Sanctions won’t fell Putin: The war in Ukraine shows no real sign of abating in spite of setbacks for Russian forces, says ALEX BRUMMER
A notice from HM Treasury extols the role of the Government in punishing Russia for its brutal war on Ukraine.
As part of the global sanctions regime, Britain has frozen a record £18billion of assets either controlled directly by Moscow or by supporters of Vladimir Putin.
Britain has, down the years, sanctioned all manner of regimes, from Iran to North Korea. Together, the total assets frozen are far less than those represented by Russia.
Sanctions: As part of the global sanctions regime Britain has frozen a record £18bn of assets either controlled directly by Moscow or supporters of Vladimir Putin
Part of the reason for the big number is down to the Russian oligarchs, who before the 2014 occupation of Crimea chose to make their base in what became known as the London laundromat.
Roman Abramovich, the former owner of Chelsea FC, was the most visible of London exiles. But he was the tip of an iceberg.
At least two billionaires, with extensive interests in Britain and well-established philanthropists, have been in contact with me in recent months pointing out the perceived injustices of the UK regime.
They argue that the Government refuses to acknowledge that they have never been ‘friends’ of Putin and their business networks were built outside of Russia.
As impressive as the sanctions regime may be, there are questions to ask as to how effective it has been in isolating Putin and bringing an end to a war, which has now raged for nearly nine months. It shows no real sign of abating in spite of setbacks for Russian forces.
Intelligences sources close to UK and Nato argue that even if splits develop between Putin and his generals over the conduct of the campaign, the West greatly underestimates the patriotism to ‘mother Russia’ and Putin’s willingness to slog it out for as many months or winters as necessary to secure territorial and strategic gains.
Economic and financial sanctions are nothing new.
In ancient Athens, Pericles blockaded allies of Sparta in the hope of bringing the dissident lands to heel. Instead of aborting a conflict, it sparked the Peloponnesian War. Former US president Woodrow Wilson described sanctions as a tactic more ‘tremendous’ than physical conflict.
They failed to prevent the outbreak of the First World War on his watch.
The only modern example of sanctions bringing down a regime was in apartheid South Africa where a largely racist and prosperous minority was cut off from international banking and found its position was no longer tenable.
Personally, I always thought it a stretch to think that a UK ban on selling programmes at Stamford Bridge and refusing first class travel to professional footballers was going to bring Putin down.
In its press notice, the Treasury describes in detail the harms done to Russia’s economy by the sanctions regime.
It says that the UK is ‘degrading Russia’s military machine’.
It points to a projected 6.2 per cent reduction of national output in 2022 (compared with forecasts), that a 2.3 per cent decline is projected in 2023 and 60 per cent of Russia’s reserves have been immobilised.
But there is another side to this. The assault on Ukraine did not happen by accident. Putin had been preparing, and built a war chest of gold and overseas currencies of an estimated £600billion.
A proportion is stored in Moscow and not – as has often been the case with past sanctioned regimes such as Libya and Iran – in vaults at the Bank of England.
The Kremlin has been confident enough of replenishing its financial resources to have cut off gas supplies to Europe with the sabotage of the Nord Stream 1 pipeline.
It was able to do this because of a ready market for its oil in two of the world’s biggest fossil fuel burners, China and India.
Western confidence that cutting Russia off from the Swift bank transfer system would starve it of hard currency proved wrong.
Fintech and non-bank intermediaries have allowed Russia to circumvent traditional ways of moving cash.
It also has benefited from Saudi Arabia’s efforts to shore oil prices.
None of this means it has not been morally right for Putin to be financially isolated and for Russian companies to be suspended (if not permanently exiled) from the London Stock Exchange.
Ordinary Russian citizens and businesses are hurting. However, there is little evidence that any of this will stop Putin acquiring weapons, such as drones from Iran, and continuing to denude Ukraine’s infrastructure.