The Justness of Russian Sanctions

By Madison Weiss

War in Ukraine continues to capture international attention. As Ukraine is not a NATO member country, NATO troops will not be sent there, but many countries are providing Ukraine with military equipment and humanitarian aid, as well as imposing sanctions on Russia. The rationale for such action is to end fighting, and as such, the loss of life. From this point of view, the success of these measures, specifically that of sanctions, is questionable. Consequently, people tend to focus on the negative aspects of sanctions and are quick to write them off as poor policy. Yet there is a deeper justification for this measure, grounded in appeals to justice more generally, that one cannot ignore when making a fair analysis. 

Export Controls

Export controls ban the sale of tactical goods, including semiconductors, computers, and lasers, to Russia. The purpose of the ban is evident:  if Russia does not have the equipment necessary to mount an attack against Ukraine, she cannot adopt an aggressive stance. We would expect to see the most direct military consequences coming from this action. Even so, these consequences were not intended to be immediate. Evidently, Russia already possesses the tactical goods necessary to mount a campaign.  The goal is to ensure that as these goods wear out, she is not able to replace them, steadily weakening her military resources over time. The success of this strategy requires two key assumptions to hold:  Russia cannot obtain these goods from other countries, nor can she produce them domestically. Given Russia’s powerful trade partners like China, India, and Saudi Arabia, as well as her own wealth of resources, this measure is clearly limited in its direct effectiveness. The fact that conflict was able to escalate in the wake of the passage of the Countering America’s Adversaries Through Sanctions Act (CAATSA) in 2017, which was supposed to limit Russian defense and intelligence, is evidence of the weakness of military sanctions on Russia in general.

Interestingly, there are export controls on other goods Russia cannot get otherwise:  luxury goods. Out of the top ten luxury goods brands by market cap, nine are headquartered in the E.U.^[1]  Luxury goods also do not have substitutes in the same way items like tactical goods do, the draw of luxury goods is in their exclusivity.^[2]  Although such goods are unnecessary to a war effort, cutting off Russia’s powerful oligarchs completely from their Birkins and Breguets is an effective and psychologically satisfying way to decrease support for the war and thus to pressure the Russian government via her own citizens.  This is, of course, dependent on Russia truly being cut off from these goods, which is likely not the case. As rational choice theory predicts, individuals working to further their own self-interest have skirted the law, creating a so-called “dark economy” for smuggled luxury goods. We would not be wrong to conclude these sanctions are also weaker than intended. 

An important sanction on Russia is Executive Order 14204. The Order attempts to preempt the operations of commerce by cutting off funding directly, forbidding American institutions from dealing with Russia’s central bank, buying Russian bonds, or giving loans to Russian citizens. Similar sanctions have been put into place by countries in Europe. These sanctions have seen direct and tangible effects, although partly due to Russia’s response of making herself a “ruble country,” or constraining debtors to only make payments using rubles. This act caused a selective default on Russian loan repayment, stunting Russia’s economic capabilities by limiting lending and further damaging the value of the ruble.^[3]  While this is heartening, it appears the value of the ruble has recovered and stabilized.^[4] There are two likely explanations for this phenomenon. First, research suggests the longer sanctions are in place, the easier it becomes for a country to adapt to them.^[5] The recovery of the ruble could thus be attributed to the measures designed to stabilize the currency’s value that Putin implemented quickly after the introduction of sanctions. These include the restriction on debt payment, as well as a requirement that at least half of excess trade revenues be converted into rubles.^[6] Putin also enacted measures on countries purchasing Russian exports, necessitating that they pay in rubles.^[7] From this perspective, Russia was able to adapt to sanctions by raising demand for the ruble, bolstering its exchange value. However, a second possible explanation points towards sanctions themselves as raising the ruble’s exchange value. Since Russians can no longer purchase many foreign goods, imports have collapsed^[8] and the demand for foreign currency has artificially been driven down. Thus, the ruble may have appreciated even without the measures that Putin took as a simple consequence of market equilibrium. It is difficult to isolate the influence of these two concurrent factors. It is thus difficult to tell whether the appreciation of the ruble is a sign of sanctions being ineffective or rather effective and bearing an unintended consequence.

