An Economic War: The Efficacy of Sanctions

An Economic War: The Efficacy of Sanctions

Written by: Alyssa Myers 

In an attempt to gain a political advantage over a situation where military action is uncalled for and diplomacy is ineffective, economic sanctions can be utilized to prohibit the targeted nation’s economic growth. The first noted use of economic sanctions was in the Athenian Empire, 432 B.C., as they banned traders from Megara in order to suffocate their economy and weaken the Empire’s rival city-state’s wellbeing. Similar strategies were taken throughout history, but the creation of multinational coalitions, predominantly starting in the 20th century, allowed for more widespread and effective economic sanctions where groups of countries could agree to restrict trade and economic relations with other nations. Yet, a deeper dive into the reality of these economic sanctions clearly highlights that oftentimes the most vulnerable groups of people are adversely affected by sanctions, creating a humanitarian and moral crisis. 

Despite the potential political gain sanctions offer, clear adverse humanitarian impacts should cause people to pause and think before immediately agreeing with the merit and efficacy of sanctions. Historically, sanctions have been mistargeted in such a way that primarily harms vulnerable populations within a given nation. As a result, the nation itself (along with its government and economy) may not be damaged whatsoever, but the lives of those living in fragile situations can be further worsened: extreme poverty, starvation, lack of economic opportunity, and far more detrimental impacts. Perhaps governments would see the harm these sanctions have on their people and make systematic changes so as to appease the nations imposing those sanctions; however, to make that assumption would be to put a lot of trust in the humanity of targeted governments, which historically is not a reliable decision.

https://tradingeconomics.com/russia/stock-market 

Presently, we see an example of the use of sanctions in the Russian-Ukrainian conflict and allows us to see if sanctions can, in fact, be used in an effective way in a modernized society.  The US and EU have both imposed economic sanctions which have been effective in the regard that they’ve shrunk Russia’s Economic growth. Pictured above is an image of the Moscow Exchange (MOEX) Russian Index, and there’s a sharp decline in its value after sanctions started being imposed on Russia and violence continued in Ukraine. The US is no longer importing Russian gas, and even international companies such as Nike and Apple are going as far as closing down their online stores in Russia. Airline and shipping companies have also stopped assisting Russia, which is greatly reducing their economic potential growth by limiting transportation. Due to financial restrictions, Russians are subjected to insane interest rates, rapidly declining value of their currency, and a bleak outlook on the future to come.

https://tradingeconomics.com/russia/stock-market 

Due in part to economic sanctions, stocks for Russian gas companies Surgutneftegas and Tatneft have fallen in value by over 40%. Additionally, Inter RAO, a company that profits from international energy trading, has fallen in value by 53.33%, and VTB Bank, which has had international sanctions imposed onto it has fallen by 53.36%.

https://www.theatlantic.com/photo/2022/02/photos-anti-war-protests-russia/622914/ 

Clearly, the sanctions on Russia have made a tangible impact, and in that sense, perhaps they’ve accomplished their goal. From the Western perspective, this likely seems as a good thing as the US/EU is finding a way to harm Russia without engaging in forthright military action. Yet, this impact has been most strongly felt by Russian citizens, who are still entitled to basic human rights, and of which a solid percentage do not even support the violence incited by Putin’s invasion of Ukraine. Above is an image of one of over 7,000 Russian citizens who’ve been detained for protesting the war. The conflict is being advertised to Russian citizens as a “special operation” in Ukraine, and mass protests show the fact that ordinary Russian citizens don’t agree with this operation. Russian citizens are subjected to financial insecurity, deflating value of their life savings, and even unforeseen impacts such as Russian tourists being stuck abroad as a result of these sanctions. This is not to say that the sanctions are directly bad -- at least we are taking some action rather than making futile diplomatic statements -- but now we are left to hope that something good may come out of these sanctions; that Russia would stop invading Ukraine to restore their economy and that Russian citizens won’t have to suffer at their behalf for nothing. 

Therefore, although sanctions can be effective in certain regards, they must be structured in a way that carefully targets the government rather than vulnerable groups of people, who are still entitled to basic human rights. A recent method of this is called targeted sanctions. These sanctions aim to reduce the negative impact that community members may face as a result of these sanctions who don’t agree with the actions their government is taking. This way, action still can be taken against the government (rather than doing nothing and condoning it) but the sanctity of human life is protected to the best extent possible. When addressing international conflicts such as this, one must stand strong to their beliefs and take action, but in doing so remember to view citizens of all countries as human beings first, more than identifying them by their nationality, especially when so many disagree with their government’s actions.

Works Cited

Abughris, Noura. “A Brief History of Economic Sanctions - Carter-Ruck.” Carter-Ruck, 30 Nov. 2021, https://www.carter-ruck.com/insight/a-brief-history-of-economic-sanctions/.

“Moex Russia INDEX2022 Data - 1997-2021 Historical - 2023 Forecast - Quote - Chart.” MOEX Russia Index - 2022 Data - 1997-2021 Historical - 2023 Forecast - Quote - Chart, https://tradingeconomics.com/russia/stock-market.

Selyukh, Alina. “How Everyday Russians Are Feeling the Impact from Sanctions.” NPR, NPR, 2 Mar. 2022, https://www.npr.org/2022/03/02/1083694848/sanctions-russia-ukraine-economy-war.