Leaning on Economics Sanctions: Why is Russia Different?

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The United States and Russia have been in an ongoing standoff since the end of World War II when primacy for power over vulnerable and broken countries was both countries’ goal. With one country advocating for democracy and the other advocating socialism, the two were bound to come to odds. What resulted was endless competition in many sectors, the threat of violence, and the inability to concede in the interest of each powers’ agendas. In some views, the standoff has persisted to modern day, with alleged antagonization such as digital attacks and election inference. These are some of the reasons the United States continues to place economic sanctions on Russia, the latest of which were announced by President Biden on April 15th, 2021. Within these sanctions, Biden expanded restrictions laid by the previous administration in 2018, those protectionist policies that were the platform of former President Trump. President Biden is quoted in the press briefing on these sanctions, “If Russia continues to interfere with our democracy, I am prepared to take further action to respond.” This author questions though, if the United States has already found interference within its democracy why not take action as it has in other countries, such as Myanmar? Why is Russia different? 

The latest sanctions against Russia are a result of the interference in the 2020 U.S. Presidential election, multiple cyberattacks, and Russia’s occupation of Crimea, among many other human rights violations. These are very serious offenses, offenses similar to ones the U.S. has responded to in other countries with crushing sanctions. In this situation though, the economic sanctions are “mostly symbolic” as Agathe Demarais, global forecasting director at The Economist Intelligence Unit, is quoted as saying in a piece by CNBC. The sanctions are imposed on 21 people and 19 entities in Russia, as well as a general sanction on investments of new Russian sovereign debt. Though this move may seem significant, Demarais continues to explain that these people and entities have no ties to the United States and probably were not looking to do business in the country anyway. There will be no noteworthy impact on their ongoing operations. As for the sanction on sovereign debt, the effect is only on the primary market and does not extend to the secondary debt market, where the majority of financial transactions are made. Again, this will have no noteworthy impact. We can observe this through the US dollar to Russian Ruble exchange rate which peaked near the day the sanctions were announced at 77.43 RUB/USD, but then stabilized in a matter of days to its biannual average of 74.46 RUB/USD.   

So, why are these economic sanctions so weak? One purposed reason is the weight Russian sovereign debt has on the international market. The Russian ruble is used in many financial transactions and any volatility or movement in its value could have a secondary consequence of affecting the U.S. economy through those international markets. Another reason for these weak sanctions is rooted directly in the history of the relationship between the two countries. If the United States tried to bleed Russia with strong sanctions, Russia has the motivation and ability to respond with violence. This is a risk the U.S. may not want to take, as it puts innocent American lives at stake. 

Is Russia different? Yes. The foreign investment in its economy makes it different. Their willingness to respond to threats against their state make them different. But are these reasons enough to treat them differently from other countries in the world? The United States proclaims itself a defender of democracy and human rights, but even when there is clear evidence against Russia, they impose “symbolic” sanctions that have no real consequence. Here we see yet another useless imposition of economic sanctions that could affect the validity of their use in the future. 

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