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One Year Later: Russia, Sanctions, and the G7

By Katya Dajani 

Just days after Crimea’s annexation, the G7 released a declaration that not only condemned Russia’s acts as a breach of international law, but essentially revoked its membership in the group. In addition to this, the United States, EU, and several others imposed a series of sanctions against Russia in hopes of preventing further escalation of the situation. 

With the conclusion of this year’s G7 summit, it has been over a year since these economic penalties were implemented. In a press conference held after the event, President Barack Obama remarked that “sanctions against Russia will remain in place so long as Russia continues to violate its obligations under the Minsk agreement,” and that “we [the G7] stand ready to impose additional, significant sanctions against Russia.” Despite the G7’s stern warning, there has been little change in Putin’s foreign policy. The West’s continuation of these penalties begs the question: are they really working?

Steven Pifer, a Senior Fellow at the Brookings Institute and former U.S. Ambassador to Ukraine, believes they are. In addition to facing sanctions targeting its energy, defense, and financial service sectors, Russia, a major crude oil exporter, experienced a 50 percent drop in oil prices during 2014. The effect on Russia’s economy has been disastrous, the ruble losing 41 percent of its value against the dollar and consumer spending dropping by almost 6.5 percent. Russian Prime Minister Dmitry Medvedev estimated that the sanctions cost Russia $26.7 billion last year, and projected that losses could rise to $80 billion in 2015.

“The impact of the sanctions, I think, is cumulative,” says Pifer. “The longer Russia goes without changing its policy, the longer the sanctions stay in place, and the more damage it does to the Russian economy. I believe that at some point… the Russians may find that damage is becoming too painful.”

Others, like the Brooking Institute’s Clifford Gaddy, an economist specializing in Russia and the co-author of Bear Traps on Russia’s Road to Modernization, remain unconvinced of the sanctions’ ability to change Putin’s current course. He believes that Russia’s president, along with the majority of its citizens, sees the West’s actions as form of “economic war.” In Putin’s eyes, he has little choice between leaving his country vulnerable to the existential threat of Ukraine (as it grows closer to the West) or enduring additional months of financial hardship. Conversely, sanctions may even act as a “punching bag” in Putin’s anti-West political narrative, as many Russians now fault America and the EU for the current economic slump.

“I think the Russians have contracted this narrative about the West pushing NATO up to Russian borders, trying to bring Ukraine in,” says Pifer. “They simply overlook the facts. Over the last fives years, you would be hard-pressed to see any real push between NATO to give Ukraine either a membership invitation or a membership action plan.”

Putin’s fear of Russia’s neighbors strengthening ties with the West has become increasingly apparent. In a 2014 address to Russian legislators and other elites, he stated that their Western partners “have come to believe in their exclusivity and exceptionalism, that they can decide the destinies of the world, that only they can ever be right.” Russia’s removal from the G7 may have added to his sentiments.

“In my opinion, [Russia’s removal from the G7] matters a great deal to them,” says Peter Rutland, Wesleyan University Professor and contributor to The Moscow Times. “Russian foreign policy has, to a large degree, been driven by a feeling that the West does not recognize them as an equal. Joining the G7 was an important symbolic (and practical) step in welcoming Russia to the club of leading industrial powers.”

Gaddy thinks otherwise. “Russia’s admission to the [G8] was never intended to be serious acceptance of Russia as an equal. Rather, it was a token concession to Yeltsin for having buckled on NATO enlargement…For some of the most important Russian elites—even those who the US thought were ‘on their side’—Russia’s membership in the [G8] was a reminder of Russia at its lowest, most humiliating point,” he explains.

Perhaps Russian Foreign Minister Sergey Lavrov was right when he said, “all the economic and financial questions are decided in G20,” and Russia is "not attached to [the G7’s] format” nor sees it as “a great misfortune if it will not gather.” In short, Russia’s expulsion does not matter.

In spite of, or perhaps due to, Russia’s souring relationship with the West, one thing remains clear: Putin’s support within his country continues to grow. According to the Levada Center, a Moscow-based pollster, Putin’s approval rating stood at a shocking 86 percent in May 2015, a 23 percent climb from two years ago. Although these numbers are likely inflated, most agree that Russian nationalism is on the rise.

 “I do think the disillusionment will eventually come,” says Cathy Young, an American author and journalist born in Russia. “People are much freer than they were to talk to each other. I think there’s definitely a great chance for the turn of public opinion. If the economy goes bad, if more people keep dying in Ukraine, and information that is now being officially classified gets out…the euphoria over Crimea has passed at this point.”

While experts remain divided on the viability of the West’s current policy towards Russia, both sides raise legitimate points. Yes, the punishments have yet to yield a result, and their future success is uncertain. Nevertheless, the sanctions placed on Russia, as well as its G7 expulsion, play a vital role in upholding the validity of international law. They send a clear message to both Putin and the rest of the world that the international community will not tolerate the seizure of sovereign lands, nor will such actions go unchecked.

*****

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Katherine (Katya) Dajani is an editorial assistant at World Policy Journal.

[Photo courtesy of Wikimedia Commons]

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