Canada is fighting Russia’s invasion of Ukraine with sanctions. But are they actually working?

Hey there, time traveller!
This article was published 11/04/2022 (892 days ago), so information in it may no longer be current.

OTTAWA — More than six weeks into the Russian invasion of Ukraine, the horrors continue to mount.

The United Nations says more than 10 million refugees have been forced from their homes. Searing images have traversed the world, showing dead civilians splayed on battered streets. And now, as Russia stages what is expected to be a major new offensive in eastern Ukraine, suspicions have emerged that President Vladimir Putin’s forces fired poison-laced munitions into the ruined city of Mariupol.

All of this occurs under a regime of western sanctions that Canadian Foreign Affairs Minister Mélanie Joly says is meant to “suffocate” Putin’s regime. Canada alone has banned fossil fuel imports from Russia, scrapped or denied $360 million in export permits to the country, and frozen the assets of hundreds of top Russian officials, so-called “oligarchs,” and companies ranging from state-owned banks to manufacturers with military ties.

It’s not that the sanctions aren’t doing anything — it’s just that they haven’t stopped the war. And although experts say Russia’s economic discomfort will sharpen with time, Putin’s regime — a dictatorship that clamps down on dissent, with a broad propaganda machine to drum up support for its war — may be able to bear the pain.

“Vladimir Putin and those close to him have a real distorted cost-benefit analysis,” said Rachel Ziemba, an adjunct senior fellow at the Center for a New American Security in Washington, D.C.

“Not only are they willing to sacrifice and kill young soldiers and others, but they’re also willing to absorb real economic stress at home that I think very few other countries would,” she said.

That stress appears to be serious. The Institute of International Finance predicts the sanctions will shrink the Russian economy by 15 per cent this year — a massive contraction twice as severe as the 2009 recession.

Ziemba said the country is also experiencing a “brain drain,” as thousands of Russians are reportedly leaving the country and taking their skills with them. Global corporations like Google and Apple have suspended their Russian operations, and this week, Bloomberg reported Russia’s state-owned railway company defaulted on its debt, as the possibility of a wider government default on foreign bonds looms over the country.

“Financially, they’re wobbling,” said Jeff Sahadeo, a professor who specializes in Russia and Eastern European politics at Carleton University in Ottawa.

“They can handle it, but there is a cost to their economy.”

As Ziemba explained, part of the reason the country can handle it is because of moves to prevent the collapse of the Russian ruble. In a bid to prevent money from flying out of the country, Russia’s central bank jacked up interest rates from 9.75 per cent — already high by Canadian standards — to a whopping 20 per cent.

Another reason Russia is weathering the storm so far: it has a strong lifeline in the form of revenues from fossil fuels. European countries are beholden to Russian oil and gas for their energy, even as they scramble for alternative sources, while states like China and India continue to purchase Russian fossil fuels, funnelling billions into Russian government coffers.

Reuters reported that Russia’s finance ministry expects $9.6 billion (U.S.) in additional revenue from energy sales in April alone because of high oil prices that continue to sit at about $100 per barrel.

For Michael Chong, a Conservative MP who is the party’s shadow foreign minister, this means the federal government should do more to increase Canada’s oil and gas exports. He called the increased production announced last month the “bare minimum,” and argued Canada can pledge to go further even if added production takes a few years to be realized.

Chong also said Canada should follow the United States and European Union in creating a special “task force” to uncover assets sanctioned Russians own in Canada, and ensure the penalties are actually enforced.

“It doesn’t matter how many people you sanction if you’re not willing to enforce those sanctions, and that’s the problem,” Chong said.

Heather McPherson, the NDP’s foreign affairs critic and an MP from Edmonton, said the government needs to release more information about the impact of western sanctions against Russia. That includes data on the amount of assets frozen or seized from sanctioned individuals and companies, she said.

In an emailed statement to the Star on Tuesday, Joly’s spokesperson Adrien Blanchard said Canada has some of the strongest sanctions against Russia and that the overall impact of western measures is having a “crippling” effect.

“We will continue working with our allies to suffocate the Putin regime. More sanctions will be announced in the coming days,” Blanchard wrote.

Carleton’s Sahadeo predicted the existing sanctions from Canada and its western allies will “start to bite.” Developed countries in North America and Europe are no longer selling high-grade technology to Russia, which could make it harder for the country to build back after extensive losses of equipment so far in the war, he said. The EU also plans to phase out Russian fossil fuels “well before 2030.”

But countries like Iran and North Korea have shown it’s possible to persist under harsh sanctions, said Andres Kasekamp, a professor at the University of Toronto’s Munk School of Global Affairs.

The strategy of targeting rich Russians and top officials also doesn’t appear to have shaken Putin’s grip on power, which is abetted by a coterie of “hardliners” who are “happy with a new confrontation with the West,” Kasekamp said.

That means sanctions alone aren’t the answer, and experts say Canada and the West can further help Ukraine through other means, like the provision of weapons to support its defence against the invasion.

“The thing that can bring Putin down, to my mind,” Kasekamp said, “is only him losing this war.”

With files from The Associated Press

Alex Ballingall is an Ottawa-based reporter covering federal politics for the Star. Follow him on Twitter: @aballinga