Russia sanctions must be extended and maintained to work – analysts

FILE PHOTO: Russian Embassy, ​​as President Biden announces new sanctions against Russia, in Washington
FILE PHOTO: A pedestrian holding an umbrella strolls outside the Embassy of the Russian Federation, near the Glover Park neighborhood of Washington, U.S., February 22, 2022. REUTERS / Tom Brenner

February 25, 2022

By Philip Blenkinsop

Economists and analysts believe that Western sanctions will not deter Russia’s invasion of Ukraine and will need to be expanded and maintained over the long term to harm the economy. Russia.

The European Commission on Friday said sanctions agreed with the United States and its allies over Russia’s energy and financial sectors, as well as export restrictions on technology, would limit the country’s ability to finance and export. war aid of the Russian “regime”.

Jacob Kirkegaard, a senior fellow at the German Marshall Fund, said export controls on technology could directly affect Russia’s military if a protracted conflict leaves the country with a shortage of chips to enter. rocket.

However, like others, he sees sanctions as a broader and longer-term economic game.

“The way to think about economic sanctions is as a tool to encourage regime change in the long run. For this to work, it doesn’t matter how much we do now, but how long we can maintain unity,” said expert analysis service Eurointelligence.

Guntram Wolff, director of the Bruegel think tank, said sanctions need to be in place over the long term and an important part of that is Europe’s ability to self-govern Russian gas, which could pose a challenge next winter, with sustainable energy unable to make up the shortfall.

“This means we have to heat less and break taboos, such as burning coal or nuclear plants,” he said.

He also said that a major shortcoming in the current sanctions is the freezing of the assets of Russian oligarchs, a measure that does not affect ordinary Russians and is perhaps more likely to give Putin a headache. .

There are already question marks over the consistency of the planned financial sanctions, with the US targeting Russia’s two largest banks and the EU focusing on smaller companies.

Removing Russia from the SWIFT global payment system is a highly recommended option, which would make payment transactions more complicated, although there are new competitors to SWIFT that the Russians could use.

EU officials point out that 80 billion euros ($89.9 billion) in exports to Russia will be lost and problems in payments to EU members such as Germany and Italy that rely on natural gas. But a growing number of EU voices are calling for SWIFT to be included in another package of measures.

China is also likely to play a big role in collective sanctions, especially after it announced a “no limits” partnership with Moscow earlier this month. It did not impose sanctions on Russia.

“The role of China is pivotal. It has the potential to help Russia circumvent technology sanctions as well as support the financial sector,” Kirkegaard said. “But the EU and the US will learn to handle these things and strike in other ways to block China’s path.”

(1 dollar = 0.8897 euros)

(Reported by Philip Blenkinsop. Editing by Jane Merriman) Russia sanctions must be extended and maintained to work – analysts

Caroline Bleakley

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