Analysis: Obama Not Alone in Having Doubts About Russia Sanctions

MOSCOW April 28, 2014— -- If President Obama seems skeptical of his own plan to stop Russia’s meddling in Ukraine with just sanctions, he may have good reason. He is in uncharted waters, trying to pressure such a large country into backing down without the threat of force.

“We don’t yet know if it’s going to work,” Obama told reporters ahead of today’s sanctions announcement.

Obama took the use of force off the table early on in the Ukraine conflict. Instead, he is relying solely on economic sanctions and his efforts to isolate Russia’s President Vladimir Putin. Yet this will not be easy, largely due to Russia’s economic size and its close economic ties with Europe.

There are few examples in the modern era of sanctions without the threat of force being used to deter aggression, and none on this scale, according to Gary Hufbauer and Jeffrey Schott, experts at the Institute for International Economics who together have studied the use of sanctions throughout history. There are even fewer instances in which it has worked, they say.

“There is no direct precedent,” Hufbauer said in a phone interview. “I cannot remember one [case] where that’s been successful.”

"There has to be a substantial loss of wealth in Russia for this reasoning to work,” he said.

“Russia much more engaged financially with the world compared with sanctioned countries in the past,” Hufbauer said.

Schott, however, cautioned about comparing apples to oranges.

“You have to be very careful in using historical precedents,” Schott he said in a separate interview. “The overall economic and political context can change quite dramatically from case to case.”

Still, there is little in history to guide the Obama administration.

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In most recent prominent uses of sanctions, notably Iran and North Korea over their nuclear programs and Iraq in the 1990s, the use of force, whether a credible threat or not, has always stood behind the sanctions as the next step should the sanctions fail.

In the case of Russia, the White House is so far sanctioning individuals and entities in Putin’s inner circle, hoping to squeeze him to halting what the West says is a coordinated campaign to destabilize Ukraine. The White House has held off on what it calls sectoral sanctions, which could hit Russia’s critical energy, mining, and banking sectors.

The reason the White House may not have yet imposed those tougher measures illustrates exactly what makes this so difficult.

Despite Obama dismissing Russia as a “regional power,” it nevertheless occupies a strategic position. Its $2.5 trillion economy is the seventh largest in the world. Its gas exports are critical for American allies in Europe (a major reason they have been reluctant to go along with tougher American proposals). American companies like ExxonMobil and Boeing have massive investments in Russia that could suffer under broad sanctions.

Russian cooperation has also been critical in negotiations with Iran and North Korea. Privately, some U.S. officials have worried that antagonizing Russia further could jeopardize that collaboration.

Others experts, however, point out that globalization is a double-edged sword and is exactly why sanctions could work.

“Russia is extremely dependent on global finance and global trade,” said Anders Aslund, a senior fellow at the Institute for International Economics. He believes the White House should impose tougher sanctions now rather than ratchet them up slowly.

“We need shock and awe to change Putin’s behavior rather than incrementalism,” he said.

Aslund dismissed any possible effect of the sanctions on the U.S. economy, calling the U.S.-Russia trade relationship “a blip” and said Europe could rely on its reserves for months if Russia retaliates by cutting off gas supplies.

U.S. officials insist their policy is adequately calibrated to ratchet up pressure on Putin, saying they believe that while it may not change his behavior immediately, it will do so “over time.”

Sanctions have become one of Obama’s preferred weapons. It’s easy to see their attraction. After over a decade of war, the American public is weary of conflict. Obama himself has displayed an aversion to the use of force. Sanctions offer a potentially powerful and bloodless alternative.

In the 1990, targeted sanctions became more powerful as leaders harnessed the power of cutting off access to the American banking system. U.S. officials are quick to praise sanctions as one reason Libyan leader Moammar Gaddafi gave up his weapons of mass destruction in 2004.

Both Hufbauer and Schott agree that for sanctions alone to work with a large interconnected country like Russia, Obama will have to get Europe on board.

“I think the only chance is that if the western powers can come up with a very strong package,” Hufbauer said. “With that threat, Putin might be deterred. But without that, chances are not very good.”

“If the U.S. and the EU can only increase this incremental approach to sanctions in naming individuals and the occasional company or bank, this is a policy of turning the screw very, very slowly and not applying much pressure,” Schott said. “If what is on the table turns out to be more of the same, the Russians may play for more time and can continue to destabilize Ukraine and absorb the costs.”

Obama, Hufbauer said, appears to be reverting to President Woodrow Wilson’s view of sanctions. Wilson trumpeted the sanctions after World War I, saying if used properly “there will be no need for war.”

“The modern theory is that they are part of the force curve. They’re signaling that force is around the corner if sanctions don’t work,” he said. “Obama has really reverted to a Wilsonian view, that sanctions are an alternative to the use of force.”

The closest modern example may be that of Syria, where Obama has all but removed the threat of American force off the table. Sanctions there have so far have failed to stop President Bashar al-Assad’s forces from attacking.