Consequences

While it remains to be seen whether sanctions will be successful militarily in the long run, they currently have real consequences on the average Russian. These sanctions have dampened Russian economic growth, causing the emigration phenomenon known as a brain-drain. The educated elite who believe they will have better prospects elsewhere flee. People with a certain amount of wealth and status have more opportunities to avoid the impact of these sanctions. As a result, sanctions affect small business owners more than oligarchs.^[9]  

This outcome is unfortunate for two reasons:  first, these are not the people who started the war, and second, these are not the people who have the power or political influence to end the war. These factors together act as a “propaganda boon”^[10] to further spur anti-Western sentiment in Russia.  It is likely similar trends will continue in the future. A consequence of economic stagnation and limited imports is the potential for “reverse industrialization.”^[11]  As domestic machinery breaks down and replacement parts are not available, the country may experience backsliding in terms of important metrics like quality of life. 

Negative effects are not restricted to the Russian people. Citizens in countries that have imposed sanctions are also experiencing economic ramifications. Currently, perhaps the biggest financial concern lies in fossil fuels. Sanctions have cut countries off from Russian exports of petroleum. In January 2022, these exports made up an industry worth over $17 billion.^[12]  Losing this huge supply drove gasoline prices up to levels unseen since the late 1970s. The average annual spending on gasoline in the United States nearly doubled since June 2021.^[13]  This has put a significant squeeze on US real incomes. As with Russia, this impact is felt disproportionately by those with fewer economic resources.

Competing Ethics Analyses

By keeping sanctions in place, political actors accept it is necessary for the average citizen to suffer in order to bring an end to the war. In doing so, they treat the average citizen as a means to an end and not an end in themselves. While a strict Kantian would say this approach is never appropriate, many would agree ending the war is a laudable goal whose ends justify such means. This is amounts to a utilitarian point of view. 

Such a way of approaching political problems has gained traction, particularly as it can lend itself nicely to cost-benefit analysis. Yet a troubling consequence of this approach is the quantification of values. It is easy enough to do a back-of-the-envelope calculation of the raw costs of sanctions, like change in disposable income. It is much more difficult and rightly controversial to weigh dollar costs against the value of human lives saved by ending the war. We are also faced with the difficult task of deciding the appropriate scope of a utilitarian analysis to this issue. Whether sanctions are appropriate is dependent on what facets of the issue one considers in a cost-benefit analysis. As the saying goes, “what gets counted counts.”^[14]  Temporal and spatial limits, for example, are of key importance. The core issue at hand is: to act justly towards Ukraine. The question remains open to debate whether ramifications that impact citizens of sanctioning countries should be weighted to a lesser extent, as they are not the central concern, or to a greater extent, as they are paying the price for external forces. Similarly, one can question how far into the future such an analysis should stretch. The consequences of sanctions will likely spread, in some form or another, far into the future. Based on the longer-term intentions of certain sanctions, it would seem unfair to make an ethical judgment based on the concentrated costs and diffuse benefits observable up to this point. At the same time, it does not feel appropriate to withhold judgment until after the conflict has played out. This implies we have to make a prediction about how events will play out. 

Predictions for a Utilitarian Analysis

On the one hand, this moment in history may have put us on the path to reshaping the global economy. Record-high fuel prices have highlighted international dependence not only on Russian hydrocarbons but on fossil fuels in general. This realization could propel legislation that would lower such heavy dependence. The result would be significant investment in renewable energy production and technologies, building sustainable pathways for development that would revitalize related economies into the long-term. In this case, the utility gained from sanctions would cause them to clearly be ethical, but this is a rather hopeful outlook given we have not taken any tangible steps down this path. In response to rising gas prices, President Biden authorized the release of millions of barrels of oil from federal reserves.^[15]  Similarly, countries without reserves, such as Germany, have been using coal in place of oil.^[16]  The approach to tightening oil supplies has not been divestment from fossil fuels, but investment in them. More than ever, we seem entrenched in our ways.

Yet if sanctioning countries are standing still, this does not imply Russia will merely lie down and accept the status quo. Already, we observe Russia’s ability to adapt to the circumstances. One such example that has received much media attention is Vkusno i Tochka, the so-called “Russian McDonald’s.”  Soon after McDonald’s privately sanctioned Russia, closing all stores there, Vkusno i Tochka restaurants began to open. There are now 65 branches in Moscow alone,^[17]serving food which purportedly tastes indistinguishable from McDonald’s. This illustrates not only Russia’s ability to overcome the effects of sanctions, but also her capacity for self-reliance. It is very possible the voids created by Western sanctions will directly spur Russian innovation, increasing the country’s self-reliance. This is particularly worrying in the context of the U.S. dollar as the world’s reserve currency. By cutting off Russian businesses from using the dollar, the United States is acting to further decrease its importance,^[18] continuing a trend away from the dollar that has already been in motion. 

