Sanctioning Deterrence Failure

The Biden administration coupled its recognition that Russia's invasion of Ukraine has begun with the first round of its sanctions barrage. The United Kingdom followed suit, and the U.S.' NATO allies, the European Union, and non-European allies, including Australia and Japan, are poised to impose sanctions in the coming days. It seems that the Biden administration's diplomatic efforts have succeeded in one sense – virtually the entire Western world will inflict some sort of economic reprisal upon Russia in return for its aggression and likely will escalate reprisals in concurrent with Russian action.

The U.S. and its allies have two sorts of sanctions in their quiver. Personal sanctions target the financial assets, movement rights, and corporate legality of an individual person and their holdings or a target company. General economic sanctions ban trade, either in whole or in part, or impose other economic consequences like corporate de-listing from stock exchanges, prohibiting access to external financial institutions, and restricting the purchase of the target country’s sovereign debt.

Sanctions do have an economic effect. Russia's economy crashed after the Obama administration imposed sanctions in 2014 following Putin's first invasion of Ukraine. The Kremlin has prepared for a new round of sanctions, gathering the world's largest currency reserves, decoupling key industries from Western Europe and North America, and trimming budgets to ensure key state services survive a budgetary crunch. Nevertheless, sustained sanctions will shrink Russian GDP and trigger another economic crisis. Moreover, personal sanctions that target oligarchs and their corporations will provoke the ire of Russia’s kleptocracy.

The issue, however, is twofold. First, sustained economic pressure paradoxically allowed Putin to consolidate his hold on power and elevated the Russian security apparatus above the oligarchs. Putin recognized the danger the oligarchs pose to his regime from the beginning, almost certainly a result of his observation of Russia's political experience in the 1990s. His most prominent target, Mikhail Khodorkovsky, was imprisoned in 2003 and exiled. Putin may have assassinated hostile oligarch Boris Berezovsky – an associate of murdered FSB defector Alexander Litvinenko – and forced Vladimir Gusinsky from the country. However, Putin also used the post-2014 sanctions to offer oligarchs lucrative government contracts that tied them to the Russian state and in turn, ensured their personal loyalty. Western sanctions may damage the oligarchs' pocketbooks. But their influence in Russia has waned. Rather, Putin's siloviki (non-ideological officials with military or security backgrounds) pull the power strings as directed. What was once a kleptocracy has become a "spookocracy," a security state run by former counterintelligence officers and other veterans of the Soviet intelligence services.

Second, Putin does not have financial ambitions. Perhaps when the oligarchs held more power, Russia could be considered a mafia-state, run by profit-obsessed gangsters who cared only to expand and protect their ill-gotten fortunes. This is no longer the case. Putin likely has amassed great personal wealth, perhaps into the tens of billions of dollars. And regardless, his role as Maximum Leader gives him access to any service, line of credit, dacha, yacht, or exorbitantly expensive watch he or his mistresses desire. Yet Putin does not care about his financial state. His finances are secure, given the effectiveness of the Russian security apparatus. And his motivations in Ukraine are distinctly non-pecuniary. Reasonable people can disagree on Putin's precise motivations, although the neo-imperial and neo-Soviet narrative increasingly popular in Western discourse ignore the strong domestic incentives Putin has for intervention (strengthening Ukrainian economy and sanctions that weaken the Russian one), and the shifting tactical balance in Donbas (as Russian-backed forces under-achieve) over the 18 months. Regardless, Putin is not invading Ukraine to reap the benefits of Kharkiv's factories or Donbas' severely diminished coal and iron mines. He does so for ideological, domestic-political, and strategic reasons.

Perhaps the Biden administration understands that sanctions are a feckless deterrent, particularly against this foe. However, the alternative is equally perplexing. Sanctions will not impede Russia's ability to wage war in Ukraine nor to escalate against NATO in the Baltics, Black Sea, and Eastern Mediterranean. Perhaps a significant enough sanctions campaign will break the Russian economy. But this will take years. And year on year, the Zhongnanhai (Chinese communist party headquarters) eyes the Kremlin with ever greener eyes. China will do what it takes to support the Russian spookocracy with an eye to coopting its natural resources, sphere of influence in Central Asia, and security buffer in Eastern Europe. Russia will not break under economic pressure.

Russia may be poor, but that need not make it weak. The Soviet Union lost 12 percent of its population during the World War. Its Imperial Russian predecessor starved its own people while constructing railroads in the late 19^th and early 20^th century – the Leninist child imitates the absolutist Tsarist grandparent. Non-military punishment will not deter Russia. Non-military punishment will not defeat Russia. Mr. Biden, therefore, puts his hopes in the young Ukrainians who man the Line of Contact and their young and old fellow citizens who will occupy woodlands and alleys after a Russian invasion. If only Mr. Biden, or his Democratic predecessor, Mr. Obama, had made this strategy clear in 2014 and armed Ukraine for nearly a decade. Perhaps, then, Russia could have been deterred. Now, it must be defeated.

Seth Cropsey is founder and president of Yorktown Institute. He served as a naval officer and as deputy Undersecretary of the Navy.