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Measuring The True Weight Of Economic Sanctions

Empirical research suggests that economic sanctions are at best ineffective and at worst counterproductive. But Russia may yet pay a hefty price for its Ukraine aggression.

In Cuba's Port of Mariel
In Cuba's Port of Mariel
*Farid Kahhat

LIMA — Empirical evidence is clear that generalized economic sanctions, such as the United States' trade embargo on Cuba, typically don't achieve their intended results. After all, the U.S. hasn't managed to end the communist regime in Cuba. And though partial sanctions targeting a specific sector with particular objectives are more likely to be successful, those too are largely ineffective.

What's more, it turns out that generalized sanctions are also counterproductive. Research by Daniel Drezner suggests that authoritarian regimes are able to redistribute the impact of sanctions in such a way as to ensure that weaker social groups (or regime opponents) will bear their cost. Meanwhile, revenues generated as a byproduct of sanctions — through smuggling of goods that can no longer be legally imported, for example — tend to benefit allies and prolong their loyalty.

Another study by economist Ronald Wintrobe contends that the adverse economic effects of sanctions may also increase the likelihood of a regime resorting to repression in response to the loss of social support sanctions may cause.

Observing these consequences initially led to what have been termed "intelligent sanctions" — essentially those that affect the outside interests of particular companies and individuals, such as the freezing of assets or bank accounts. They seek to ensure that sanctions are primarily shouldered by those they target.

Still, certain problems persist. When sanctions target policies that are viewed as a matter of national interest — Russian policies toward Ukraine, for example — the regime might prefer to tolerate very high costs rather than change them. Reaching the set objective might then require harsher sanctions than earlier envisioned, which is risky given the considerable interdependence of states both applying and suffering sanctions. Russia supplies 30% of Europe's energy, for example.

I presume this is what President Vladimir Putin had in mind when he first threatened his own sanctions against European powers. All that achieved was the hastened flight of capital from Russia. Depending on the calculation, the net value of private investment leaving Russia so far this year is between $50 billion and $70 billion (or betweeen 2.5% and 3.2% of the Russian economy). That provoked a roughly 15% devaluation of the Russian ruble in the first months of 2014, which in turn pumped the annually adjusted inflation rate up to 7.2% in April.

To curb inflation and mitigate capital flight, the monetary authority sold $35 billion in reserves on the markets and raised the primary interest rate from 5% to 7%, then to 7.5%. That move, however, merely reinforced the downward trend in economic growth. Moody's changed its initial prediction of economic growth from 2% in 2014 to -1%.

Even if sanctions don't assure policy changes, their influence on investor expectations are presenting the Russian economy with a very hefty bill. And that may wind up carrying a political price tag for the Putin government that can't be measured in rubles alone.

*Peruvian Farid Kahhat is an international analyst and professor of the Department of Social Sciences at Peru's Pontifical Catholic University.

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FOCUS: Israel-Palestine War

Why The U.S. Lost Its Leverage In The Middle East — And May Never Get It Back

In the Israel-Hamas war, Qatar now plays the key role in negotiations, while the United States appears increasingly disengaged. Shifts in the region and beyond require that Washington move quickly or risk ceding influence to China and others for the long term.

Photograph of U.S Secretary of State Antony Blinken  shaking hands with sraeli Defense Minister Yoav Gallant.

November 30, 2023, Tel Aviv, Israel: U.S Secretary of State Antony Blinken shakes hands with Israeli Defense Minister Yoav Gallant.

Chuck Kennedy/U.S State/ZUMA
Sébastien Boussois


PARIS — Upon assuming office in 2008, then-President Barack Obama declared that United States would gradually begin withdrawing from various conflict zones across the globe, initiating a complex process that has had a major impact on the international landscape ever since.

This started with the American departure from Iraq in 2010, and was followed by Donald Trump's presidency, during which the "Make America Great Again" policy redirected attention to America's domestic interests.

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The withdrawal trend resumed under Joe Biden, who ordered the exit of U.S. forces from Afghanistan in 2021. To maintain a foothold in all intricate regions to the east, America requires secure and stable partnerships. The recent struggle in addressing the Israeli-Palestinian conflict demonstrates that Washington increasingly relies on the allied Gulf states for any enduring influence.

Since the collapse of the Camp David Accords in 1999 during Bill Clinton's tenure, Washington has consistently supported Israel without pursuing renewed peace talks that could have led to the establishment of a Palestinian state.

While President Joe Biden's recent challenges in pushing for a Gaza ceasefire met with resistance from an unyielding Benjamin Netanyahu, they also stem from the United States' overall disengagement from the issue over the past two decades. Biden now is seeking to re-engage in the Israel-Palestine matter, yet it is Qatar that is the primary broker for significant negotiations such as the release of hostages in exchange for a ceasefire —a situation the United States lacks the leverage to enforce.

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