Crimea continues to be annexed and Ukraine faces the threat of being “demilitarised”.
This week, China dismissed sanctions as ineffective. And they know why. In 1989, the EU and the US imposed sanctions on China after the Tiananmen Square protests. It was aimed to turn China more democratic. Beijing has since shut down democracy in Hong Kong, waged unprovoked border wars with India, has articulated its ambition to annex Taiwan. Ironically, US officials apparently urged China repeatedly to intervene and to stop the war in Ukraine.
Words can be weaponised into rhetoric to convey intent but the force of sanctions is defanged. The crux of failure lies in structural rigidities of the economies which is the basis for ideological ambiguity. Natural gas is the preferred transit option to meet climate change goals. Ten of the EU’s members depend on Russia for energy. Would Germany be so dependent if it had reviewed its 2011 decision on nuclear power after Russia’s annexation of Crimea? Could Europe have crafted the energy grid to be Atma Nirbhar? Indeed, Javier Blas, author of ‘The World for Sale’, observed on Friday that “since the fighting began, Russia started selling its gas at very close to record levels. It’s making lots of money, which is going into FX reserves!”
For decades, the US and its allies have pursued what is described as the strategy of wishful thinking. The hope harboured by the US and NATO allies has been that Russia, in the post-cold-war era, will assimilate with the European project — the larger idea of peaceful and prosperous Europe. Similarly, the Nixon administration invested in the idea of befriending China. The administrations which followed enabled China’s rise with trade and entry into world trade in the hope that one day China will join mainstream democracies.
The question which must haunt the Western world and subscribers of the rule-based world order is what are the options when China moves towards what President Xi Jinping characterises as “reunification” with Taiwan. Can the US or its allies envisage sanctions as a deterrent when Xi moves ahead with the declared ambition? The question which must follow is does the United Nations in its current architecture serve the purpose of preserving the Westphalian idea of sovereignty and rule-based world order? Can the West agree to make the Security Council more representative? Can it usher in systemic options — provisions for no-fly zones, a multilateral force to stop authoritarian cartographers.
It has been said that for decades nothing happens and then there are weeks when decades happen. The end of history is indisputably also the beginning of history.