In 2014, Agathe Demarais was commercial attaché at the French embassy in Moscow, she had to deal with the sanctions imposed against Russia after the invasion of Crimea and the war in Donbass. Now chief economist at the Economist Intelligence Unit, in November she published a book on the subject of sanctions, Backfire. How Sanctions Reshape the World Against US Interests (“Blowback. How Sanctions Are Reshaping the World Against American Interests,” Columbia University Press, untranslated).
The main weapon used by the West after the invasion of Ukraine was that of sanctions. Does this work?
It all depends on what the original objective was. The first objective was to send a strong message to Russia, which was neither a mere diplomatic communiqué nor an act of war. From this point of view, it is successful. I believe that Putin did not expect such a united reaction from Westerners. The oil embargo, which will soon be in place, hurts. True, Russia instead sells its oil to China and India, but at a steep discount. Today, the war-induced rise in oil prices is offsetting this, but next year the global economic slowdown is expected to cause prices to fall.
The second objective was to complicate the financing of the war. Again, it works: the Russian economy will lose about four points of GDP this year. It’s a lot, even if it’s less than the initial forecasts.
The third objective is the slow asphyxiation of the Russian economy. Russia is a cash economy, with the exploitation of raw materials, which requires access to financing and cutting-edge technologies, particularly for drilling in the Arctic. China can replace the funding, at least in part, but it does not have the necessary technologies. Today, Russia therefore lives on its reserves.
Still, the sanctions did absolutely not end the war, nor bring the Russian economy to its knees…
Sanctions work, but only in the long term. It is a slow poison, which takes time to work. In Iran, it took ten years of sanctions before the regime agreed to make compromises to sign the nuclear agreement.
Are sanctions counterproductive, as they have a heavy economic cost, especially in Europe?
It is Russia that inflicts this cost, not the sanctions. There are no sanctions on the gas, but Putin has decided to gradually use this weapon this summer by cutting off the supply. Similarly, the rise in the price of oil after the start of the war is not the consequence of the sanctions: the oil embargo will not be in place until the beginning of next year. You really have to be careful not to listen to what Russia is saying, which is trying to divide Westerners on the subject and fuel extremism. Putin had tried to make it appear that the sanctions blocked grain and cereal exports and risked causing world hunger. It was wrong. The Russians had set up a blockade of Ukrainian ports and the Ukrainians had trapped them, but there were no sanctions against food exports.
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