As Russia expands its grip on Ukraine, paying little heed to cries of outrage and revenge from America and Europe, sanctions have been considered as one tool the latter can use to punish Moscow. Some sanctions have already been announced, and US-European officials are scratching their heads for more. Other than this commonly used punishment, there are no options to frighten President Vladimir Putin. A military strike isn’t even considered an option. But are sanctions against Russia working? Interestingly, it is, but not in a way that will make a difference to Putin and his people. A slew of reports in the Western media are talking about this.
Russian economy is too huge for sanctions to make a crippling impact. Moscow is sitting on roughly half a trillion dollars in foreign exchange, and it exports about 9 million barrels a day of crude oil, bringing in about $330bn a year. And that doesn’t include its sales of natural gas. Moscow’s stock market rebounded on Tuesday for the second day in a row after the latest round of sanctions turned out to be weaker than expected.
Experts argue that even if Russia were to cross the border into eastern Ukraine , it would be hard to imagine a full embargo on Russian exports, because the world needs the oil, which means such a measure would bite back. And trade with Russia for US and Europe outside the energy sector is relatively small; trade with Russia for US accounts for less than one percent of overall US trade. At the same time, sanctions are bad news for foreign companies operating inside Russia. The biggest US investor in Russia is Exxon Mobil, which has an oil and gas production facility off Sakhalin Island in eastern Russia. London-based oil giant BP is more exposed to Russia. It owns a 19.75 percent stake in Rosneft, whose chief executive, Igor Sechin, was just added to the US sanctions list. Royal Dutch Shell has a stake in a Gazprom oil and gas field in Siberia and is a partner in Sakhalin-2, which has a liquefied-natural-gas terminal that in 2012 supplied a 10th of Japan’s gas needs.
Putin and Russians seem to be determined to suffer a little for the sake of Ukraine, which they say fall in their sphere of influence. Moscow has always been sensitive about Ukraine and has threatened to go to any extent to protect its interests.
Though sanctions have worked economically in the case of smaller countries, it hasn’t succeeded in breaking their will. The US embargo of Cuba has lasted more than half a century, and the Castros still rule there. The embargo of North Korea has not weakened the power of the Kim family, despite the suffering of the populace.