Top State Department Economist: US Sanctions In Russia Are Working Pretty Great

A new review published on the State Department website, but not technically endorsed by the department, concludes that targeted sanctions against Russian interests have been successful.

posted on Feb. 9, 2017, at 12:53 p.m.

Hayes Brown
BuzzFeed News Reporter

An academic paper recently published on the State Department’s website argues that the US sanctions targeted against Russian President Vladimir Putin and his closest allies are working as intended — punitive measures that President Donald Trump has suggested he’s open to lifting.

State Department deputy chief economist Daniel Ahn is listed as the primary author of the paper, alongside Georgetown professor Rodney Ludema. Together, they concluded that the economic sanctions were in fact depriving its targets of revenue and resources. According to their 36-page paper’s abstract, “the average sanctioned company or associated company loses about one-third of its operating revenue, over one-half of its asset value, and about one-third of its employees relative to their non-sanctioned peers.”

But the researchers also discovered that the “smart” or “targeted” sanctions placed against Russian companies and individuals starting in 2014 live up to their name. The four rounds of sanctions that have been put into place — aimed at Putin’s inner circle, several Russian banks, the defense industry, and the energy sector — have, according to the paper, managed to affect those individuals without being a primary damager of the Russian economy broadly.

Instead, a global collapse in oil prices has been far more harmful to Russia’s macroeconomy, which had been previously flush with cash from its petroleum exports.

Smart sanctions first gained traction as a way of exerting diplomatic leverage in the mid-1990s, when backlash against broad economic sanctions against countries and their effect on average citizens — as seen in Iraq during an extended oil embargo — began to grow. Ahn and Ludema’s paper concludes that, despite the limited number of cases that have been studied, the practice is working as envisioned.

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