As regular readers know, I am not a great believer in the benefits of economic warfare. All our past attempts to subdue the enemy by causing economic harm have little to show for.
The regimes of neither Cuba, nor North Korea, nor the Islamic Republic of Iran have so far succumbed to our zealous attempts, no matter how much pain we inflicted on their populace and for how long.
In the case of the Democratic People’s Republic of North Korea, target of US-led sanctions on and off since the 1950s, their people have died of malnutrition in large numbers, but the cruel regime has endured, strengthened even, and its nuclear armament programme is meanwhile progressing swiftly.
Why we keep repeating a strategy that has convincingly proven its impotence and counter-effectiveness is hard to explain.
I understand that it is desirable to strangle an adversary remotely rather than risking the lives of one’s own soldiers. The approval of the domestic audience has appeal, as has the satisfaction that emanates from moral righteousness.
But in the end we should aim at strategies that improve an unsatisfactory situation, instead of making it worse. The more so as economic strikes are inflicting costs on the attacker too.
The reasons why sanctions don’t show the desired effects are multitudinous. Citizens rally behind their long despised regimes, which are nurtured and embellished by foreign threats, embargo-induced corruption and total control of information flows.
Countries less inclined to follow the embargo banner will come to help. North Korea would have long collapsed without a Chinese lifeline, for instance. The sanctioning of South Africa’s apartheid regime was marginally more successful because very few nations felt compelled to prop up white supremacists.
But in the long run it is capitalist profit-making that will blunt the effectiveness of sanction rules. The longer they last, the more efficiently they will be circumvented.
The sanctioning of Russia, a treasure trove of fossil fuels, metals and materials, is a case in point.
As much as its cruel attack on Ukraine has provoked condemnation by the international community of nations, only a comparably small group of Western countries has taken sides. African nations, most of them unwilling to support their erstwhile colonial masters, remember Russia as a reliable partner in their struggle for independence.
They also have little sympathy for the sufferings of Ukraine as they see their own armed conflicts, causing far greater bloodshed, being largely ignored.
Many countries in South America and southeast Asia are too familiar with US meddling to take their side with zeal. The Middle East, always susceptible to US-themed conspiracy theories, sees little economic advantage in joining a war that is not theirs, and neither does India.
Russia’s former Soviet republics in Central Asia and the Caucasus are in angst for their independence as well as in need of Russia’s continuing benevolence or even regime support and cannot take sides.
And then there is the sizable alliance of countries that have long been at the receiving end of US-led sanctions and military interventions, happy to join forces with Russia: North Korea, Venezuela, Iran, Iraq, Syria, Libya, and of course, China, which feels seriously threatened by the US in its ambition to be the new master of the world.
In the long run it is capitalist profit-making that will blunt the effectiveness of sanction rules- Andreas Weitzer
The latter must be enjoying this proxy war with the US, a testing ground for its own military ambitions. It is a conflict that is guaranteeing China exclusive access to a bottomless reservoir of raw materials, energy and arable land just over the border.
In such a disunited world, to discuss the effectiveness of sanctions is meaningless, because they can’t even be implemented in a meaningful way. The oil we don’t buy is gobbled up by India, Turkey and China with gusto.
What they don’t buy is transhipped to Europe by a growing flotilla of sanction-busting shippers, ‘blended’ in friendly harbours, loaded onto collector vessels off the coastal waters of the Mediterranean or refined in Indian and Chinese refineries to be sold as oil products to Europe that it refuses to buy directly from Russia.
The flow of Russia’s oil is undiminished, and this is what we wanted in the first place, because a real drop of Russia’s share in global markets would have been too expensive to contemplate.
A ‘grey’ market for shipping Russian oil has developed. It’s not ‘black’ because sanctions are ingeniously circumvented, not violated. Middlemen based in Singapore or Dubai handle crude shipments financed and insured by Russia and increasingly by Middle Eastern banks too, on a growing armada of second-hand ships that have rapidly changed ownership in the last few months.
Attempts to strangle Russia’s access to microchips and electronic goods had the intended effect of cutting off direct shipments. Yet these were swiftly replaced by re-exports from less scrupulous countries whose demand for such goods has miraculously soared.
While we fear the supply of arms, ammunition and drones from the likes of North Korea, Iran and China to Russia, the latter has the uninterrupted means to self-replenish its ordnance. We’d better ramp up our arms supplies to Ukraine fast.
Meanwhile, life in Russia is continuing as before. Economic development, stagnant for a long time with people not having experienced much improvement for two decades, has not been visibly worsened by sanctions. The rouble has regained its pre-war exchange rate.
For most Russians, who had little to hope from Putin in the first place, their drab existence has gained a meaning now as they are taught by relentlessly foaming news outlets, school drills and the church: back to square one, fighting the Nazis again, and NATO, the reincarnation of Hitler’s Germany.
What will damage Russia much more than Western reaction to its aggression is its own squander of a better future. Long before the war, but accelerated by it, economic incompetence has truncated the country’s potential. The young and the educated have left Russia year after year for a better life elsewhere.
The oligarchs have followed with the presentiment that their time is borrowed too. This permanent brain drain has accelerated with the first wave of forced mobilisation and will not stop until the Iron Curtain comes down again. If we really want to pacify Russians for good we should welcome them. Yet we did the opposite. We chased the oligarchs back into Putin’s lair and alienated ordinary Russians and banned them from coming.
We think about rebuilding Ukraine once the war is over, although we have no idea when this will be and how to achieve it. Perhaps we should also start thinking how to reintegrate Russia, the biggest country by land mass, once the nightmare is over ‒ with or without Putin. Russia, after all, will not be the last threat to world peace.
Andreas Weitzer is an independent journalist based in Malta.
The purpose of this column is to broaden readers’ general financial knowledge and it should not be interpreted as presenting investment advice, or advice on the buying and selling of financial products.
andreas.weitzer@timesofmalta.com