Nationally, this has important ramifications in terms of debt financing and even higher inflation.^[19]  But it also spells trouble internationally. The global economic system is currently built on this currency. Reliance on the dollar for almost one hundred years has granted a certain level of stability to international trade that will be shaken if the dollar is replaced, as not only national but international actors like the IMF^[20] vie to occupy this role. It appears the U.S. has also shaken the faith of foreign investors in unilaterally seizing Russian assets. Overall, American action to confront this crisis has spotlighted the country’s role as a hegemon and the problematic consequences of this position.^[21]  The threat from inveterate intervention in foreign affairs, is the US toppling her own empire. This would cause great disutility, making sanctions unethical. 

But frankly, amid every period of the most remote turbulence for the US, cries have prophesied the end of an era that has never come. This is not to say America’s leaders should take needless risk, but an outcome of complete cataclysm is far from a foregone conclusion. It seems more likely there will be any substantive shift away from the status quo. This is due to a phenomenon known as reversion to mediocrity. While certain events have the power to destabilize society temporarily, society does tend to revert to the way it was. If sanctions are not enough of an outside force to knock the global economy out of orbit, and it does not appear they are, then the most likely outcome is neither utopic nor dystopic, but “business as usual.”  Sanctions will continue to cause inconveniences on all sides, inspiring no salient change in any direction. Given that sanctions have caused and most likely will continue to cause some negative utility to all parties, we should consider them unethical and come out in opposition to them. Nevertheless, a staggering eighty-five percent of Americans when polled favored maintaining strict sanctions.^[22]  Clearly, there is more at stake here than utility.

Sanctions as a Value-Driven Response

To put it plainly, the symbolic meaning of sanctions may be even more important than any practical purpose they serve. Sanctions act as a clear position condemning Russia’s invasion of Ukraine,^[23] a retaliation against Russian aggression,^[24] and a refusal to be complicit through inaction.^[25]  They also serve as a marker of solidarity, showing international cooperation and support for Ukraine.^[26]  Sanctions are supported by many because they are perceived as just. In particular, sanctions serve the function of retribution. They act to hold Russia accountable^[27] and are the country’s “just dessert.”  This is particularly salient from the perspective of just war theory, which necessitates that war is fought as a last resort and with the right intentions.^[28]  While Vladimir Putin has claimed the westernization of Ukraine constituted an existential threat to Russia,^[29] this is transparently a smokescreen for Russia’s own territorial ambitions, a stance which must be punished in the name of human dignity and morality.  With this in mind, it is debatable whether the punishment fits the crime. After all, sanctions treat economic hardship as the cost of loss of human life and disregard for national sovereignty. These are crimes against humanity that cannot be assigned a monetary value and as such have no fair market cost. In addition, some have dubbed sanctions as mere “moral grandstanding,”^[30] or action that makes us feel like we have accomplished retribution while doing nothing to serve real justice. 

Yet this is not necessarily a fair interpretation. Firstly, one must consider what a more just punishment would be. Sanctions have been described as an “alternative between words and war.”^[31] This implies that to take further action than sanctions would be to consign people to death in military conflict, an outcome we clearly want to avoid. Secondly, one should recognize the signaling value of sanctions. Not only do they encourage cooperation between sanctioning countries, but they also make other countries wary when it comes to supporting Russia. The impact of this is most notable when it comes to China, where President Xi has backed off some deals with Russia out of fear of angering the U.S. and her allies.^[32]

However, one cannot ignore that sanctions do pose economic injustices, most notably procedural and commutative injustices. Procedurally, sanctions are unjust in that they inhibit personal choice. Commutatively, sanctions are unjust in that they distort markets. This has evidently had the most notable impact in the market for oil. By artificially limiting supply through sanctions, governments shifted the market out of equilibrium and into a much higher price point. In trying to address this by releasing oil from reserves, the American government, while lowering prices, also made a profit. The average price paid for oil from the reserves is $29.70 per barrel,^[33] with one million barrels being made available per day. While it is unfair to argue this was a motive for sanctions, it is undeniable it has been a consequence of them.

