Friday July 01, 2022

Punishing populations

March 11, 2022

Economic sanctions are like the siege of a medieval city. Siege engines batter at the walls and hurl missiles over them, but it is all a slow business. Those suffering the most are too powerless to surrender, while those in charge are the least affected by shortages.

The countries imposing sanctions on Russia since its invasion of Ukraine face the same problems as besiegers in the Middle Ages. Sieges take months or even years to succeed, but the crisis in Ukraine is deteriorating by the hour and the day – as demonstrated by the fighting around the Zaporizhzhia nuclear plant. As at Fukushima, there is the risk that the electric power needed to cool the reactors will be cut off with disastrous consequences.

Yet the weakness of sanctions is not only that they work slowly, but that they give a false sense of achievement which is largely illusory. This has been demonstrated again and again in the last 30 years, ever since stringent UN sanctions were imposed on Iraq in response to its invasion of Kuwait in 1990.

The difficulty is that sanctions are the bluntest of instruments which inflict collective punishment on entire populations, but least affected are invariably the country’s leadership. In Iraq, the currency became largely worthless and one could see ruined householders trying to sell their crockery and furniture under the overpasses in Baghdad. Meanwhile, Saddam Hussein was building new palaces and giant mosques to show that his regime was not short of resources, even though everybody else was being squeezed.

In an economic siege, anybody with political and military power is well placed to profit from shortages. In the case of Iraq, it was Uday, Saddam Hussein’s eldest son, who earned millions of dollars a month by importing black market cigarettes from Turkey to take advantage of a disruption of the supply in Iraq.

I spent years writing about how sanctions were leading to children dying in hospitals because there were not enough oxygen cylinders and the forecourts of the hospitals were full of immobile ambulances which had been cannibalised for spare parts.

This was all very demonstrable, but protests by myself and others had no effect whatsoever. People outside Iraq wrongly felt that economic warfare must be kinder than the military variety. In reality, the casualties were higher, but they were less visible because those who died prematurely were the very old, the very young, and the very sick.

The whole of Iraq, inside and outside Saddam Hussein’s control, became the victim of collateral damage. I once went to a village called Penjwin in the Kurdish-held north-east of the country, where sanctions-driven poverty had forced its inhabitants to earn a pittance by salvaging explosives from the minefields. They would try to defuse a particularly dangerous Italian made mine called the Valmara, which – if you did not handle it just right – would jump into the air, spraying lethal pellets like ball-bearings in all directions.

After 13 years, of course, Saddam Hussein was overthrown but by the US-led invasion and not by anything to do with sanctions. Paradoxically, it was the American, British and their allies who inherited an Iraqi economy and society that had been wrecked and criminalised by the long years of embargoes and other restrictions. The invaders thought that the misery they saw around them was long standing and did not understand their own role in producing the general ruin.

I suspect much the same process of degradation is now underway in Russia. Such is popular anger in most of the rest of the world over the invasion of Ukraine that any measure directed against anything Russian will get unquestioning support. Who does not relish the news that a $600 million yacht belonging to a Russian oligarch close to Putin has been seized? The British government is under pressure to do the same to the palatial residences of oligarchs in Mayfair, Knightsbridge and Kensington and to explain why they have not acted before.

But even a British government less lugubrious in pursuing ill-gotten Russian gains would have their work cut out. The one reasonably frank conversation I ever had with a member of the Russian mafiosi, which took place in about 2001, was less about the criminal way he made his money, which was relatively simple, than the elaborate means he had to take to conceal it. His over-riding fear was of corrupt members of the local Russian security agencies knowing how much he had got and where it was, leading them to demand an even bigger cut in his profits than he was already giving them.

The Russian kleptocracy may in future no longer be able to display their obscene wealth abroad without the risk of it being frozen or confiscated. But they have had years to hide it and to hire experts to find the best hiding places.

Proponents of the sanctions imposed on Russia since 26 February say that this time it will be different and no punches will be pulled or loopholes left unclosed. Western companies can no longer deal with Russian banks outside the energy field and they have been excluded from the normal means of making payments.

The Russian central bank is cut off from its $630 billion assets abroad, Russian share prices have dropped 90 per cent in markets abroad, and the ruble is down 28 per cent this year. Foreign companies are in flight from Russia with BP giving up its 20 per cent share in Rosneft, the oil company with links to Putin.

These are damaging blows to the Russian economy, but not necessarily to Putin and his circle or their ability to make war in Ukraine. Economic warfare seldom trumps military warfare, certainly not in the short or medium term. The Russian middle class is more likely to emigrate than rebel. Collective punishment of all Russians for what is very much ‘Putin’s war’ may even encourage national solidarity rather than turning people against the man in the Kremlin. Oligarchs may be upset by losing their grand houses in London, but they are much more frightened of being rehoused in some prison cell in Moscow.

Excerpted: ‘Sanctions are Blunt Instruments Which Punish Entire Populations But Hurt Leaders Least’.