Putin's no fool: western sanctions were quick but not Swift

Get ready for wall-to-wall jingoistic sabre-rattling. It has already started but is going to get a whole lot worse. Russian President Vladimir Putin sends his troops into two breakaway states in eastern Ukraine held by pro-Moscow separatists, an action considered to be an inflammatory attack on the country’s sovereignty, as a possible precursor to an all-out invasion, and Boris Johnson is on the airwaves. Russia, says the UK prime minister, can expect a “barrage of sanctions” for this escalation. In Washington, US President Joe Biden is said to be preparing the “mother of all sanctions” programmes against Russia. EU Commission President Ursula von der Leyen and Council President Charles Michel are promising tough measures. OMG, I want to scream. Mr Putin must be quaking in his handcrafted boots. But then I resort to another piece of social media shorthand, LOL. He knew they would do this, of course he did. Yet, he still went ahead regardless, and judging buy his bellicose address, this won’t be the last incursion — it could be the start of something much bigger. Still, in the face of all manner of threats from the West, he persists. There could be a simple explanation for this, that Mr Putin is mad, that he would rather inflict enormous financial pain and suffering, a cost that would far outweigh the benefits of securing those two states and more. To him, adding to Russia’s territory, restoring the former borders, adding to the greater glory of the motherland, greatly exceeds any economic hurt. The banks identified in the overnight announcements are not the biggest — the major Russian banks are tied up with the UK, US and EU investment banks, and the unravelling would be complex and costly. This is a reason given for the reluctance to block Russians from using the Swift banking-transactions network, that the fallout would severely impact upon their trading partners in the West. Plenty of international businesses will suffer because of the clampdown. But Mr Putin believes Russia is better prepared than in the past when embargoes were imposed and can ride out this current storm — he thinks there will some damage but it is a price worth paying. Mr Putin is no fool, he is not insane. His calculation is that the western steps will not cause so much agony. In recent years, Mr Putin has been trying to create fortress Russia, strengthening the economy against likely attack, preparing for days such as these. Russia’s reserves have grown while the proportion held in dollars has decreased. It has made strides to develop its own technology industry, so Russia is not so reliant on imports of chips and hardware, and on the software side, its programming and apps development have advanced. Russia has been cosying up to China as a ready market for its commodities and fossil fuels, which remain its biggest source of foreign exchange. Nevertheless, to pretend Russia is immune from what the West could do is foolhardy. The EU accounts for 27 per cent of all Russian exports; despite improvements, Russia is dependent on western technology imports (just because Russia is portrayed in the Western media as being capable of launching sophisticated cyber- attacks does not mean it is so versed in equipping its own people). Germany’s barring of the Nord Stream2 gas pipeline is expected to affect Russia more than Germany, at least in the short-term. And turning towards China, too, has its downside. There is no question as to which would be the junior partner. The notion of his Russia falling under China’s outwardly friendly but baleful influence would be unpalatable for Putin. Moving against some Russian banks and individuals will inflict hardship on them, although in truth, listing friends or known close associates of Putin and being seen as attempting to close down their dealings and freeze their assets in London, New York and other centres in the West may appear tough but that is all it is: an appearance. It is for show, for making headlines, rather than to get anywhere near rocking Putin. The fact is we have had sanctions lists in the UK, UK and EU for years and there has been no meaningful drop in Russian influence or activity. London is the pre-eminent global centre for washing Russian money; City firms are just as busy serving Russian clients; large parts of prime luxury residences continue to be owned by Russians; those people cited have long been able to put their affairs in order, working closely with their City advisers, so their lives can carry on as normal. This will not be lost on Mr Putin. Where a country as large and as connected and as wealthy as Russia is concerned, bringing sanctions is a two-way street. There may be a third aspect to Mr Putin’s planning, which is that sanctions do not work. Professor Lee Jones at Queen Mary London has published a paper: Societies Under Siege: Exploring How international Economic Sanctions (Do Not) Work . A professor in international politics, Mr Jones’s thesis is that sanctions rarely achieve their stated aims. “Statesmen do not really say what sanctions are meant to do. It is not possible to test their claims because they are never clearly specified. Often leaders will say something very simplistic like, ‘Oh, we’ll put pressure on the government.’” Added Jones: “A classical liberal understanding is that sanctions will work in one of two ways. The first is by provoking an immediate response on behalf of the targeted government by changing its cost-benefit analysis. The second is that sanctions will cause economic suffering among the population, which will lead them to turn against the government, and the government will have to change course as a result. In practice, both of these mechanisms rarely, if ever, trigger.” By his estimate, the success rate could be as low as 5 per cent. He looked at what happened when Russia invaded and annexed Crimea in 2014. Jones took the view that Mr Putin’s intention was to seize Crimea, then stop and reach a settlement with Ukraine. So, in that sense, sanctions did not change his aims — he was never going to invade all Ukraine, he was always going to confine himself to Crimea. Certainly, that time round, Russia was wounded economically, but there was also an upside: anti-American sentiment increased, pro-Putin sentiment increased, and so did support for Moscow's policy in Ukraine. Mr Putin knows this. The West would be foolish to put too much store by sanctions.