Rather than crippling the Russian economy as all the real card carrying experts promised, the ruble is stronger than it’s been in seven years and Russian oil exports are generating more revenue than ever. The outcome is the opposite of what was intended as the war in Ukraine rages on with no end in sight. Rarely does a policy fail so spectacularly.
In late 2021 and early 2022, sanctions against Russia were all the rage. It seemed like not a day would pass without the announcement of new sanctions or the threat of additional sanctions. There were sanctions on Russian oligarchs, banks, oil companies, and more, even the confiscation of Russian yachts. At first, these sanctions were supposed to prevent the invasion of Ukraine by crippling the Russian economy. As National Security Advisor Daleep Singh explained it at a press conference on February 22, “Sanctions are not an end to themselves. They serve a higher purpose. And that purpose is to deter and prevent. They’re meant to prevent and deter a large-scale invasion of Ukraine that could involve the seizure of major cities, including Kyiv.” Secretary of State Antony Blinken noted something similar, “The purpose of the sanctions in the first instance is to try to deter Russia from going to war.” Pentagon Secretary John Kirby echoed the thought, “We want them to have a deterrent effect, clearly.” Sanctions remained the go-to plan even after they failed to deter an invasion and Russia was busy committing war crimes in theater. The claim that they were a deterrent was promptly memory-holed when President Biden responded to a question from CBS’s Christina Ruffini, giving sanctions an entirely new purpose. “Let’s get something straight: You remember, if you’ve covered me from the beginning, I did not say that in fact the sanctions would deter him. Sanctions never deter. You keep talking about that. Sanctions never deter. The maintenance of sanctions — the maintenance of sanctions, the increasing the pain, and the demonstration — why I asked for this NATO meeting today — is to be sure that after a month, we will sustain what we’re doing not just next month, the following month, but for the remainder of this entire year. That’s what will stop him.”
The US President wasn’t alone in this fantasy. French Finance Minister Bruno Le Mairec claimed these sanctions would “cause the collapse of the Russian economy.” The mainstream media and their real card carrying experts were also in lockstep, parroting these same bold beliefs earlier this year, barely noticing that prevention had failed and the story had completely changed. Throughout March, the belief we could cripple the Russian economy to force a resolution remained in vogue in all the right circles. CNBC reported, “Western nations have responded to Russia’s invasion of Ukraine with a raft of sanctions intended to cripple the country’s economy, and economists suggest it could work.” The Swedish economist, Anders Aslund tweeted, “Essentially, the West took down Russian finances in one day. The situation is likely to become worse than in 1998 because now there is no positive end. All Russia’s capital markets appear to be wiped out & they are unlikely to return with anything less than profound reforms.” A key part of this belief was the notion that the Russian currency, the ruble, would collapse, beset by both massive inflation and an inability to access foreign markets. In Poland, President Biden himself declared victory in this regard, “As a result of these unprecedented sanctions, the ruble almost is immediately reduced to rubble.”
The other leg of the “reduce the Russia economy to rubble” stool was cutting off oil exports, the backbone of their GDP. As President Biden put it, “The United States is targeting the main artery of Russia’s economy. That means Russian oil will no longer be acceptable at U.S. ports, and the American people will deal another powerful blow to Putin’s war machine.” Coupled with a steady supply of arms to the Ukrainian military, it was believed Russia would have no choice except to relent, if not withdraw entirely, at least come to some settlement for the Eastern provinces only. It all made sense to all the right people, a sure fire plan to end Russian aggression without firing a shot or getting our hands dirty. The only problem is: The exact opposite of what they claimed would happen has actually happened over the following three months. The ruble is, in fact, stronger today than it was before the sanctions, as is the Russian oil market. Russian currency was trading at $.013 on the US dollar in July 2021, but as of yesterday it’s at $.018, an increase in value of over 38%. By comparison, the US dollar increased at a much slower pace over the same period, rising from .85 Euros to .98, a rate of barely 15%. This led CBS News to report that “Russia’s ruble is the strongest currency in the world this year.” CNBC likewise noted the “ruble has actually gotten so strong that Russia’s central bank is actively taking measures to try to weaken it, fearing this will make the country’s exports less competitive.” Overall, the ruble is as strong as it has been since May 2015 and Russian President Vladimir Putin is already declaring victory over the sanctions. “The idea was clear: crush the Russian economy violently,” he said last month during the annual St. Petersburg International Economic Forum. “They did not succeed. Obviously, that didn’t happen.”
