By Daniel DePetris
If the goal of this week’s G7 summit in the quaint Bavarian town of Schloss Elmau was to ensure the world’s wealthiest countries remained united on behalf of Ukraine, then it appears to have been a success. The U.S., U.K., Germany, France, Italy, Canada, Japan, and the European Union all agreed to explore additional ways to ratchet up the sanctions pressure against the Russian economy, including through higher tariffs on Russian goods. But if the Western-led sanctions regime against Russia was meant to push Vladimir Putin toward ending his war of aggression in Ukraine or sitting down for negotiations with the Ukrainian government on a possible settlement to the conflict, then the measures have failed—and they will continue to fail.
Officials in Washington and Brussels may not want to hear it, but the facts are clear: Putin is as committed to prosecuting the war in Ukraine today as he was on the first day of the invasion. The Russian president has calculated that calling it quits in Ukraine would deal a threatening blow to Russia’s geopolitical position and can therefore not be tolerated, even at the cost of a years-long recession.
This is difficult for many in the West to understand, let alone accept. In terms of the economic realities, there is little doubt the Western-led sanctions campaign is having a negative impact on Russia’s business climate. Over 1,000 multinationals have either curtailed operations in Russia or have left the country entirely. The coordinated decision by the U.S., the E.U., and Japan to wall off as much as half of Russia’s massive $640 billion in foreign reserves was an unprecedented move against a major economy. Russian billionaires tied to Putin are increasingly persona non grata in the international financial system—$30 billion in Russian assets have been frozen, including yachts, luxury homes, and personal planes. Export controls on U.S. technology like microchips will hurt Russia’s ability to stay competitive in the global marketplace and dent innovation for a long time to come.
The sour economic outlook in Russia has also driven thousands of highly-skilled IT workers to pack up and leave, leading to a brain drain in one of the world’s most lucrative industries. In part due to the U.S. and E.U. sanctions, 15 years of Russian economic growth is projected to be erased. Moscow also defaulted on its foreign debt for the first time in over a century.
This piece was originally published in TIME on July 1, 2022. Read more HERE.