Don’t Rely on Sanctions Alone: Ways of Facilitating Regime Behaviour Change

Sanctions regimes aim to change elite behaviour by raising the costs and stakes of their choices, both directly in terms of diminishing their personal comfort including travel and access to finance, and indirectly by increasing popular pressure against their rule through economic hardship. 

This highlights one of several problems with sanctions. These elites are usually uninterested in popular welfare, and more concerned about maintaining themselves in power and funding their lifestyle, whatever the cost to their people. 

But there are ways and means, direct and indirect, to raise the costs of such choices. Some of these new means have been developed following Russia’s invasion of Ukraine. 

The Kyiv Scientific Research Institute of Forensic Expertise investigates the engineering make-up and components of the bombs, drones and missiles used against Ukraine. The Institute’s researchers, including former military engineers, have identified an astounding array of parts from across the globe, despite sanctions on Russia's technology imports.

A Ukrainian government website displays a database of 3,000 components from nearly 400 foreign manufacturers in 32 countries found in weapons used by Russia in the war against Ukraine. 

Economic sanctions are a tool of coercion on the softer end of a spectrum that starts with diplomatic isolation and voluntary boycotts and ends with physical blockades. It can even include softer measures such as a more careful calibration of aid. While many – usually those against whom they are applied – are quick to claim that sanctions don’t work, history suggests that, at least in some instances, with the right amount of political will, they can. But an over-reliance on sanctions alone obscures other non-violent possibilities for encouraging and, in fact, facilitating regime behaviour change. 

How Sanctions Work – and Don’t Work

During the height of sanctions on South Africa in the late 1980s, South African entrepreneurs quickly developed methods to circumvent even the tightest of measures. 

This is not unusual. The efficacy of sanctions is weakened by their inconsistent, incoherent and half-hearted application, and the relative ease with which they can be circumvented. 

Still, sanctions remain attractive precisely because they offer governments a means to punish military aggression or human rights abusers short of going to war. Since 2000, the number of individuals and entities on the US sanctions list has increased over tenfold to 10,000. Some 19 countries, including Belarus, Afghanistan, Libya, Sudan and Zimbabwe, have one or other type of sanctions imposed on them. As sanctions have improved in accuracy, might and range, so too have the means by which they are circumvented.

While sanctions against Cuba, Iran, Iraq and North Korea may have constrained these states, their elites have successfully buttressed themselves against regime change, albeit at a cost to their citizens. 

With a Little Help from Our Friends

The circumvention of sanctions is made easier by a lack of diplomatic support for the cause behind their imposition, reflecting self-interest. 

Russia’s war in Ukraine is a case in point. Governments representing about 60% of the world’s population, including India, China, South Africa and much of the Middle East, did not at the outset of the conflict accept the Ukrainian or Western narrative of the war in 2022 for various reasons. 

In response to Russia’s 2014 and 2022 invasions of Ukraine, the West has imposed an unprecedented raft of economic measures against Moscow. By mid-2024, the EU had adopted 14 packages of sanctions, targeting over 2,200 individuals and entities and covering a wide array of sectors, goods and services. In turn, the US has imposed over 14,000 sanctions, more than those on Iran, Cuba and North Korea combined, targeting 10,173 individuals, 4,089 entities, 177 vessels and 100 aircraft. In total, Russia has been subjected to more than 14,000 sanctions.

The idea was, at the outset, that Western sanctions would slowly but inexorably bite, making the conflict a ‘struggle between the refrigerator and the television’, as one Ukrainian colonel commented at the start of the 2022 phase of the war. Rhetoric may make a full heart, he said, but seldom fills the stomach.

According to a study published by the joint US–Ukrainian International Working Group on Russian Sanctions, sanctions have shrunk Russia’s surplus in the current balance of payments, estimated to be 60% down in 2022/3. The rouble also depreciated, driving up inflation and, in the process, creating social effects worsened by the diversion of funding to the war from Russia’s National Welfare Fund. Receipts from the oil and gas trade – responsible for nearly half (some $230 billion) of export income in 2021 – reportedly fell by around 50% in 2023. 

Given the closed accounting and secrecy of Putin’s state, it may be difficult to determine the real, longer-term effects of the sanctions regime. Certainly, it is likely to have made military production and rearmament more costly and complicated, given the supply of components at a premium, especially from North Korea, China and Iran. 

By the start of 2024, however, it was estimated that Russia’s defence expenditure accounted for as much as 40% of its budget because of the war in Ukraine, more than its combined spending on health and education. By comparison, the US spent 11%, while the NATO average was 4.3%.

By activating its own axis of strategic partnerships, Moscow has obtained at least 3 million rounds of heavy artillery from North Korea since August 2023 (and perhaps as many as 6 million), and 300,000 from Iran in 2023. Russia itself is producing about 250,000 artillery shells per month, or 3 million annually. Moreover, critical Western goods and components continue to find their way to Russia’s war machine.

