Sanctions against the Russian war on Ukraine could be made to work

Peter A.G. van Bergeijk 28 March 2022



The 2022 economic sanctions against Russia have been described by Western leaders and policy analysts as sanctions without precedent (Danielsson et al. 2022). That's actually quite an exaggeration. Sanctions against the Iraqi invasion of Kuwait in 1990 froze immediately all foreign assets and a total oil boycott was enforced with a military blockade. Sanctions against Iran in 2012 were also more comprehensive. Those sanctions for the first time (and thus unexpectedly) deployed the international bank payment system SWIFT – all Iranian payments were excluded.

The sanctions also had clear precedents in another sense: the western world has a long and sobering history of sanctions against the Soviet Union/Russia, including the US grain embargo against the USSR invasion of Afghanistan in 1980 and export control and restrictions on technology during the Cold War. Neither of these cases was successful (Afesorbor and van Bergeijk 2022).   

The unteachable West

The Western world has learned little from the ineffective sanctions against Russia's annexation of Crimea in 2014. Those sanctions did not work, because they were ‘smart’ and ‘targeted’ and therefore predominantly symbolic. Targeted sanctions predominantly fail to achieve their results (their failure rate is 80-90%, see Park and Choi 2020, Biersteker and Hudáková 2021). Public choice theory argues that the design of sanctions is determined by opposing interest groups in the sender country (Kaempfer and Lowenberg 1992) suggesting that democracies ceteris paribus will design less potent sanctions than autocracies. The choice for targeted sanctions rather than broad-based sanctions may thus reflect domestic interest group considerations rather than the effectiveness of the instrument. It has been argued that starting with targeted sanctions enhances the threat of future escalation towards broad-based sanctions, but unfortunately slow and piecemeal implementation is significantly reducing the probability that a sanction succeeds. On both accounts the policy recipe should be “slam the hammer instead of turning the screw” (Hufbauer et al. 2007)!

In this case, targeted sanctions are also likely to fail because it is naive to think that financially hitting oligarchs and top officials represents a threat to Mr. Putin, whose power to punish opposition carries much more weight for those who want to survive. Moreover, the signalling impact of smart and targeted sanctions aimed at the circles around Putin – while possibly strong at the personal level – is limited for the broader population, especially in the context of the manipulation of Russian news by the Kremlin. Broad-based sanctions, through their impact at large, are more apt to communicate to the Russian population that the 2022 war on Ukraine is in no way comparable to the 2014 annexation of the Crimea. 

The economic sanctions so far have not been sufficiently directed towards Russia’s major source of foreign currency income, that is, its energy exports to the European Union. Neither has an embargo on capital goods, intermediate products, and transport equipment been imposed. At the time of writing, the sanctions package is admittedly more extensive than it was in 2014, but importantly this time the West is trying to hit a Russian economy that is better prepared and more resilient. The sanctions during the Crimean crisis were imposed in a context where the Russian economy was vulnerable to foreign economic pressure, but the Russians, unlike the Western world, learned from the sanctions following the annexation of Crimea. The possibility to escalate sanctions had more credibility and carried more weight in 2014 when EU-Russia bilateral trade amounted to 22% of Russia's GDP (van Bergeijk 2014) but the latest pre-sanction figure for EU-Russia proportional trade linkage is 14%. Russia also limited its dependence on the West in other areas, for example because the Russian Central Bank developed the System for Transfer of Financial Messages (SPFS) as an (imperfect) alternative to SWIFT. All in all, Russia increased its resilience by strategically reducing its dependencies on foreign countries.

Bělín and Hanousek (2021) show that the EU sanctions on exports to Russia were enforced selectively causing only minor disruptions while the Russians were able to enforce significant economic losses on the EU (Apuzzo and Bradley 2022). The tit-for-tat pattern of the 2014 EU and US sanctions and the Russian countersanctions revealed comparative vulnerabilities of the EU and Russia related to their respective decision-making institutions and to a large extent explain why the EU sanctions remained quite limited. Indeed, the weak 2014 sanctions may have reduced the credibility of any broad-based sanctions by the EU.1 

Changing the Kremlin’s calculus

Given the increased Russian resilience, the increasingly autocratic nature of President Putin’s government, and the failure of European democracies to implement appropriate strong and broad-based measures, smart and targeted sanctions are unlikely to influence the Kremlin’s calculus (van Bergeijk 2022). The EU could only influence that calculus by restoring its reputation as a credible applicant of strong broad-based sanctions, including an embargo on capital goods and a boycott of Russian energy (with the side benefit that energy is an important source of income for the oligarchs).

