opinion | The effect of Russian sanctions on the war in Ukraine

The other day, my kuni and stone center colleague Branko Milanovic suggested It would be interesting to “compare Napoleon’s continental blockade against Great Britain with the existing sanctions against Russia.” As it happened, I was already on this topic. I just read Andrew Roberts”Napoleon: A Life” And was thinking of equality.

The similarities, in fact, are not very good. But ironing out differences is, I believe, a useful exercise, and there are other historical examples of trade sanctions in times of war that come closer to what is happening now.

So, for those who are not familiar with history, a brief summary: at the beginning of the 19th century, Britain and France were locked in a peculiar standoff – the British unbeatable at sea, France almost unbeatable on land. Napoleon tried to break this impasse by economic warfare, closing the ports of Europe to British commerce. But their blockade was leaky, and their efforts to close the leaks led them to disastrous military undertakings—first a bloody swamp in Spain, then a disastrous invasion of Russia.

What does this have to do with the current situation? not much. Let’s fast forward to 2022.

The conventional wisdom on February 24, I think, was that Russia would achieve a quick military victory in Ukraine, but then face a cash crunch as the West restricted its exports. This has not come to the fore.

On the military side, Russia’s efforts to quickly capture major cities in Ukraine ended with heavy losses and outrageous return, Russia then shifted to grinding, artillery-driven fighting in the Donbass, but again gained only a few square miles of land at the cost of heavy losses. That attack more or less stalled in mid-June, and recent Western arms have tilted the balance of power in Ukraine’s favor, although the front lines remain stable, at least for now.

On the other hand, Western efforts to restrict Russian exports have failed. Russian oil is still finding its way into world markets, and if anything, the country To appear to be full of cash.

But while Russia is having no problem selling stuff, it’s having a lot of trouble buying stuff. As I said, the ban on Russia’s exports is a bust, but ban on Import – Russia’s refusal to sell essential goods – has, as far as I know, been more successful than anyone expected. Even countries that are not part of the sanctions coalition, including China, have sharply cut their exports to Russia:

This would have made no sense in the Napoleonic era, because then international trade was very simple. The sanctions appear to be restricting Russian industry because modern trade involves industrial inputs, not consumer goods. This was not true in 1810, the main exception being cotton – which did not come from Napoleonic controlled areas.

Furthermore, in 1810, there were not many multinational businesses. Today, a company that makes goods in China – even if it is Chinese-owned – is probably reluctant to sell potentially strategic goods to Russia because it could find itself accepted in other important markets such as the United States and European. Federation.

So economic sanctions against Russia appear to be surprisingly effective, as everyone expected. That said, there are no indications of which I am aware that the economic cost of sanctions is leading to any laxity in Russian policy. What they are doing instead is reducing Russia’s military output, which is a real problem for Putin, given the continued influx of Western weapons into Ukraine.

But wait, that’s not the end of the story, because there’s another real ban going on. At the start of the war, Ukraine’s supporters urged European countries – particularly Germany – to stop buying Russian natural gas; He didn’t. But now Russia is actually sanctioning its own gas exports. It is not an explicitly stated policy, but Russia is reducing deliveries to European markets, apparently in an effort to damage the European economy and increase political pressure to end Ukraine’s support for Europe.

I find this chart, which shows the price of natural gas in the Netherlands – European benchmark – attractive:

Gas prices rose with the Russian invasion in February, but quickly fell back to more or less pre-invasion levels. They didn’t start growing steadily until mid-June. I do not think it is a coincidence that this upward break coincides with the point when the Russians also realized that their Donbass attack was not going to deliver a decisive breakthrough.

Everything suggests that it was then that Russia began to limit gas delivery. In fact, Russia, not the West, is now the player trying to use economic warfare as a substitute for its incompetence on the battlefield.

The closest historical parallel I can find is cotton export ban It was imposed by the Union at the start of the Civil War, in an effort to force Britain to intervene further south. The embargo did not last long, but by the time it was repealed, it was controversial: the Union Navy was blocking southern ports anyway. Needless to say, the ban didn’t work.

Will Russia’s move go better? I wish I was more confident about European resolution, especially given the high inflation and high risk of recession (which is higher than in the United States). On the other hand, the nations most likely to waver, especially Germany and Italy, have been Lagging behind in the delivery of weapons Otherwise too; Russia’s stealth gas embargo is unlikely to prevent significant shipments from the United States, Britain and Poland.

The truth is that it is difficult to find historical examples of successful economic warfare unless you count the disruptions that were themselves a form of military action – such as the American submarine campaign that devastated Japan’s economy during World War II. was. In the end, the war in Ukraine will probably be decided on the battlefield.

Not much change in the map, but what is getting down,

while technically regressive import substitution,

why are wheat prices Disclaimer?

When Ted Cruz thought Russia was strong because it didn’t wake up,

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