By the end of 2023, according to the Kyiv School of Economics, Russian imports of microelectronics, wireless and satellite navigation systems, and other critical parts had recovered to near pre-war levels, averaging $900 million monthly during the first nine months of 2023. Supply chains, disrupted by sanctions imposed in 2022, had been quickly reconfigured with the help of China, Hong Kong and countries in Russia’s backyard like Kazakhstan, Armenia, Turkey (a NATO member), Kyrgyzstan, Uzbekistan, Georgia and Serbia. One challenge is that not all of the aforementioned components are sanctioned. Dual-use certification, including that for space exploitation, is another legal loophole allowing the export of sensitive technology. 

But it is too easy to focus on the ‘axis’ countries as the sole perpetrators in sanctions busting. Some businesses will find a way given the rewards on offer and despite the moral and legal hazard. 

Taiwan’s foreign minister Joseph Wu has said that a Russian victory in Ukraine ‘would be seen as a victory of authoritarian states because Russia, China, North Korea and Iran are now linked together’. Despite this, Russian purchases of Taiwanese nitrocellulose have increased by 94% over the past five years. On the other side of the ledger, Taiwan is the world’s fifth largest importer of Russian coal. Taiwan is also a substantial importer of Russian gas, aluminium, copper and iron.

And there are legacy strategic drivers, especially with EU states. The West continues to rely on Russian oil and gas. The EU’s dependence on Russian energy products is significant, constituting €110 billion or 74% of the EU’s total energy imports in 2021, and 40% of Germany’s energy requirements. 

One Solution: Tighten the Screws

In response to these weaknesses, two big changes have occurred to sanctions regimes in this century: the willingness to go after select individuals and to sanction the financial systems that prop up rulers. 

The US government’s Global Magnitsky Act is a far-reaching, targeted, human rights and anti-corruption sanctions programme aimed at government officials as well as private citizens. In its first 10 years the Act has cited 450 individuals. 

Additionally, while targeted sanctions against Russia started feebly in 2022, they soon extended to the Russian banking system, preventing Russia’s use of the SWIFT international payment system. By cutting off seven Russian banks from the system, the West significantly raised the cost of banking. In addition to the weaponisation of the dollar in this manner, the freezing of Russia’s currency reserves was an unprecedented use of extraterritorial jurisdiction. The call to seize the more than $300 billion held by Western banks and employ it for Ukraine’s relief was similarly met with alarm from commercial banks. 

Such fears of a politicised and weaponised US dollar are partly responsible for the dollar’s share among global reserves falling from 70% to just under 60% this century, as countries seek to sanctions-proof their reserves. 

The more stamina is required, the less inclined Western populations have become, it seems, to pay a premium for sanctions. 

Another Option: Work Smarter for Regime Behavioural Change

Several notable individuals have called for the distribution of frozen Russian funds. The danger of making a fanfare about sanctions is that there is an opportunity to cast the sanctioning party as the bad guys in a sort of perverse moral equivalence. 

There is another approach, less founded in the moralism which accompanies sanctions than in engaging with the problem in a manner aligned with more careful calibration of the benefits of external engagement regimes. 

The menu of choices could include the following:

• Providing information on the financial transactions of leaders direct to the public.
• The training of journalists, accountants and engineers.
• Support for civil society organisations.
• Support for opposition politicians and academics, in the latter instance by commissioning work to ensure a basic income free from state controls.
• Fostering networks of opposition politicians through meetings such as those that have been managed through the Platform for African Democrats, Casa Africa in the Canary Islands, or the World Liberty Congress.
• Publishing online resources in local languages on how to mount a political campaign and win an election.
• Training and equipping of cyber-activists.
• Supporting local investigative journalism.

Sanctions should be seen as part of a continuum of state action, at one end of which is a more careful calibration of benefits to undo authoritarianism and, at the other, a stricter application of measures specifically targeting individuals – a capacity which exists today in unprecedented forensic detail. 

Conclusion: Strengthen Forensics

The Achilles heel of sanctions remains their (lack of) implementation, driven by political differences or financial advantage, and enabled by a lack of consequences. The variance in sanctions monitoring capacity ranges across Europe in departments from five to 150, for instance. Similarly, limiting money laundering via flow-through (transit) accounts is important in order to cut corrupt practices. One means of enabling this is for all member states to implement without further delay the EU Confiscation Directive and to incorporate it into their national legal frameworks. Also on a legislative level, more countries should amend their respective criminal codes to introduce or strengthen punishments for the violation of international sanctions.

But sanctions should not be a pretext for presenting the options as ratcheting up isolation and nothing else. On a spectrum of coercion, there has to be a carrot with the stick. That is probably the lesson from apartheid South Africa which is most often overlooked, despite its power and impact, because it was not a dramatic action from outside that brought change, but rather external support for those fighting for change within the country. South Africa did not change because it was cut off. It changed because the regime did not want to be cut off, and those that remained connected had gained all the advantages and strengths of so doing. 

Sanctions remain critical in reducing government capacity, in part by increasing the cost and complexity of regime survival, and ensuring that elites in particular are not immune to the implications of their actions. Changing elite behaviour depends on increasing the pressure for parties to move off the battlefield and towards the negotiating table. Sanctions can help to tip the balance, not least in changing perceptions of elite impunity.

This article draws, in part, on Greg Mills and David Kilcullen, The Art of War and Peace (Johannesburg: Penguin Random House, 2024). A longer version of this article is here.

The views expressed in this Commentary are the authors’, and do not represent those of RUSI or any other institution.

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