The Role of Sanctions in Curtailing Russia

Posted February 24, 2022

The European Union and nations such as the United States, Great Britain, and Germany have moved in recent days to impose new sanctions on Russia over the Ukraine conflict. Tibor Besedes, Mary S. and Richard B. Inman, Jr. Professor of Economics in the School of Economics, researches the effectiveness of sanctions — including those imposed on Russia following its annexation of Crimea. He says while sanctions can make it harder to do business with a country, they do not always achieve the desired result in terms of changing behaviors.

“In the short run, I don’t think it changes much. Longer term, the intensification of trade restrictions may result in a domestic political price that Putin may have to pay,” Besedes said.

Besedes said sanctions by organizations such as the EU are critical, as his research shows companies in sanctioned countries are often able to evade the penalties through third countries. However, worldwide sanctions imposed by the United Nations are almost impossible to imagine because of Russia’s seat on the UN Security Council, where it exercises veto authority.

“The ultimate penalty that might befall Russia is that they may be excluded from the SWIFT system, which governs most of the financial transactions around the world. This is what happened to Iran in 2014, and since then, it’s been really difficult to do business with Iran because there’s no way of sending money out of the country.”

More experts from Georgia Tech and the Ivan Allen College weigh in on Understanding the Russia/Ukraine Conflict.