Virtues

A final ethics approach to sanctions takes an even more abstracted view than iterations of justice and instead appeals to virtue more broadly. Two of the classical virtues are fortitude and temperance, both of which sanctioning countries exemplify. By implementing sanctions against Russia, a major supplier of oil, these countries knew they would be bringing economic and consequently political hardship onto themselves. The courage this displays is a clear sign of fortitude, as well as is the endurance required to maintain sanctions when this hardship became manifest. What’s more, these countries limited their response to targeted sanctions with clear goals. They did not overreact out of spite but instead took moderate action out of rational calculus. This limited response shows temperance. As such, sanctions are both a fortitudinous and temperate response, and thus a virtuous action. From this perspective, the outcome of sanctions becomes almost irrelevant. Sanctions can be seen as just simply because they are virtuous.

Ultimately, whether one views sanctions as ethical is a nuanced decision built on uncertain predictions and compromises over what aspects of justice we find most salient. From a utilitarian perspective, the outcome that sanctions achieve is of the utmost importance. Not knowing what this is in advance, we find it difficult to judge their ethical character, though it is likely they will cause overall disutility to all parties and are therefore unjust. From a deontological perspective, we concern ourselves with various subcategories of justice, finding sanctions to be just as a form of retribution and unjust due to their procedural and commutative ramifications. Finally, from the perspective of virtue ethics, we find sanctions to be ethically justified as embodying two traditional virtues. Having considered these approaches, we must recognize there is no such thing as a perfect solution or perfect justice in the real world. By implementing sanctions, countries have shown they value virtue and retributive justice over utility and procedural and commutative justice. By not implementing them, the opposite would have been true. Either decision would have sacrificed some elements of justice in the name of others. This is an unavoidable part of policy that cannot be ignored in a fair analysis of sanctions. Calling sanctions purely just or unjust is reductive and inaccurate in light of the varied ethical frameworks that have a place in our society.

^[1] Value.Today.  “World Top Luxury Goods Companies List by Market Cap as on Jan 7th, 2022”. https://www.value.today/world-top-companies/luxury-goods.

^[2] Statista. “Consumer Markets:  Luxury Goods.”  2022, https://www.statista.com/outlook/cmo/luxury-goods/russia.

^[3] Cooban, Anna. “Russia has defaulted on its foreign debt, says S&P,” CNN Business, 11 April 2022, https://www.cnn.com/2022/04/11/investing/russia-default-sp/index.html.

^[4] Kirby, Jen. “Are sanctions against Russia working?”  Vox, 4 May 2022, https://www.vox.com/23049187/russia-sanctions-ukraine-ruble. 

^[5] Dashti-Gibson, Jaleh et al. “On the determinants of the success of economic sanctions: An empirical analysis.” American Journal of Political Science, p. 610, 1997.

^[6] Zilber, Ariel. “Russian ruble is the best-performing currency of 2022 despite sanctions”. New York Post, 23 June 2022, https://nypost.com/2022/06/23/why-the-russian-ruble-is-strongest-currency-so-far-this-year/.

^[7] Supra note six.

^[8] Inman, Phillip. “Sanctions are hitting hard enough to hurt Russia, if not stop it.” The Guardian, 11 June 2022, https://www.theguardian.com/business/2022/jun/11/sanctions-are-hitting-hard-enough-to-hurt-russia-if-not-stop-it.

^[9] Pilkington, Philip. “Sanctions Could Harm Us and Bolster Russia on the World Stage.”  Newsweek, 15 March 2022, https://www.newsweek.com/sanctions-could-harm-us-bolster-russia-world-stage-opinion-1687703.

^[10] Dugan, Kevin T. “Are the Sanctions Against Russia Working or Not?”  Intelligencer, 9 April 2022, https://nymag.com/intelligencer/2022/04/are-the-sanctions-against-russia-working-or-not.html.

^[11] Supra note four.

^[12]OEC. “Profiles:  Russia.”  2020, https://oec.world/en/profile/country/rus/#:~:text=Exports%20The%20top%20exports%20of%20Russia%20are%20Crude,%28%2425.3B%29%2C%20Netherlands%20%28%2422.5B%29%2C%20Belarus%20%28%2415.8B%29%2C%20and%20Germany%20%28%2414.2B%29.

^[13] Kennedy, Charles. “U.S. Consumer Spending on Gasoline Has Doubled In 12 Months”. OilPrice.com, 19 May 2022, https://oilprice.com/Energy/Gas-Prices/US-Consumer-Spending-On-Gasoline-Has-Doubled-In-12-Months.html.

^[14] D’Ignazio, Catherine and Lauren Klein. “Principle: Rethink Binaries and Hierarchies.”  Data Feminism, 27 July 2020, https://data-feminism.mitpress.mit.edu/pub/h1w0nbqp/release/2.

