Western countries have been imposing sanctions on Russia since the war in Georgia in 2008. They have always been too little, too late, and poorly enforced.
That is the depressing conclusion of “Punishing Putin: Inside the Global Economic War to Bring Down Russia,” a new book by the Bloomberg journalist Stephanie Baker. She tells a gripping but infuriating tale. So many talented and conscientious officials in the West worked so hard. Russia’s economy and the assets of the regime’s cronies abroad presented so many targets. The stakes for Ukraine—and the world—could not be higher.
Yet after 1,000 days of full-scale war, the sanctions have evidently failed. Russia is slowly destroying Ukraine. It has circumvented the sanctions or simply accepted the modest economic pain they inflicted.
Baker’s vivid account ranges from hotspots of evasion to the supposed bastions of Western financial integrity. She goes on a chartered boat trip in Cyprus, where a Moscow law firm lectures potential clients on how to dodge sanctions, by incorporating in off-shore jurisdictions such as the Seychelles, for example. In Dubai, she shows first-hand how easy it is to launder money by buying and selling gold.
She describes how the sanctioned Russian oligarch Oleg Deripaska ensures that his girlfriend gives birth in the United States—not once, but twice. Russian regime insiders may be fire-breathing critics of the West. But they still want their children to have the advantages of an American passport. Perhaps the most infuriating stories are of Western official incompetence.
Britain’s National Crime Agency raids an oligarch’s mansion in north London. But it turns out that the search warrant was not properly filled out. They ended up paying damages to the oligarch for trespassing on his property and had to pay his legal bills. “For all their tough talk on enforcing sanctions, the UK authorities showed they were incapable of conducting a basic search,” she writes bitterly.
A slightly more encouraging side of the story was on display last week in London at the annual Magnitsky awards dinner, hosted by the financier-turned-campaigner Sir William Browder. Once a cheerleader for Putin, he is now a far more effective foe than many of the government bodies described in Baker’s book. Browder’s approach is to target not governments, but individuals. The worst people in the world, he argues, should not be allowed to launder their loot in our financial system, or to come here to spend it. So put them on visa blacklists and freeze their assets. These sanctions and annual human-rights awards commemorate the lawyer Sergei Magnitsky, who was beaten to death in a Russian prison on November 16th, 2009, aged 37.
Magnitsky was investigating Russian officials who had seized Browder’s companies and used them to perpetrate a vast tax fraud. Browder had already been banned from Russia as a “threat to national security” for exposing corruption in companies run by Putin’s pals. Browder has withstood Kremlin-backed smear campaigns and extradition attempts. His awards dinner was notable not just for the celebrities and bigwigs attending, but for the heavy security.
Browder is rightly feted for his efforts. But when he started, Western governments—not least in the United States and Britain—did not like him much either. The idea of targeting individuals was heretical. It might set a precedent. And indeed, it has. More than a dozen countries have passed Magnitsky sanctions. More will follow.
Western governments should follow Browder’s example, adopting a far more innovative and determined approach. Sanctioning the “enablers” in the West who do Russia’s dirty work is a particularly promising line of attack. But hurry up. Ukraine is bleeding.
Edward Lucas is a Non-resident Senior Fellow and Senior Advisor at the Center for European Policy Analysis (CEPA).
Europe’s Edge is CEPA’s online journal covering critical topics on the foreign policy docket across Europe and North America. All opinions are those of the author and do not necessarily represent the position or views of the institutions they represent or the Center for European Policy Analysis.
From the Ashes: Cultural Identity and National Security in the Age of Conflict
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