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S.A. Burma
SANCTIONS AS A MEANS OF PRESSURE ON RUSSIAN ECONOMY
The article deals with the problem of sanctions imposed on the Russian Federation. The sanctions were imposed after the Crimea had been proclaimed part of Russia after the Referendum. The article gives definition of sanctions, tells about actual sanctions which are a reality and analyses the results in the Russian economy.
Key words: sanctions, Russian economy, Crimean crisis, political reasons, European Union.
The issue of sanctions is urgent because the sanctions that have been imposed on the Russian Federation have touched all spheres of our everyday life. The purpose of the article is to show the influence of sanctions on the Russian economy. There are various definitions of sanctions. The most complete to my mind is: official orders or laws stopping trade, communication etc with another country as a way of forcing political changes. International sanctions are actions taken by countries against others for political reasons, either unilaterally or multilaterally.
There are several types of sanctions.
•Diplomatic sanctions - mean the reduction or removal of diplomatic ties, such as embassies.
•Economic sanctions - are typically a ban on trade, possibly limited to certain sectors such as armaments, or with certain exceptions (such as food and medicine)
•Military sanctions - are as a rule military intervention
•Sport sanctions - usually prevent one country's people and teams from competing in international
events.
•Sanctions on individuals - ban visitations.
Economic sanctions are distinguished from trade sanctions, which are applied for purely economic reasons, and typically take the form of tariffs or similar measures, rather than bans on trade.
Sanctions are often regarded as an alternative to military force. By punishing an offending party economically, socially, or politically, rather than militarily, those who impose sanctions hope to solve a conflict without the mass suffering and sacrifice required by war. Indeed, sanctions have sometimes been effective, and are widely used. The use of sanctions is much more common than their success: results of studies show that only five to 30 percent of sanctions result lead to the desired change. The use of sanctions also comes with significant risks.
Sanctions go back for thousands of years. They have been a tool of economic statecraft during many centuries. Pericles, a statesman in Athens in the 5th century B.C. ordered all trade banned between the Athenian Empire and Megra, a city-state that had sided with Sparta, Athens' enemy. He intended to send the message that, short of going to war, Athens would punish anyone who challenged her authority. These sanctions ultimately lead to a thirty-year war.
For most of the 20th century, sanctions were rarely used. During the Cold War, both the U.S.S.R. and the United States tried to gain a competitive edge over each other by cooperating with corrupt leaders. This policy made sanctions an ineffective tool. Before the fall of the Berlin Wall, there were only two U.N.-approved sanctions, against Rhodesia and South Africa.
After the Cold War, the U.N. Security Council ordered sanctions against a number of countries, Afghanistan, Angola, Haiti, Iraq, Serbia, Somalia, Sudan, and others. Their violations include external and internal aggression, support of terrorism, and suppression of democracy. Also during this time, the United States rose to unprecedented international power, giving greater authority to its unilateral sanctions. The United States' economic strength, combined with a reluctance to deploy its military force to address economic, moral, or political problems resulted in a sharp increase in unilateral sanctions. In 1998, one commentator estimated that "two-thirds of the world's population was subject to some sort of US sanctions." However, the United States has not been the only nation to employ economic sanctions. In addition to thousands of single-nation bans and proposals, the increasingly viable European Union has been sponsoring its own brand of sanctions.
The effectiveness of sanctions is questionable. It is clear that the more harm sanctions have on their target, the more likely they are to influence the target's behavior. The human costs of such sanctions, however, are often unacceptable and make international support unlikely. Moreover, sanctions are likely to have greater effect on their target if the target government is faced with domestic opposition; otherwise, sanctions may simply encourage greater political cohesion around the targeted leadership.
The Ukrainian crisis prompted a number of governments to apply sanctions against individuals and businesses from Russia and Ukraine starting from March 2014. Sanctions were approved by the United States,
© Burma S.A., 2016.
BecmnuK Maeucmpamypu. 2016. № 6(57). T. IV.
ISSN 2223-4047
the European Union(EU) and other countries and international organizations. Russia has responded with sanctions against a number of countries, including a total ban on food imports from the EU, United States, Norway, Canada and Australia. Both these sanctions applied to Russia and Russia's import bans in response have contributed to the collapse of the ruble and the 2014-15 Russian financial crisis.
This was the response to the Crimean crisis and the subsequent annexation of Crimea by the Russian Federation.
The first round of specifically targeted sanctions was introduced by the US, the EU and Canada on 17 March 2014, the next day after the Crimean referendum and a few hours before the Russian president Vladimir Putin signed a decree recognizing Crimea as an independent state, thus laying the groundwork for its annexation by Russia. They were the most wide-ranging sanctions used on Russia since the 1991 fall of the Soviet Union. Japan also announced sanctions against Russia. These included the suspension of talks regarding military matters, space, investment, and visa requirements. A few days thereafter, the US government announced it was expanding the sanctions.