Perhaps needless to say, the experts and the media cannot simply accept that our approach has been a catastrophic failure, a turn of events with the absolute opposite outcome that was intended. This would be too much like George Costanza admitting his every instinct is wrong. Instead, we’ve begun making excuses and predicting future calamities. Things might appear to be moving in the opposite direction now, but just wait. The plan will work at some indefinite point, likely after Ukraine no longer exists, and so NPR claimed the ruble was exhibiting only “artificial” strength. Newsweek insisted “market analysts and the underlying economic data indicate that the sanctions against Russia are already beginning to bite, and many of the measures against Russia specifically target the economy’s long-term prospects.” They go on to rate the claim that a strong ruble is proof sanctions have failed as “mostly false,” even though everyone predicted a collapse and one economist they spoke to noted the obvious, “Thanks to the fast reaction of the government and the central bank, Russia has avoided a banking crisis, a liquidity crisis and a currency crisis. The budget is also in pretty good shape. Economic activity is so far relatively stable thanks to the previously accumulated inventories, stable employment, state support to income, inertia in household consumption.” The Associated Press took a similar tact, claiming we are experiencing “Pain for Europe now, later for Russia.” Fortune Magazine gets closest to the truth, noting that “Putin has been preparing for this moment for years.” The Russian President knew sanctions would be coming, and took steps to mitigate their effects including a rapid response to inflation, the use of the Russian Central Bank as an intermediary and a paying agent to keep money flowing even with sanctions in place, the purchase of gold from Russian banks, and other measures.
The Russian economy has also been bolstered by the rapid rise in energy prices and, once again, the sanctions have had only a miniscule effect despite the rhetoric. Russia remains the world’s largest exporter of gas and the second largest export of oil, even after the supposedly crippling efforts on our part. Exports have declined slightly from slightly over 3 million barrels per day to a little under 2.5 million, but revenue is up big time. Before the invasion, they were raking in approximately $12 billion per month from energy sales. It’s now closer to $20 billion, increasing by $1.7 billion in May alone. All told, Russia generated some $98 billion in the war’s first 100 days, all while they were bombing cities, killing civilians, committing war crimes, and filling mass graves with the dead. Even now, they are still exporting substantial amounts to Europe, an increasing amount to China, and even a small amount to the United States. The latest prediction is that it could take “years” to unwind Europe’s dependence, meaning the impact of any of these sanctions is so far in the future, there might as well be no impact. Further, this turn of events shouldn’t have been difficult to predict for anyone with a basic grasp of economics or foreign policy: Energy prices were already rising rapidly as the world economy recovered from the pandemic and inflation set in. Europe’s dependence on Russian oil wasn’t exactly a secret, culminating with former President Donald Trump verbally berating our NATO allies for being “captive” to Russia as recently as 2018, another item fact checked by the media as false which was undoubtedly true. China has long been a Russian ally as well and has been happy to help fill the gap from any sanctions. One needn’t be a master of three-dimensional chess to figure out that any energy sanctions would have limited or even no effect, but that didn’t prevent the US government, puffed up by the mainstream media, from making bold claims with nothing to back them up in the real world.
These were perhaps the boldest of the near countless false proclamations, but they are far from the only ones. The media has been peppered with a wide variety of misinformation since the start of the invasion. Russian President Vladimir Putin was supposed to be gravely ill, suffering from cancer or some other malady with one foot in the grave. As late as last month, The New York Post was reporting that he was “as once again seen apparently gripping a table for dear life — appearing tense as his veins bulge, amid mounting speculation about his possible declining health.” They continued, “Putin’s awkward appearance mirrors his meeting with Defense Minister Sergei Shoigu in April, when he was seen grasping a desk for support, also with his right hand, while looking bloated.” The report was accompanied by rumors President Putin had been advised not to make “lengthy” public appearances because of his “unstable health.” He was suffering from “a sharp sickness, weakness, and dizziness.” There were also various reports he was mentally ill, unstable, and unlikely to continue in office. Earlier this week, however, the Russian President was alive, well, and looking fit for a state visit to one of their allies in the Middle East, the terrorist sponsoring state of Iran. Iran’s Supreme Leader Ali Khamenai praised the Russian strongman’s invasion of Ukraine. “In the case of Ukraine, had you not taken the initiative, the other side would have taken the initiative and caused the war, NATO would know no bounds if the way was open to it. And if it was not stopped in Ukraine, it would start the same war some time later using Crimea as a pretext.” For some reason, US officials viewed this summit as a sign of Putin’s weakness and their success, as they always do. “[The trip] shows the degree to which Mr Putin and Russia are increasingly isolated. Now, they have to turn to Iran for help,” explained Mr. Kirby. (Yes, the same person that got it completely wrong on sanctions.)
At this point, it is impossible to say whether the US government and their supporters in the mainstream media are living in a deranged fantasy land, intentionally misleading the world, or just plain incompetent. The sad truth is that the war in Ukraine rages on, Russia is in an equivalent or if not stronger position than when the war began, and there is no acceptable end in sight, even as the conflict has faded from the headlines and no longer dominates the conversation in Washington, DC. In other words, the sanctions have completely failed and our policies have produced the opposite of the outcomes we’ve sought. The Biden Administration and our supposedly renewed relationships with our allies around the world have produced absolutely nothing of value and thousands have died, the rare result so at odds with your intent one would swear the intent wasn’t there all along. Meanwhile, the media keeps pumping out propaganda and insisting that President Biden’s statecraft has ushered in a new era for NATO. This new era is defined by the first land war in Europe since NATO was founded and one NATO itself has completely failed to prevent, remaining powerless to do anything about it for the past six months. Once upon a time, alliances were defined by their usefulness, their ability to bring about desired outcomes based on shared interests. Sadly, that standard no longer applies and the main product is pure, useless, lying rhetoric while soaking up a lot of money. Ultimately, it makes one wonder what’s the point of any of this and brings to mind the old saying: With friends like these…
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