Sanctions on Russia: the next phase

Sanctions have so far been economic and short-term. The long-term goal of political freedom in Russia must be kept in mind.

Since the Russian invasion of Ukraine, the first four rounds of European Union sanctions have rightly focused on hitting the oligarchs propping up the president, Vladimir Putin. Yet it is increasingly clear that the sanctions are also having an effect on ordinary people and everyday life in Russia.

One only has to look at the website of the Russian trade union confederation (FNPR). Although the FNPR is a staunch supporter of Putin’s war—contrary to the values of the European trade union movement—it has been forced to address empty shelves in the supermarkets, rising inflation and a devaluation of the rouble.

The FNPR is trying to calm Russians. But workers and the middle classes are evidently being hit, with serious, long-term consequences for society as well as the economy.

‘Brain drain’

A ‘brain drain’ has begun, with qualified young people fleeing as quickly as the oligarchs seek to move their yachts out of European waters. It has been reported that more than 60,000 young professionals, including engineers and technology specialists, are among 200,000 people estimated to have left Russia since the war started.

These are people who had become accustomed to a lifestyle in which they could shop at IKEA, drink Coca-Cola, drive Mercedes and post on Facebook. Not any more.

That economic freedom was granted by Putin to avoid giving citizens political freedom. But those who have lost their consumer choice know it to be the result of the political choices made unaccountably by Putin himself.

Change in Russian politics does not depend only on its oligarchs and elites. Demands from workers and citizens could deliver change too. That’s why future sanctions should channel the discontent of ordinary Russians towards their authoritarian political leadership.

At the same time, the sanctions must not hit Russian working people too hard. They should not be forced to turn their backs on Europe and the west. Sanctions need to be targeted: ‘collateral damage’ cannot be avoided but it can be minimised.

Glaring gaps

The repulsive atrocities in Bucha, most likely with more unimaginable horror to be revealed as the Russian army withdraws, have brought loud calls for stronger sanctions. So what should be hit by a fifth sanctions package? There remain some fairly glaring gaps. Gas, oil and coal, the main resources for financing the Russian war machine, are still not covered. This has been noticed by dockers, increasingly unwilling to handle Russian oil. There are also instances where Russian vessels have been boycotted by workers.

While stopping gas imports will be a long process, it would be possible to stop importing coal and oil much sooner. Any such measure should however consider the impact on the livelihoods of workers and citizens, already struggling with inflation at its highest since the 1970s.

Another economic crisis in Europe would not benefit Ukraine. The EU should not return to austerity but, on the contrary, consider reactivating temporary instruments to mitigate unemployment—notably the SURE mechanism—to support jobs, while prolonging the suspension of the fiscal rules under the Stability and Growth Pact.

A debate has to be opened on how to close the financing gap, in conjunction with measures to insulate European workers from a price shock, such as energy price caps. A windfall tax on energy companies banking record profits would be something these leviathans could easily absorb.

Abandoning Putin’s energy is the right thing to do, but it can’t be done overnight and it can’t be the poorest who pay the price. In the long term, it will require the EU to accelerate the decarbonisation of its energy consumption and redouble its efforts to reduce energy demand, as the European Commission has set out to do through the REPowerEU initiative.

Companies remaining

Of course, the fight for freedom in Ukraine will have a cost for all of us, including in the EU. But just as working people should not have carried the burden for the banking crisis, so they should not bear the weight of a war waged by the pinnacle of Russian power.

The sanctions also need to hit more effectively European and American companies that choose to remain in Russia. There are even reports of European companies seeing a competitive advantage in staying when others leave—they must be stopped.

How much trade unions should participate in boycotting these companies is up for discussion but it seems they can do more to hit them. There are however important exceptions—for example, companies producing essential products such as baby milks—so decisions need to be taken on a case-by-case basis. One fundamental rule before European companies decide whether to keep doing business with Russia is they must consult trade unions and shop stewards in the EU.

Long-term goal

As we plan our next move, there is no better source of inspiration than the Soviet chess master and dissident Gary Kasparov. He said recently: ‘Ukraine deserves to know we are doing everything we can, not everything Putin allows.’ We also need to move forward as quickly as possible, as the autrocities reported last weekend show.

Sanctions so far have been focused narrowly on limiting Putin’s ability to pursue the war in Ukraine, in the short term. But we need to address the long-term goal of sanctions—not just hitting economic capacities, but restoring the political freedoms and civil liberties of ordinary Russians which are so important to bringing about a lasting solution.