Sanctions and Mr. Putin

      Comments Off on Sanctions and Mr. Putin

How Harper can get at Putin, and other tips on sanctions

Colin Robertson The Globe and Mail Tuesday, Aug. 05 2014

Sanctions started with the travel and banking blacklist of Vladimir Putin’s closest cronies – the new nomenklatura. After the annexation of Crimea, bans were put on arms sales and the export of energy-related technology.

Last week, Western capital markets closed to Russian state banks. Western governments also expanded the list of Russian banking, arms and energy companies banned from doing business in the West.

Will these new sanctions work?

In the short term probably not as Russians are behind their President. Recent Russian polls put Mr. Putin’s popularity at over 80 per cent with strong confidence in the direction of the country, their military and government.

At the World Trade Organization, the Russians say the sanctions could trigger a fight that would “ultimately undermine the credibility of the multilateral trading system.” It will test the national security override provision in the WTO.

Outside of the G7 and the European Union, only a few nations are applying serious sanctions to Russia. There are still loopholes for Russia to avoid or evade them.

Sanctions are only as strong as the weakest link.

The Western arms ban only applies to transactions after the Crimean invasion. France intends to sell two warships – Sevastopol (as in occupied Crimea) and Vladivostok – to Russia. As the New York Times editorialized, “financial sacrifice is one thing; arming Russia is another.”

If Prime Minister Stephen Harper wants to cock a snook at Mr. Putin, do a favour to French President François Hollande. Pre-emptively purchase the ships for the Royal Canadian Navy. Rename them Frontenac and Champlain, after our great French warrior-governor explorers. Sign the Canada-Europe trade agreement on their deck.

For sanctions to bite they need to be progressively ratcheted up. The rest of the world needs to buy in. Sanctions work better when targeted, calibrated and comprehensively applied.

As with armed force, threat of sanctions has deterrent value. As with force, their application record is mixed.

The challenge, pointed out Jimmy Carter in his Nobel lecture, is avoiding the “injustice” of sanctions, aimed at penalizing abusive leaders, that “inflict punishment on those who are already suffering from the abuse.”

Sanctioned nations – Rhodesia after its Unilateral Declaration of Independence, South Africa over apartheid, Cuba since Fidel Castro, China after Tiananmen Square, Iraq after the first Gulf War and currently North Korea and Iran – have proven resilient. They adapt and find alternate sources through the black market or other rogue regimes.

In Economic Sanctions Reconsidered, Peterson Institute scholars’ Gary Hufbauer and Jeff Schott look at the effect of sanctions since the First World War.

Sanctions were assessed “at least partially successful” in one-third of the 204 cases examined.

Used to punish and deter, as well as to assuage domestic constituencies, they were more effective when applied between friendly nations, likely because they shared norms of behaviour.

Financial sanctions are becoming increasingly effective through better tracking. Named companies and individuals become “radioactive,” curbing their ability to travel and profit.

In their look at three decades of sanctions on Iran, the Iran Project concluded their impact on the kitchen table helped persuade Iran to return to the nuclear bargaining table. The challenge is knowing when to convert a “purely confrontational strategy” to one combining pressure and positive signals.

Sanctions are having an effect on Russia. Russia’s central bank raised its interest rate to 8 per cent last week noting the “negative impact” of “external political uncertainty.” Russian annual growth was downgraded by the IMF to 0.2 per cent.

Western leaders need to pressure the new beneficiaries of the liberal international order, especially those in the G20, to join in the application of meaningful sanctions. With global trade and investment rights come community responsibilities.

Within the G7, set a timetable for additional sanctions if President Putin does not comply.

For Mr. Putin to get away with invasion, annexation and the murder of innocents is wrong. Hold him to account.

Sanctions are imperfect but a better tool than using force. “Peace” Ronald Reagan observed, “is not absence of conflict, it is the ability to handle conflict by peaceful means.” Hitting the bad guys in their passports and pocketbooks helps encourage compliance.

Sanctions oblige patience, fortitude and disciplined unity – difficult virtues for democracies. But at stake is the integrity of our liberal international order.