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Thomas Gift

February 24th, 2023

With its new sanctions, the US is walking a fine line between punishing Russia and alienating China

0 comments | 3 shares

Estimated reading time: 8 minutes

Thomas Gift

February 24th, 2023

With its new sanctions, the US is walking a fine line between punishing Russia and alienating China

0 comments | 3 shares

Estimated reading time: 8 minutes

One year on since the start of Russia’s war in Ukraine, the United States has signaled plans to impose a new round of sanctions on Russian President Vladimir Putin’s regime. In this Q&A, Thomas Gift discusses what the new sanctions would entail, their broader economic and geopolitical ramifications, and how effective they might be given evasion efforts by Russia. 

What impact would the planned sanctions have on Russia?

The new sanctions are expected to be far-reaching, even if they stop short of what the most hawkish wings in Washington would like to see imposed. According to reports, they’d affect roughly 200 individuals and private enterprises in Russia. Targets would include so-called “dual-use” items such as refrigerators, which contain semiconductors that be repurposed by Russia’s armed forces. The sanctions would also take aim at the shipment of oil, particularly to border states, which has been pivotal to propping up Russia’s economy. Perhaps the most measure would be to further prohibit commercial transactions between foreign firms and financial institutions with Russia. The US and its allies are essentially delivering an ultimatum: either continue to do business with Russia—or with a coalition of Western economies comprising roughly 50 percent of the world’s GDP.

Have sanctions been effective to date? 

Put simply, the sanctions haven’t delivered the kind of economic “knockout” punch that the White House promised. We obviously don’t have the counterfactual — what would have occurred absent sanctions. But just looking at some of the key metrics, Russia has so far been able to avoid the most dire predictions. For instance, the ruble’s exchange rate has barely budged since before the war started (it’s still trading at about a 75-per-dollar rate). GDP declined at roughly 2 percent last year. But that’s nothing relative to the 15 percent that Washington forecasted. And in 2023, many estimates predict that Russia’s economy will actually fare better than the UK’s. In large part, Russia has been able to withstand sanctions because of its ability to continue exporting energy reserves and to access black-market versions of products that have kept domestic consumerism afloat.

Can the US avoid alienating China, a close trading partner of Russia, with these new sanctions?

The Beijing-Moscow connection is pivotal to these new sanctions, and it’s an issue that the administration is monitoring. Ratcheting up sanctions — not only on individuals but businesses — will almost certainly escalate US tensions with China. It’s worth keeping in mind that China is already an essential supplier of materials to Russia that serve both civilian and military purposes. It’s one of the largest sellers, for example, of products like drones, vehicle parts, and various technological hardware. On top of that, there’s legitimate worry within NATO that China could start directly arming Russia. For Biden, the risk with these new sanctions is further alienating Beijing, pushing it closer to Russia — and not only straining US-China relations — but pushing Beijing to formally align with the Kremlin in Ukraine. Avoiding that outcome will be a balancing act for the White House.

USA and China Flags in Chinatown” by Nan Palmero is licensed under CC BY 2.0 

To what extent can Russia evade some of these new sanctions? 

One of Biden’s central goals is to prevent Russia from circumventing an oil price cap that’s formally been put in place by the Group of Seven countries and Australia. But that’s difficult, and the US is necessarily limited in what it can do in preventing evasion. Alongside better enforcement, the US has been trying to hike the costs of Russia’s war indirectly through making the exporting of oil more expensive. As a result of its policies, for example, Russia has been compelled to pay billions of dollars more in insurance for oil tankers—money that could be channeled into the war effort. But whether that’s enough to do measurable damage compared to the profits that Russia continues to reap is unclear. Putin seems to be getting more effective at avoiding the effects of both sanctions and export controls, making U.S. counter-evasion efforts that much more critical.


About the author

Thomas Gift

Thomas Gift is Associate Professor of Political Science at UCL, where he is director of the Centre on US Politics (CUSP).

Posted In: US foreign affairs and the North American neighbourhood

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