One of the initial rounds of sanctions targeted members of Putin's so-called inner circle, including Gen-nady Timchenko, founder of commodity trading company Gunvor, Igor Sechin, chairman of Rosneft, Russia's leading petroleum company, Arkady and Boris Rotenberg, magnates with majority stakes in construction firm Stroygazmontazh, and banks SMP and Investcapitalbank and others. Were these sanctions largely symbolic, or did they do some real damage?
On 28 April, the United States imposed a ban on business transactions within its territory on seven Russian officials, including Igor Sechin, and seventeen Russian companies. On the same day, the European Union issued travel bans against a further fifteen individuals. In connection with this, the EU issued a paper stating the aims of the sanctions. The EU states that their "sanctions are not punitive, but designed to bring about a change in policy or activity by the target country, entities or individuals. Measures are therefore always targeted at such policies or activities, the means to conduct them and those responsible for them. At the same time, the EU makes every effort to minimise adverse consequences for the civilian population or for legitimate activities"
The third round of sanctions was applied on 17 July 2014 and extended its transactions ban to two major Russian energy firms, Rosneft and Novatek, and two banks, Gazprombank and Vneshekonombank. The third round of sanctions targeted against certain sectors of Russia's economy, including the financial sector, trade restrictions relating to the Russian energy and defence industries.
In response to the escalating War in Donbass, on 17 July 2014 the United States extended its transactions ban to two major Russian energy firms, Rosneft and Novatek, and two banks, Gazprombank and Vneshekonombank. On 25 July, the EU expanded its sanctions to an additional fifteen individuals and eighteen entities, followed by an additional eight individuals and three entities on 30 July. On 31 July 2014 the EU introduced the third round of sanctions against certain sectors of Russia's economy, including the financial sector (all majority government-owned Russian banks), trade restrictions relating to the Russian energy and defence industries, and additional individuals and entities designated under the EU asset freezing provisions. On Feb 16, 2015 the EU increased its sanction list to 151 individuals and 37 entities.
The third round of sanctions was faced with criticism by numerous EU politicians, businesspeople and officials who saw them as counterproductive and/or harmful to the European economy.
Sanctions by Russia
Three days after the first sanctions against Russia, the Russian Foreign Ministry published a list of sanctions against certain American citizens, which consisted of ten names. The ministry said in the statement, "Treating our country in such a way, as Washington could have already ascertained, is inappropriate and counterproductive".
On 6 August 2014, Putin signed a decree "On the use of specific economic measures", which mandated an effective embargo for a one-year period on imports of most of the agricultural products whose country of origin had either "adopted the decision on introduction of economic sanctions in respect of Russian legal and (or) physical entities, or joined same".
How have sanctional measures influenced Russian economy? The oil prices have now fallen, the prices of buckwheat have increased as much as 70 per cent. Basic food stuff has increased sharply. The exchange rate is falling, it is jumping up and down. It's moving either way by 5 percent in a day. The worst we've seen is it has gone down by 10 percent in a day.
These are only a few examples.
Of course this information is controversial. People in Russia, Ukraine and the USA treat the situation quite differently. This happens because of the way mass media represent the information. In fact, almost nobody knows the real state of things and that's why even close friends or relatives living in Russia and Ukraine have opposite points of view and hot arguments because of this situation.
But in my opinion even in the current situation Russia can gain from sanctions by stabilizing its home
economy, giving a chance to national producers, and maturing economic safety of the country.
List of references
1.Lyudmila Kravchenko. «Economic sanctions against Russia: Challenges and Threats». Center of scientific thought and ideology.
2.Public and business forecasting and analytical newspaper. «Sanctions against Russia» 03.05.14.
3.Raizberg B.A., Starodubtseva E.B. Modern Dictionary of Economics - 2 edition, corr. 499pg 1999. Dictionary of Economics. 2000.
4. http: //www. aif. ru/dontknows/actual/115961
5. http: //tass.ru/sankcii-v-otno shenii-rossii
6.Pankova S.V., Popov V.V. On the formation of special economic zones on the territory of municipalities // National interests priorities and bezopasnost. 2015. № 7 (292). S. 16-24.
7.Popov V.V. Risks in the commission of trade and economic operations and methods of assessment // Management of economic systems: electronic scientific zhurnal. 2012. № 10(46). 37 pp.
8.Popov V.V. Theoretical aspects of statistical analysis of customs duties // Bulletin of the Orenburg State universiteta.- 2008. number 84.
БУРМА СТЕПАН АЛЕКСАНДРОВИЧ - студент Института менеджмента, Оренбургский государственный университет, Россия.
