Hope springs eternal:
The official US position has been to threaten broader sanctions that seem unlikely to get the European support necessary to make them hurt, while arguing that Russia's actions will be so self-defeating that the problem would just sort itself out.
It sounded silly, a shrug of a policy. And maybe it even was. But it also turns out to be working surprisingly well. Russian President Vladimir Putin has over-reached in Ukraine, creating problems for himself so bad that they may force him down as or more effectively than plausible American actions alone might have (although they helped). Putin is hanging himself by his own rope.
The hidden hand of Adam Smith's economic theories don't work for economics, we are told by our enlightened lefty brethren, but as applied to international relations they work fine?
The author deploys three charts showing declines in Russia's stock exchange, declines in one major bank's stocks (seen as a proxy for the equity market), and declines in the value of the ruble against the dollar since Russia invaded Crimea to prove that economic hits are playing havoc with Russia over the Ukraine adventure.
Values of companies will revive when nothing much happens, I am sure, as investor confidence is restored.
And the chart on the value of the ruble declining? The decline actually began in January. Yes, the first two charts show sharp drops just as Russia's operation in Crimea visibly began at the very end of February, but the ruble chart actually shows the ruble better off now (well, as of April 24 when the chart ends) against the dollar than it was at the end of February. Huh.
Russia will adapt. As it becomes apparent that sanctions are symbolic and as people figure out ways around them, the two declines noted will be but a blip in the natural vector.
Remember that Cuba and Iran have endured actual economic sanctions with some bite for 50 and 35 years, respectively, without pushing them to change their policies. Sure, the people are poorer, I suppose. That's unfortunate. And the government's are weaker as a result, sure. That's good. But they are still communist and Islamist thug states, respectively, who haven't changed their hostile policies toward the West. Just what are the odds that a wealthier and far more powerful (and nuclear over-armed) Russia will succumb when these minor states have not?
None, of course, as the author even admits.
The author offers the caveat that this punishment that is "working" will do nothing to deprive Putin of his Crimea annexation:
There is a big caveat here: Crimea. Russia controls Crimea and there just does not appear to be much the world can do about that.
So doing nothing to punish Russia for taking Crimea doesn't actually reverse Russia's taking of Crimea.
Wow. Now that's an insight.
Punish Russia by making the next act of aggression riskier for Putin.
UPDATE: Another entry in the "Adam Smith will punish Russia" chapter notes that the ruble has been declining since the beginning of the year, without noting that the decline basically took place prior to the invasion of Crimea--so the cause and effect just isn't there.
