Breaking down the effectiveness of the latest sanctions on Russia
LEILA FADEL, HOST:
The Biden administration introduced another round of sanctions on Russia last week. Sanctions have become a Western weapon of choice to counter Russian aggression in Ukraine. But as the war drags on, the question remains - are sanctions working? Joining me now is Ian Bremmer, founder of Eurasia Group, the world's leading political risk research and consulting firm. Good morning.
IAN BREMMER: Good morning to you.
FADEL: So when President Biden banned Russian oil and natural gas back in March, he said he wanted to deal another powerful blow to Putin's war machine. And you and I are speaking more than a hundred days into Russia's war on Ukraine, with no sign that Russia's military assault is waning after rounds and rounds of U.S. and other Western sanctions. So what have these sanctions actually done?
BREMMER: Well, lots of evidence that Russian - the military assault is waning in the sense that they've pulled back from Kharkiv, they've pulled back from around Kyiv. But the sanctions aren't what have accomplished that. That's the military and the intelligence support that the West, and particularly...
BREMMER: ...The U.S., has provided for Ukraine, as well as how toughly - how courageously the Ukrainians have fought. The - these sanctions are not changing Russia's military behavior, but they are damaging their economy and severely. The expectation is, from the IMF, about a 10% contraction of Russian GDP. Russia economists I've talked to that are closer to the issue think it could be as much as 15% this year. And this is the first time that an economy this large has ever been decoupled so aggressively from the advanced industrial economies in the world. Russia's a G-20 economy.
BREMMER: You've never seen sanctions like that against a G-20 economy of this scale.
FADEL: But the stated goal was to stop the Russian military. Was that not the goal?
BREMMER: The stated goal of the sanctions was to punish the Russians for their invasion. You know, I think the idea that economic sanctions by themselves are going to force the Russians to change their behavior is always going to be a tough call. This is going to hurt them for a long time. I don't think they're coming back. I think that once the Europeans decouple their oil and their gas - like they have their coal - from Russia, I don't see that coming back. I see that diversification will be permanent. And that's a - that's an unfortunate thing for people around the world, don't get me wrong.
BREMMER: But there's no question that this is part of a - the understanding, that Putin really misjudged his decision to invade Ukraine. I think the way I would frame it is if he knew that the West was going to respond collectively and as strongly as they have...
BREMMER: ...The likelihood he would have invaded on February 24 is very low indeed.
FADEL: Now, he's still projecting an image of strength, real or not. And energy prices are high. The U.S. has banned Russian oil. Europe is, like you said, waning itself off. But they are still getting the money from oil - billions from oil and gas sales. So what does that mean for Russia right now?
BREMMER: Yeah, well, it means that we are in between when the announcements of all the cuts have been made and when they've been made. I mean, right now, in terms of gas, you've got a small number of countries that have said that they're no longer going to use these ruble-denominated accounts - Poland, Bulgaria, Finland, Netherlands, I think Denmark. That's all of, like, 15% of gas that goes to Europe from Russia. And oil - announcements have been made about big boycotts - the big ones, like Germany and Poland - coming from the end of the year. So the prices are going up, but they're still selling to Europe. And so as a consequence, yes, they're still making a lot of money right now.
Having said that, keep in mind, half of Russia's central bank assets have been frozen. They don't have access to that. That's hundreds of billions of dollars. It's larger than the amount that they are selling right now in terms of energy. That's an unprecedented sanction that was also taken by the Americans and the Europeans. So when you look at the Russian economy as a whole, you can't say, oh, they're doing better in response to sanctions. That's just not true. But also, Russia's not North Korea, and you can't make them into a global pariah when countries around the world are still very much relying on many of the commodities that they pull out of the ground.
FADEL: Right. And they're looking elsewhere to make up for the eventual Europe loss, namely China and India. You talked about punishing Russia. In the few seconds we have left, the long-term goal - punishing Russia on the global stage. What does that accomplish?
BREMMER: The long-term goal is that a - an invasion of a democratic country to forcibly change their borders and wipe them off the map is not going to be tolerated by the United States and its global allies, either in NATO or in Asia. And I think that that sends a message not just to Russia but to other countries that consider further invasions in the future.
FADEL: Ian Bremmer is founder of Eurasia Group. Thank you for taking the time.
BREMMER: My pleasure.
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