Russian war sanctions show why U.S. must rethink its strategies

Trade penalties have tended to benefit China, Washington’s top rival

Brahma Chellaney, Nikkei Asia

Russian President Vladimir Putin holds talks with Chinese leader Xi Jinping via a video link from Moscow on Dec. 30, 2022: The sanctions are bringing America’s two main adversaries closer together. © Sputnik/Kremlin/Reuters

The flight of a Chinese reconnaissance balloon across the continental U.S. for several days before it was shot down has put into stark relief the fact that a rising China, not a declining Russia, poses the biggest threat to America.

Indeed, a number of observers believe that the biggest beneficiary of Western sanctions against Russia over its invasion of Ukraine has been Beijing, not Kyiv. This reminder of sanctions’ side effects should be moving Washington to rethink its approach, rather than relying ever more heavily on trade penalties.

Sanctions have long been a favorite foreign policy tool of the White House and the U.S. Congress, even though they rarely change the behavior of targeted countries. But with the relative decline of American power, the efficacy of sanctions has been noticeably eroding.

The unprecedented American-led sanctions against Moscow have had a global impact without reining in the Kremlin’s war machine or pushing Russian President Vladimir Putin to the negotiating table. At the same time, they are helping China to advance its economic and strategic interests.

“China has emerged, by a wide margin, to be Russia’s most important trade partner. It now receives about 20% of Russia’s total exports and is the source of over 35% of Russia’s total imports,” the Free Russia Foundation, a Washington-based advocacy group, said last month in a study based on 40 million customs records. It called China the “biggest winner” from Western punitive measures.

The sanctions are bringing America’s two main adversaries, China and Russia, closer together, cementing their anti-Western partnership and boosting bilateral trade in military technologies and equipment.

In exchange for greater access to Russian military technology, China has been aiding Moscow’s war in Ukraine by supplying navigation equipment, jamming technology and fighter jet parts to sanctioned entities, according to customs records reviewed by Washington research center C4ADS and The Wall Street Journal.

Russia and China, although natural competitors, have grown closer since the U.S. started to sanction Moscow over its 2014 seizure of Crimea from Ukraine.

But Chinese President Xi Jinping does not need to learn from Russia that aggression works, given his own expansionistic maneuvering from the South China Sea to the Himalayas. Indeed, none of his actions, including redrawing the geopolitical map and his mass incarceration of more than 1 million Muslims in Xinjiang have drawn a sanctions response remotely comparable to that imposed on Russia.

But the largely ineffectual sanctions campaign against Moscow looks likely to embolden Xi’s designs on Taiwan, especially since comparable penalties against Beijing would have even less impact given the much larger size of China’s economy and the countermeasures it has undertaken. Just as Putin was clear about his plans for invading Ukraine, so has Xi been explicit about absorbing Taiwan.

Meanwhile, Europe’s shift from cheap Russian energy to importing costlier supplies from elsewhere has opened the path for China to build a safety net that could withstand Western sanctions and even a blockade in the event of war over Taiwan. China has significantly boosted overland oil and gas flows from Russia at heavily discounted prices, setting up a supply line that would be difficult to interrupt.

U.S.-led sanctions have failed to change the behavior of other targets, too, including North Korea, Myanmar, Iran, Cuba, Syria and Venezuela. In each case, the penalties have only reinforced the regime’s renegade behavior.

Iran and North Korea have made significant advances in their nuclear, missile and drone programs while facing some of the harshest sanctions that the U.S. and its allies have ever imposed. Iranian drones are also playing an important role in Russia’s bombing campaign in Ukraine, while North Korea recently surprised Seoul by flying five drones through South Korean airspace for five hours, with one nearing the president’s office and none being shot down.

China has usually been quick to seize opportunities arising from a sanctions-hit country’s isolation. As a result, U.S. sanctions often help advance Beijing’s commercial and strategic interests.

For example, American trade penalties have pushed resource-rich Myanmar and Iran into China’s arms. China has not only emerged as a top investor in, and security partner of, Iran, but also has almost cornered Tehran’s oil exports at a hefty discount.

Asked about European Union sanctions over human rights violations, Cambodian Prime Minister Hun Sen told attendees at Nikkei’s 2021 Future of Asia conference, “If I don’t rely on China, who will I rely on?”

The fact that sanctions often tend to be a blunt instrument prompted U.S. President Joe Biden’s administration in its early days to order an internal review of American sanctions programs to understand their utility and consequences.

According to a declassified version of the review released in October 2021, the U.S. should assess whether sanctions are “the right tool for the circumstances” before imposing them, and coordinate punitive measures with allies to magnify their impact and achieve clear policy objectives.

The review, however, has done little to moderate the growing U.S. use of sanctions. While the Biden administration often acts in coordination with America’s allies, this support does not guarantee the penalties’ effectiveness as the West is no longer economically dominant.

Washington, instead of developing objective criteria for the circumstances that would justify sanctions, allows moral outrage and narrow geopolitical considerations to drive its sanctions policy. This needs to change, or its overreach could accelerate the relative decline of U.S. wealth and power.

Brahma Chellaney is professor emeritus of strategic studies at the Center for Policy Research in New Delhi and a former adviser to India’s National Security Council. He is the author of nine books, including “Water: Asia’s New Battleground.”