Sanctions hurt Russia, but still far from changing minds.

[another_liberal]

Source: Reuters

(Reuters) - Sanctions on Russia over its actions in Ukraine have compounded the impact of oil's plunge but Moscow may have the financial buffers to hold out for two years without a change in policy. European governments meet next week to review the sanctions, imposed after Russia annexed Crimea last March and threw its support behind pro-Moscow separatists in eastern Ukraine.

The West's response centred first on financial and travel restrictions on key individuals but by mid-year it had effectively cut off overseas funding to corporate Russia. Although there was scepticism at the outset, these measures have hurt, particularly combined with the parallel collapse in oil, Russia's major export. Their impact has far outweighed Russian counter punches to European agricultural imports or the cancellation of its South Stream gas export pipeline through southern Europe. "The big hit to Russia has really come from the oil price but extra shrapnel has come from sanctions," said Chris Weafer, senior partner at Macro-Advisory consultancy in Moscow.

Many dispute U.S. President Barack Obama's assertion that Russia's economy is now 'in tatters' -- a jobless rate of just over 5 percent and total external debts of about 30 percent of national output are just two raw numbers that would make some European leaders jealous. But the fabric has been badly damaged. Reeling from 50 percent tumbles in both oil prices and the rouble, output is forecast to contract by up to 5 percent this year, inflation is already well into double digits and corporate finance has all but seized up.

According to Thomson Reuters data, Russian companies have sold only eight foreign currency bonds totalling less than $5 billion since last March and none since November. That compares with 52 bonds worth about $34 billion in the prior 12 months. "Policymakers who devised these sanctions can be satisfied the intermediate goal has been achieved -- if that goal was to damage Russia's economy," said Christopher Granville, managing director of London-based consultancy Trusted Sources. "But the whole logic of the sanctions policy is that it leads to the ultimate goal of getting the Putin administration to rethink its strategy towards Ukraine."

(snip)



Read more: http://www.reuters.com/article/2015/02/04/us-investment-russia-sanctions-analysis-idUSKBN0L80W720150204

---

Russia has an unemployment rate of just five percent and external debt totaling only thirty percent of GDP? If they still can manage numbers like that after a year of ever-increasing sanctions and six months of ever-decreasing oil prices, it's clear this anti-Russian economic siege of ours is not going to be the quick and easy victory many originally thought.

[DeSwiss]

1. We'll see who fades first.

- The US is whistling past the graveyard. I'll give 'em two, three weeks before something breaks.

Check back then.....

[another_liberal]

2. Our oil exploration and extraction related sectors are already taking quite a hit . . .

We will see which domino falls next.

[Bugenhagen]

6. I think it won't be Russia

My experience is that they take a lot of pride in not capitulating no matter how bad things get. Many of them remember Stalingrad, Leningrad, and have even managed to finish reading The Brother's Karamazov.

In the 90s they faced horrible shortages of everything right down to food. Today they can't get Camembert and BMWs. Things aren't that bad, and it is going to take a lot more sanctions to make them much worse. That seems unlikely.

[another_liberal]

7. I could not agree more . . .

And that is where the real danger lies. If our country is thinking Russia will easily break and accept our demands, their not doing so will inspire our neo-Cold Warriors to escalate their pressures. That, in turn, could result in a true tragedy of monumental proportions. This is a stupid, frighteningly risky game we are playing at.

[Thinkingabout]

3. Yes, the sanctions are having an effect on Russia, before Russia had

Begun to meet with favor with other countries. The low oil prices are also going to effect the US along with Iran and ISIS.

[pampango]

4. If anyone thought that sanctions would be a "quick and easy victory" they don't know much about

the history of economic sanctions anywhere in the world.

If a country wants to conduct a quick reaction to political events, the military is a much better choice - witness events in Crimea last spring. Russia did not just enforce economic sanctions on Ukraine in reaction to events in Kiev. Guys with guns got results in Crimea much faster than economic sanctions would have done.

Sanctions cause pain on both sides. Existing trade was beneficial to both sides or it would not have been happening. Stopping that trade then will obviously hurt both sides. There are many corporations and their conservative politicians who have argued against sanctions for precisely that reason. They knew they would feel the pain, too.

Sanctions are a viable, long term response to political events if you rule out a military response for moral or practical reasons and rule out not having any response at all (other perhaps than a sternly worded letter). Sanctions took years to work in South Africa. There is nothing 'quick and easy' about them.

[Adrahil]

5. Sanctions are better than bullets.

They take a while, but even if they don't reverse outcomes in this case, they can make the price for such misbehavior clear.

[another_liberal]

8. It would be better still . . .

For us to not be trying to bring Ukraine under our economic and military control. This entire crisis need not have happened but for our decision to interfere in Ukraine's internal affairs, which we were treaty-bound to not do.

[Adrahil]

9. But it IS OK for Russia to do that amiright?

Keeping in mind that this happened when Putin INSISTED that Ukraine not enter into a trade pact with the EU.

SO, did Russia violate their treaty obligations?

I mean, not that I expect YOU to actually criticize Russia... oh heavens no, anything but that!

[another_liberal]

10. Russia is only reacting defensively to our expansionist moves on its very border . . .

Our country would have started three or four real wars in response to something like that.

[polly7]

12. Russia never did that.

So no, you're not right.

[polly7]

11. Sanctions are economic terrorism - for any country.

But as was said for the half million Iraqi children who died because of them - 'We think it was worth it'. But propaganda that begets these sanctions that hurt the most vulnerable are thought of as a 'noble alternative to war' - for what? Something started by the west - as usual? Russia will be just fine, they aren't a weak country without the ability to fight back when the sanctions inevitably fail and they have powerful friends, as much as the west hates to admit it. I hate war, but that's what certain people are hoping for - very badly. It's so needless, and beyond stupidity.

[another_liberal]

13. Sanctions also make money for some people . . .

A great deal of money for a few. Plus there is the big payoff if they actually help bring down an economic rival.

[polly7]

14. +1. nt.

[elias49]

15. Excellent OP. Thanks.

And reasonable and reasoned replies!