What impact will sanctions have on Russia?

So many sanctions. Once again, the United States, United Kingdom and European Union are hitting Russia with a new wave of sanctions over Moscow’s invasion of Ukraine. This time, they come in response to the death of noted Kremlin critic Alexei Navalny, who died in an Arctic penal colony last week. With Friday’s latest round of sanctions — landing one day before the second anniversary of the war — the US has targeted more than 4,000 officials, oligarchs, firms, banks and others. The EU has targeted more than 2,000 people and entities, including Russian President Vladimir Putin and his associates.

President Joe Biden says the sanctions are designed to make Putin pay “an even steeper price for his aggression abroad and repression at home.” But the sanctions have not been a knockout punch to Putin’s ambitions.  The latest sanctions focus on people and firms connected to Russia’s weapons manufacturing, finance and import sectors. They also target three officials that Western leaders say were involved in the death of Navalny and others they hold responsible for kidnapping and reeducating Ukrainian children.

Many of the new sanctions target Russian firms that contribute to the Kremlin’s war effort — everything from drone and industrial chemical manufacturers to machine tool importers. The EU is also targeting foreign firms that officials say have exported dual-use goods to Russia that could be used in the war.  The sanctions on people block their access to property in the US and other countries that target them and their ability to travel and do business in the West. They also punish those who do business with sanctioned people or companies.

The US State Department is targeting three Russian officials it says are connected to Navalny’s death. These include the deputy director of Russia’s Federal Penitentiary Service, who was promoted by Putin to the rank of colonel general on Monday, three days after Navalny died.

The sanctions bar the three men from traveling to the US and block access to US-owned property. But it’s unlikely they travel to or have assets or family in the West, which makes the action largely symbolic. White House national security spokesman John Kirby says there’s more US action to come related to Navalny’s death.

The UK also sanctioned six Russian prison bosses this week in charge of the penal colony where Navalny died. The Group of Seven allies in December 2022 imposed a $60 per barrel price cap on Russian oil, hoping to limit Russia’s revenues from fossil fuels.  The Treasury Department says Kremlin oil tax revenue was more than 40 percent lower in the first nine months of 2023 because of the cap. But the IMF says Russia’s economy is still set to grow, with GDP projected to increase by 2.6 percent in 2024.

Policy experts are divided on the effectiveness of the price cap. Some have called for stronger enforcement of the current policy, a lowering of the price cap or even a complete oil embargo.  MIT economists Simon Johnson and Catherine Wolfram wrote for the European Centre for Economic Policy Research Friday that the EU and US should step up their enforcement of the cap.

Treasury Deputy Secretary Wally Adeyemo says the US and its allies will not lower the price cap — “rather what we’ll be doing is taking actions that will increase the cost” of Russia’s production of oil. The Biden administration acknowledges that sanctions alone cannot stop Russia’s invasion. And many policy experts say the sanctions are not strong enough — as evidenced by the growth of the Russian economy.

Eswar Prasad, a Cornell economist, says the latest sanctions are “likely to be of limited potency in stifling Russia’s economy or its war effort.” He said the “escape valve” provided by China, Russia’s ability to maneuver around many of the sanctions and the impasse in Congress over new military aid for Ukraine “have substantially eroded the symbolic and substantive power of such sanctions.”

The West still has other options to consider in further punishing Russia.

The U.S. and Europe are considering the use of $300 billion of Russia’s frozen central bank assets to fund Ukraine as reparations for the war, but that’s a legally complex matter. The U.S. could also designate Russia a state sponsor of terrorism, an idea that has gained bipartisan popularity in the U.S. Congress.

Associated Press