Are Western sanctions against Russia working?: ANALYSIS

The Biden administration rolled out its largest-ever round of sanctions against Moscow on Friday, amplifying attempts to use the restrictions to crush Russia's war machine as the country's invasion of Ukraine enters its third year and also punish the Kremlin for its role in the death of opposition leader Alexei Navalny.

"Our actions to ensure Mr. Putin pays an even steeper price for his aggression abroad and repression at home are actually having an impact," White House national security spokesperson John Kirby said on Friday.

Even before the latest actions were announced, Russian individuals and companies were already the subject of more than 16,000 sanctions, making Russia the most sanctioned country on the planet, according to Statista.

And still, those penalties haven't delivered the fatal blow many officials forecasted at the outset of the war -- and experts say that while the latest round from the Biden administration is welcome, it's unlikely to have a significant impact as Russia continues to subvert the worst of West's intended consequences.

Russia's 'no-limits' trade partnership

Even though the U.S. has worked in careful coordination with aligned countries, Russia has maintained and even fortified its own critical partnerships.

"The history of sanctions and other economic coercion is not a happy one, especially when dealing with a highly motivated great power, as Russia is in Ukraine. Economic coercion usually fails without a high level of global compliance with the effort," said Justin Logan, director of defense and foreign policy studies at the Cato Institute.

China has proven to be the Achilles heel in the West's economic war on Russia, with trade between the two countries soaring to a record high in 2023, according to data provided by Beijing.

The U.S. has warned the Chinese government against arming Russia -- promising dire consequences if Beijing is caught supplying weapons to Moscow -- but the administration has set no such red line for dual use items -- technology that can be used for both civilian and military purposes.

Washington and other Western powers are starting to crack down on these loopholes, including through imposing penalties third party countries in the Biden administration's latest tranche of sanctions, but Timothy Ash, an emerging market strategist and an associate fellow at Chatham House, says it's a delayed response.

"The West, while eager to maximize the international isolation of Russia and trying to keep the developing world on board, was slow and soft on enforcement," he said.

"Way too late -- to my mind -- the West is now tightening up with secondary sanctions imposed on an increasing number of companies and individuals among Russia's trading partners, from China to India, the Middle East, and Turkey," he continued.

Elaine Dezenski, senior director of the Center on Economic and Financial Power at the Foundation for the Defense of Democracies, says disrupting Russia's trade network will require more than targeted sanctions against specific companies doing business with Moscow.

"The administration should also issue sanctions or restrictive measures against entire jurisdictions that are major sanctions-evasion hubs for the Russians," she said, while also arguing for carrying out increased asset seizures and interdictions to break lethal foreign-supply chains.

Oil money

Experts also point to Russia's continued ability to turn a profit from oil exports as an effective lifeboat for Moscow's economy.

The U.S., G7 and other E.U. countries placed a $60 ceiling on barrels of Russia crude shipped by sea in late 2022, seeking to let the supply hit markets in middle-income countries while sharply limiting returns for Moscow.

A Treasury Department analysis released on Friday shows Russia has been forced to sell much of its oil at a discount of more than $60 below the standard price per barrel, but that the country had subverted restrictions in earlier months by using a "shadow fleet" of ships.

Russia has been able to use that network and its own vessels to move as much as 70 percent of its maritime oil, according to estimates.

"As a result, we've seen continuously growing revenues of the Russian budget coming from the oil," said Maria Snegovaya, a senior fellow for Russia and Eurasia with the Europe, Russia, and Eurasia Program at the Center for Strategic and International Studies

Russia's monthly revenue from the exports is now higher than it was before the war, Snegovaya says.

"Accordingly, Russians used this money to double down on defense spending. In 2024, its investments in defense have increased by almost 70 percent as compared to 2023," she added.

No economic pain, no gain

Some also argue that maximizing sanctions against Russia would require the U.S. and allies to place additional restrictions on its own companies -- even if it may lead to collateral economic damage.

Ash argues that Western countries should ban all business with Russia "barring special licenses for truly critical items."

"This would close off Russia from most non-critical imports and trade and, I think, accelerate the international isolation of Russia from business," he said.

Steven Blockmans, a senior research fellow at the Centre for European Policy Studies, argues that Western businesses should at least be required to "pay for the privilege of continuing to do business in Russia despite sanctions."

"While some of the world's largest companies have completely pulled out from Russia, most EU and G7 firms maintain a foothold in Russia to 'honor' existing contracts," he said. "Taxing them would make them pay for their contribution to Russia's war effort against Ukraine."