The hope that the EU will do this any time soon appears to be unrealistic also because the currently preferred sanctions on individual persons, companies, and banks generate a barrage of sanction messages that feed the West’s news cycle and give the impression of toughness that European governments want to communicate to their own population. If the public sector will not come to the rescue of the Ukrainians, to whom could they turn?

President Zelensky’s allies could very well be CEOs rather than MPs, as illustrated by the anti-Apartheid sanctions in the mid-1980s. The international business community played a pivotal role as a decisive escalation of economic stress came when private banks and multinationals began to see the political risks of lending to and investing in South-Africa and withdrew significant quantities of capital along the 1985 South African debt crisis (Cortright and Lopez 2002). Divestment shrinks an economy in a direct manner (less production due to less capital), but also indirectly because FDI has significant spill-over effects in terms of access to modern technologies, management techniques and foreign market access. Disinvestment, moreover, offered a mental blow when longstanding firms leave a country because of objectionable behaviour. Private sector activities may be more important to change the cost benefit analysis of the Russian authorities, especially if the current trend of divestment by multinational corporations perseveres. 

The possibility that Russia will be unable to pay interest on outstanding foreign debt and the threat of a debt crisis also may add necessary bite to a sanction package that is in itself both too little and too late.


Afesorgbor, S K and P A G van Bergeijk (2022), “Economic sanctions will hurt Russians long before they stop Putin’s war in Ukraine”, The Conversation, 1 March. 

Apuzzo, M and J Bradley (2022), “Oligarchs got richer despite sanctions. Will this time be different?” The New York Times, 16 March.

Bělín, M and J Hanousek (2021), “Imposing sanctions versus posing in sanctioners’ clothes: The EU sanctions against Russia and the Russian counter-sanctions”, in: P A G van Bergeijk (ed), Research handbook on economic sanctions, Edward Elgar Publishing: Cheltenham, pp. 249-63.

Biersteker, T and Z Hudáková (2021), “UN targeted sanctions: Historical development and current challenges” in: P A G van Bergeijk (eds), Research handbook on economic sanctions, Edward Elgar Publishing: Cheltenham, pp. 107-124.

Cortright, D and G A Lopez, (2002), Sanctions and the search for security, Boulder: London, pp. 95-96.

Hufbauer, G C, J J Schott, K A Elliott, and B Oegg, (2007), Economic sanctions reconsidered, 3rd edition, Peterson Institute for International Economics: Washington, DC. 

Danielsson, J, C Goodhart, and R Macrae, (2022), “Sanctions, war, and systemic risk in 1914 and 2022”,, 10 March.

Gallea, Q, M Morelli, and D Rohner (2022), “Power in the Pipeline, paper presented at the conference Smart sanctions: Theory, evidence, and policy implications”, 18 March.

Kaempfer, W H and A D Lowenberg (1992), International economic sanctions: A public choice perspective, Westview: Boulder.

Park, J and H J Choi (2020), "Are smart sanctions smart enough? An inquiry into when leaders oppress civilians under UN targeted sanctions", International Political Science Review 0192512120931957.

van Bergeijk, P A G (2014), “Russia’s tit for tat”,, 25 April. 

van Bergeijk, P A G (2022), “Economic sanctions and the Russian war on Ukraine: A critical comparative appraisal”, International Institute of Social Studies working paper 699, Erasmus University. 


1 Moreover, Europe’s increasing energy dependency on Russia over the last decades could reduce the expectation that the EU would use comprehensive sanctions (Gallea et al. 2022).



Topics:  Politics and economics

Tags:  Russia, sanctions, war, Putin, energy, oligarchs, Ukraine war

Professor of International Economics and Macroeconomics, Erasmus University, International Institute of Social Studies


CEPR Policy Research