This is Bloomberg Business Week with Krol Messer and Tim Steneveek on Bloomberg Radio.
Well, it's hard to believe it's been nearly two years since Russia invaded Ukraine. The war, of course, still ongoing. Ukraine's saying today that at least four people were killed in another ninety two wounded in Russian missile strikes in the early hours of this morning that mainly targeted the country's largest cities, Kiev and Kharkiv. Again, this war still going on, Carol's also a war that involves massive sanctions
on Russia. It's a land war, it's an air war, it's a war of technology, and it's a war of sanctions.
No, it's a really good point. As of July, the US had sanctions in place against more than thirty six hundred individuals, entities, vessels, and aircraft. That's according to kestellum Ai. It's a compliance screening company that maintains count targets of US sanctions included the top ten Russian owned banks, military manufacturers, and government leaders all the way up to President Vladimir Putin.
I feel like in the early days, remember we talked about this in what people were doing to put pressure on the oligarchs, and so the yacht exactly hit and the property throughout the world.
Well nearly two years in. Have these sanctions actually worked? Christine Abele is Assistant Professor in Contracts in International Business at New England Law and she's got a new book out all about this. It's called The Russia Sanctions, The Economic Response to Russia's Invasion of Ukraine. She joins us on zoom from Boston. Professor, congratulations on the book. Good to have you with us this afternoon. Thank you for joining us. Simple yes or no? Have the sanctions on Russia worked?
I would say yes, to the extent that sanctions can work and to the extent that they can be reasonably expected to achieve results. Have they reduced the resources available to Russia Russia available to Russia to wage war? Yes, they certainly have.
Well.
Necessity is the mother of invention, as they say. And if you can't get if you can't get energy, or if you can't get money as a result of selling energy to the European Union into the United States, then perhaps you can go and sell energy to China and North Korea or another country that's not imposing So in your book, you argue that there's sort of this new alliance forming, new axis forming in the world based on necessity and where Russia has had to go in order to buy and sell goods.
Certainly, and we've seen that as a result of the oil the oil the ban on oil imports into the US and the EU, Russia is selling its oil to purchasers including India and China. And as a result this, this coalition of sanctioning nations, which includes the EES, US, the UK, and the EU, are going to have to step up enforcement and implement new sanctioned strategies going forward.
Yeah, it's interesting. I was just checking out a story that we did earlier in December, early December and then basically talking about Moscow's monthly income from oil exports greater now than before the invasion of Ukraine, highlighting the failure of measures to curb its war chest. I feel like, you know, it gets complicated. We say this about so
many any of the geopolitical issues. How do we you know, is there the will if you will, I guess, among allies to kind of punish Russia even further, and so we kind of prevent these go arounds, if you will.
I think so, And I think that what we might see going forward is more of an emphasis on secondary sanctions, where parties who are from nations that aren't haven't imposed their own sanctions. Right, parties from third party country nations like China and India, they might themselves be made subject to sanctions in the future based on their supporting Russian companies and individuals.
Do you think, really China though, I mean, they need oil, you know, I think about right. It's like I said, I'm being silly, but I mean, you know, they're looking at what they need. I feel like there's kind of a rewriting almost of geopolitical allies starting to unfold here as we say see kind of pressures and stress points
around the world. But I do do you think something like China will consider its allegiance or allies with the United States and others in the Western world more important than its need for oil?
No, And I don't think that sanctions are ever going
to be one hundred percent effective, right. Russia is always going to be able to sell its oil to parties in India or parties in China, But sometimes those parties will have to make a choice right as to whether they want to maintain economic relationships with Russian companies or with EU or US ones, and there may be more of a cost to those parties in supporting especially Russian military linked companies, right, and parties that are more crucial
and more directly linked to the Russian war effort.
How do you differentiate between sanctions that a government puts on a country versus a disas decision. And we've spoken to Professor Jeffrey Sun and felt quite a bit over the last couple of years. Ever at Yale, a company that makes a decision to withdraw from Russia, how do you distinguish between those two actions.
Yeah, so sometimes they're really interlinked, and a decision of a private company to withdraw can be a result of sanctions, even if those sanctions don't necessitate the company to take that action, Because when there are so many sanctions, even if they're individual targeted sanctions that are imposed with respect to a certain region, it may be in a company's own interest, right, and they may not want to take on those compliance costs of determining what exactly it is
they can and cannot do, And so the business decision for them maybe just to withdraw from newing business in that region entirely. So definitely those two those two phenomena are very very interlinked.
With the stress points that we were seeing, whether it's Russia Ukraine and then the allies lining up on either side, or what's going on in the Middle East. How are you thinking about foreign policy evolving right now?
Yeah, so I think that since the invasion of Ukraine, right, and the sanctions responds to Russia, this is very much the use of economic tools, right, These sanctions tools as a means to achieve foreign policy. So these economic sanctions all have these foreign policy but they affect private parties and entities in their quest to do so.
So when you think about the actual effects on Russia, I think we're I think a lot of people are really surprised today, professor, to see that this war is still going on to the extent that well, Russia hasn't clearly won. I mean almost two years ago, so many people were sitting here saying this is going to be a matter of days, not weeks, when Russia is success
in its campaign. And then as the war started playing out and you started seeing companies and countries sever ties with Russia, a lot of people thought wait a second, now, maybe we will start to see the Russian people push back against the government. That hasn't happened to the extent that actually weakens the government and says, okay, you know the Russian government is pulling out and is no longer invading Ukraine. Are you surprised by that?
No, because I think that so much of what affects these issues is the military aspect as well, right, And so I think that in the coming months and perhaps years, what we'll see is pressure on Putin as a result of lack of military gains in the battlefield, as a result of Russians being conscripted. I think that that certainly will cause domestic pressure. And I think that in the long run, economic sanctions do have significant power, but rarely
do economic sanctions themselves affects change. It's these other factors that help spark those sorts of things as well.
I'm not trying to be glib, but what about people going from being able to buy iPhones and you know, a McDonald's burger to not being able to do that in a matter of days.
Well, I think that's that's really interesting because China has become more economically intertwined with Russians, so they're able to to replace many of the products that are no longer available to Russians because of the sanctions. Right, So they're not always a perfect substitute, but oftentimes certain consumer products
are available. That's not to say that that's always the case, but certainly in the long run, I think that some of the most notable economics effects we'll see are as a result of export controls, where maybe higher tech items are provided to Russia because of the sanctions.
Professor, we only have about thirty forty second here. In his New Year's Address, President j talked about China's reunification with Taiwan. Would you anticipate a coordinated action effort by global allies if we start to see you know, you talk about the principle of territorial integrity in your book. Would you expect to see a global coordinated effort in terms of sanctions or other efforts against China if that was to happen just very quickly.
I think it's different from the Russian situation because of the extent of economic interdependence between the US and China in a way that US and Russia are not so heavily linked.
All right, certainly a lot to think about in this year that is going to be probably once again jimp pac geopolitically. Thank you so much, Christine Able. She is Assistant Professor in Contracts and International Business at New England Law on Zoom from Boston. Her new book, The Russian Sanctions