^[15] Dickler, Jessica. “Biden’s plan to bring down gas prices could take weeks. Here’s how to get relief now.”  CNBC, 1 April 2022, https://www.cnbc.com/2022/04/01/bidens-plan-to-lower-gas-prices-could-take-weeks-how-to-pay-less-now.html#:~:text=1%20Track%20gas%20prices.%20Apps%20like%20GasBuddy%2C%20Gas,help%20offset%20the%20price%20at%20the%20pump.%20.

^[16] Smith, Sophia et al. “Germany reopens coal plants to avert gas shortage as Russia cuts supply.”  Financial Times, 19 June 2022, https://www.ft.com/content/f662a412-9ebc-473a-baca-22de5ff622e2.

^[17] Sommerland, Joe. “Alexander Govor: The Siberian billionaire behind the ‘Russian McDonald’s’”. Independent, 15 June 2022, https://www.independent.co.uk/news/world/europe/russian-mcdonalds-rebrand-replacement-logo-b2101502.html.

^[18] Supra note nine.

^[19] Hostelley, Darwin. “Future of the World Reserve Currency – What happens if the US dollar loses its status?” Gold Alliance, 26 May 2021, https://goldalliance.com/blog/market-insights/if-the-dollar-loses-its-status-as-the-worlds-reserve-currency/.

^[20] Cosgrove, Mike. “The new world currency’s here: IMF issues $650bn in new money”. Caperata, 27 August 2021, https://www.caperata.com/the-new-world-currency-is-here-imf/.

^[21] Weijia, Hu. “Unilateral sanctions add to evidence that it’s no longer safe to hold assets in US.”  Global Times, 20 May 2022, https://www.globaltimes.cn/page/202205/1266185.shtml.

^[22] Pew Research Center. “Public Expresses Mixed Views of U.S. Response to Russia’s Invasion of Ukraine.”  15 March 2022, https://www.pewresearch.org/politics/2022/03/15/public-expresses-mixed-views-of-u-s-response-to-russias-invasion-of-ukraine/.

^[23] Pandey, Vikas. “Ukraine: Why India is not criticising Russia over invasion.”  BBC News, 3 March 2022, https://www.bbc.com/news/world-asia-india-60552273.

^[24] U.S. Department of Commerce. “Commerce Implements Sweeping Restrictions on Exports to Russia in Response to Further Invasion of Ukraine.”  24 February 2022, https://www.commerce.gov/news/press-releases/2022/02/commerce-implements-sweeping-restrictions-exports-russia-response.

^[25] McCarthy, Simone. “Russia’s attack on Ukraine reveals political fault lines in Asia.”  CNN, 7 March 2022, https://www.cnn.com/2022/03/07/asia/china-india-ukraine-reaction-intl-hnk-dst/index.html.

^[26] Bureau of Industry and Security. “Commerce Increases Restrictions on U.S. Exports to Russian Industrial and Commercial Sectors.”  9 May 2022, https://www.bis.doc.gov/index.php/documents/about-bis/newsroom/press-releases/2986-2022-05-09-bis-press-release-commerce-increases-restrictions-on-u-s-exports-to-russia/file.

^[27] Stanley, Marcus. “Why sanctions on Russia are necessary.”  Responsible Statecraft, 25 February 2022, https://responsiblestatecraft.org/2022/02/25/why-sanctions-on-russia-are-necessary/.

^[28] Moseley, Alexander. “Just War Theory.”  Internet Encyclopedia of Philosophy, https://iep.utm.edu/justwar/.

^[29] Gvosdev, Nikolas. “Ukraine: An Ethical Response.”  Ethics & International Affairs, 8 March 2022, https://www.ethicsandinternationalaffairs.org/2022/ukraine-an-ethical-response/.

^[30] Flanigan, Jessica and Cristopher Freiman. “Russian Sanctions: The Helpful, the Harmful, and the Pointless.”  Reason, 11 March 2022, https://reason.com/2022/03/11/russian-sanctions-the-helpful-the-harmful-and-the-pointless/.

^[31] Glucroft, William Noah. “Sanctions: What are they good for?” DW Akademie, 4 June 2021, https://www.dw.com/en/sanctions-what-are-they-good-for/a-57780906.

^[32] Supra note eight.

^[33] Office of Fossil Energy and Carbon Management. “Strategic Petroleum Reserve.”  https://www.energy.gov/fecm/strategic-petroleum-reserve-9.