The Vicious Circle of Sanctions
Valdai Club Conference Hall, Tsvetnoy boulevard 16/1, Moscow, Russia
List of speakers

On March 3, the Valdai Club hosted an expert discussion titled “The Vicious Circle of Sanctions: Can Russia and the West Surprise Each Other?” The discussion moderator Ivan Timofeev, Programme Director of the Valdai Club, noted the unprecedented nature of the sanctions applied against Russia. “It’s hard for me to find a historical analogy. You can probably compare what is happening now with the blockade of 1918,” he said, adding that the targeted sanctions, aimed at prompting Russia to change its course of action, were traded for sanctions aimed at the complete destabilisation of the Russian economy.

Zorawar Daulet Singh, Research Fellow at the Institute of Chinese Studies and Visiting Fellow at the Strategic Initiative Forum (India), briefly outlined the sanctions-protected zones in Russian-Indian relations, but pointed to the threat sanctions pose to ambitious joint transport projects. He also noted that there is an opportunity to include such multilateral structures as BRICS in the situation. “The kind of crisis Russia faces can happen to any regional power. We need buffers to protect ourselves,” he said.

Nelson Wong, Vice President of the Shanghai Centre for Strategic and International Studies (China), believes that the sanctions imposed on Russia will affect the entire world economy. “Unilateral economic sanctions are most often a double-edged sword that hits both sides. Europe will suffer,” he believes. Russia should not underestimate sanctions, but the West should not underestimate Russia’s determination to resist them.

Ekaterina Arapova, Director, Senior Research Fellow, Sanctions Policy Expertise Centre; Head of the Department for Academic Development, Institute of International Studies, MGIMO University, ranked the applied sanctions according to their severity in the short term. She ranked the blocking of foreign exchange assets of the Central Bank first; and the sanctions in the transport and logistics sector, covering the entire logistics chain, second. “No matter how difficult the sanctions conditions are for Russia, no one has cancelled the boomerang effect: the sanctions also hit the initiators. The question is to what extent both sides are willing to bear economic losses for the sake of political goals,” Arapova stressed.

Sergey Afontsev, Deputy Director for Research and Head of the Economic Theory Department at the Primakov National Research Institute of World Economy and International Relations (IMEMO),  pointed to the real threat posed by the entire Russian financial system being disconnected from SWIFT. Speaking about individual sectors of the economy, he added that it is too early to describe the dynamics in detail, but it is already clear that the sanctions will bring down all precision microelectronics and create big problems in the transport sector. Analysing the general trends in sanctions pressure, Afontsev emphasised that sanctions are an economic tool for achieving political goals. “To understand how they will affect economically, you need to understand what goals are set,” he said. Thus, the United States, according to the scholar, is implementing a long-term strategy aimed at limiting the economic potential of Russia and its ability to achieve foreign policy and defence goals. If we consider sanctions as an element of this strategy, they fulfil their tasks. If we talk about their ability to influence the situation in Ukraine, it should be recognised that they cannot influence it.