Sanctions against Russia: What will and won’t work
A short post today about when economic sanctions work and when they don’t.
Sanctions don’t work when:
Elizardo Sanchez, who had spent eight-and-a-half years in prison in Cuba and is still a prominent dissident there, was typical and unequivocal:
I believe the embargo is the best ally the totalitarian government has, because it justifies its failures. When there’s no medicine, or transport, or food, everyone says, ‘it’s Washington’s fault.’ For that reason, when politicians in Washington try to lift the embargo, the [Cuban] government doesn’t help. The embargo serves the interests of the government here.
As for an effect on supply, it’s not obvious. As long as there’s sufficient demand, why not keep supplying? Some consumers — in China, say — will buy what you’ve got. And surely, as a producer, you want to sell it.
So then, why impose sanctions at all? Which leads us to those instances in which sanctions do work.
Sanctions do work when:
As for the rich, if they can’t operate easily in the global economy due to a freeze on their foreign assets, say, well — to the extent they have influence over government policy, they have reason to pressure it in ways that bring the embargo against them to an end.
In evaluating sanctions against Russia, then, it would be wise to see if its oligarchs are being seriously targeted, especially in England, where so much of their money has gone in recent years (a large part of London’s remarkable boom). And I’ll be watching the extent to which the Russian banking system and stock market tremble. Oil sanctions? I could be wrong, but I won’t take them all that seriously.
Fore more, The New Yorker’s John Cassidy has done a nice job of summarizing the sanctions debate in this piece from last year about sanctions against Iran.