Putin Says Economic Sanctions Are Making Russia Stronger — He’s Not Totally Wrong

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Trolling but not necessarily lying. Photo: Lintao Zhang/Getty Images

Last Thursday, one day after the U.S. Senate voted to implement new, Trump-proof sanctions on Russia in retribution for its meddling in last year’s election, Russian president Vladimir Putin went on TV to boast that the sanctions the U.S. and EU have imposed on his country for the past three years have hardly achieved their intended effect. On the contrary, Putin said, they had only made Russia stronger, by forcing Russians to “switch on our brains” and reduce their dependency on mineral exports.

Putin is as prone to blowing smoke as any other authoritarian, but in this case, he wasn’t lying — at least not with respect to the state of the Russian economy. Less than three years ago, observers were predicting a veritable economic apocalypse as the ruble plunged in tandem with the price of crude oil and as the U.S. and EU sanctions, levied as punishment for Russia’s annexation of Crimea and continued meddling in Ukraine, took their toll. Now, as Putin noted on Thursday, the Russian economy is out of recession, with the World Bank predicting it will grow modestly this year and in the two years to come. While Russia’s current trajectory compares poorly to the recoveries from its previous two recessions, that’s not exactly a unique problem these days; nor is its shortage of labor, particularly in high-demand, high-skill fields like technology. The Russian tech sector consists of much more than just fake news, neo-Nazi shitposting, and foreign-election hacking — though these have doubtless been growth industries in this economic cycle.

None of this suggests that sanctions aren’t having some impact: That recovery would probably be a bit less sluggish with fewer restrictions on its access to European and American markets. But neither have they been the defining economic event of this decade in Putin’s Russia — that would be the enormous volatility in the oil market, with crude prices plummeting from nearly $113 a barrel in August 2013 to as low as $30 in January 2016. The slow recovery of oil prices in the past year or so is likely partly to thank for Russia’s emergence from recession as well, and if anything taught Putin to be wary of becoming a petro-state, it probably wasn’t the sanctions. Indeed, Putin made this very point in his comments on Thursday.

Nor have the sanctions done much to alter Putin’s behavior thus far: Russia continues to back the regime of Bashar al-Assad in Syria’s intractable civil war, continues to back separatists in Eastern Ukraine, and has been busy all along conducting cyberwarfare against the liberal order in the West. As scholars of political science and international relations have been pointing out for years, economic sanctions may be preferable to war as a means of settling geopolitical scores, but most of the time, they don’t really work.

In light of Putin’s dismissive attitude, now may be a good time to revisit the debate over our most recent supposed sanctions success story: Iran. The planners and proponents of the economic sanctions against Iran, including Hillary Clinton, credit them with forcing Iran to finally negotiate with the U.S. over its nuclear program; critics countered that sanctions were not a deciding factor in this development, and that it had more to do with the election of Iranian president Hassan Rouhani and John Kerry replacing Clinton as secretary of State in 2013.

Critics of that sanctions regime also contend that it inflicted a great deal of needless suffering on innocent Iranians but very little pain on the regime and ruling class whose behavior it was meant to influence. In fact, closing off access to global markets created new opportunities for Iran’s Islamic Revolutionary Guard Corps to tighten its grip on the economy through smuggling and monopolies. Whether or not the sanctions were ultimately effective in terms of pulling Iran to the negotiating table, they undoubtedly had the downside effects of enriching the IRGC and lending rhetorical ammunition to Iranian hard-liners who gain power by convincing their constituents that the U.S. is out to hurt them.

One might ask whether the same effects can be observed in Russia. Again, the sanctions over Ukraine have so far failed to influence policy in Moscow in any positive direction, and Putin is still as uncompromising as ever. As in Iran, the bite of sanctions has been felt primarily by the poor and unemployed, while the oligarchy has managed to keep itself in furs. A study last September found that Russia was the most unequal major country in the world, with U.S.-dollar millionaires owning 62 percent of Russia’s wealth, compared to just a third of the wealth in the relative socialist paradise of the United States — driven by corruption, excess, and greed among billionaire oligarchs in a country where 23 million people are living in poverty.

Of course, President Donald Trump’s request for greater flexibility in the latest round of Russia sanctions may have less to do with concern over their effectiveness and more to do with his own financial ties to said oligarchs (he has no problem imposing new sanctions on Iran, for instance). It would be an extremely 2017 miscalculation, however, for liberals to fall in love with sanctions just because Trump opposes them. Putin may be a bad dude, but the evidence so far indicates that economic punishment is unlikely to reform him.

Putin Says Sanctions Are Helping Russia. He Might Be Right.