Speaker 1: This is Bloomberg Business Week with Krol Messer and Tim
Speaker 1: Steneveek on Bloomberg Radio.
Speaker 2: Well, it's hard to believe it's been nearly two years
Speaker 2: since Russia invaded Ukraine. The war, of course, still ongoing.
Speaker 2: Ukraine's saying today that at least four people were killed
Speaker 2: in another ninety two wounded in Russian missile strikes in
Speaker 2: the early hours of this morning that mainly targeted the
Speaker 2: country's largest cities, Kiev and Kharkiv. Again, this war still
Speaker 2: going on, Carol's also a war that involves massive sanctions
Speaker 2: on Russia. It's a land war, it's an air war,
Speaker 2: it's a war of technology, and it's a war of sanctions.
Speaker 1: No, it's a really good point. As of July, the
Speaker 1: US had sanctions in place against more than thirty six
Speaker 1: hundred individuals, entities, vessels, and aircraft. That's according to kestellum Ai.
Speaker 1: It's a compliance screening company that maintains count targets of
Speaker 1: US sanctions included the top ten Russian owned banks, military manufacturers,
Speaker 1: and government leaders all the way up to President Vladimir Putin.
Speaker 1: I feel like in the early days, remember we talked
Speaker 1: about this in what people were doing to put pressure
Speaker 1: on the oligarchs, and so the yacht exactly hit and
Speaker 1: the property throughout the world.
Speaker 2: Well nearly two years in. Have these sanctions actually worked?
Speaker 2: Christine Abele is Assistant Professor in Contracts in International Business
Speaker 2: at New England Law and she's got a new book
Speaker 2: out all about this. It's called The Russia Sanctions, The
Speaker 2: Economic Response to Russia's Invasion of Ukraine. She joins us
Speaker 2: on zoom from Boston. Professor, congratulations on the book. Good
Speaker 2: to have you with us this afternoon. Thank you for
Speaker 2: joining us. Simple yes or no? Have the sanctions on
Speaker 2: Russia worked?
Speaker 3: I would say yes, to the extent that sanctions can
Speaker 3: work and to the extent that they can be reasonably
Speaker 3: expected to achieve results. Have they reduced the resources available
Speaker 3: to Russia Russia available to Russia to wage war? Yes,
Speaker 3: they certainly have.
Speaker 1: Well.
Speaker 2: Necessity is the mother of invention, as they say. And
Speaker 2: if you can't get if you can't get energy, or
Speaker 2: if you can't get money as a result of selling
Speaker 2: energy to the European Union into the United States, then
Speaker 2: perhaps you can go and sell energy to China and
Speaker 2: North Korea or another country that's not imposing So in
Speaker 2: your book, you argue that there's sort of this new
Speaker 2: alliance forming, new axis forming in the world based on
Speaker 2: necessity and where Russia has had to go in order
Speaker 2: to buy and sell goods.
Speaker 3: Certainly, and we've seen that as a result of the
Speaker 3: oil the oil the ban on oil imports into the
Speaker 3: US and the EU, Russia is selling its oil to
Speaker 3: purchasers including India and China. And as a result this,
Speaker 3: this coalition of sanctioning nations, which includes the EES, US,
Speaker 3: the UK, and the EU, are going to have to
Speaker 3: step up enforcement and implement new sanctioned strategies going forward.
Speaker 1: Yeah, it's interesting. I was just checking out a story
Speaker 1: that we did earlier in December, early December and then
Speaker 1: basically talking about Moscow's monthly income from oil exports greater
Speaker 1: now than before the invasion of Ukraine, highlighting the failure
Speaker 1: of measures to curb its war chest. I feel like,
Speaker 1: you know, it gets complicated. We say this about so
Speaker 1: many any of the geopolitical issues. How do we you know,
Speaker 1: is there the will if you will, I guess, among
Speaker 1: allies to kind of punish Russia even further, and so
Speaker 1: we kind of prevent these go arounds, if you will.
Speaker 3: I think so, And I think that what we might
Speaker 3: see going forward is more of an emphasis on secondary sanctions,
Speaker 3: where parties who are from nations that aren't haven't imposed
Speaker 3: their own sanctions. Right, parties from third party country nations
Speaker 3: like China and India, they might themselves be made subject
Speaker 3: to sanctions in the future based on their supporting Russian
Speaker 3: companies and individuals.
Speaker 1: Do you think, really China though, I mean, they need oil,
Speaker 1: you know, I think about right. It's like I said,
Speaker 1: I'm being silly, but I mean, you know, they're looking
Speaker 1: at what they need. I feel like there's kind of
Speaker 1: a rewriting almost of geopolitical allies starting to unfold here
Speaker 1: as we say see kind of pressures and stress points
Speaker 1: around the world. But I do do you think something
Speaker 1: like China will consider its allegiance or allies with the
Speaker 1: United States and others in the Western world more important
Speaker 1: than its need for oil?
Speaker 3: No, And I don't think that sanctions are ever going
Speaker 3: to be one hundred percent effective, right. Russia is always
Speaker 3: going to be able to sell its oil to parties
Speaker 3: in India or parties in China, But sometimes those parties
Speaker 3: will have to make a choice right as to whether
Speaker 3: they want to maintain economic relationships with Russian companies or
Speaker 3: with EU or US ones, and there may be more
Speaker 3: of a cost to those parties in supporting especially Russian
Speaker 3: military linked companies, right, and parties that are more crucial
Speaker 3: and more directly linked to the Russian war effort.
Speaker 2: How do you differentiate between sanctions that a government puts
Speaker 2: on a country versus a disas decision. And we've spoken
Speaker 2: to Professor Jeffrey Sun and felt quite a bit over
Speaker 2: the last couple of years. Ever at Yale, a company
Speaker 2: that makes a decision to withdraw from Russia, how do
Speaker 2: you distinguish between those two actions.
Speaker 3: Yeah, so sometimes they're really interlinked, and a decision of
Speaker 3: a private company to withdraw can be a result of sanctions,
Speaker 3: even if those sanctions don't necessitate the company to take
Speaker 3: that action, Because when there are so many sanctions, even
Speaker 3: if they're individual targeted sanctions that are imposed with respect
Speaker 3: to a certain region, it may be in a company's
Speaker 3: own interest, right, and they may not want to take
Speaker 3: on those compliance costs of determining what exactly it is
Speaker 3: they can and cannot do, And so the business decision
Speaker 3: for them maybe just to withdraw from newing business in
Speaker 3: that region entirely. So definitely those two those two phenomena
Speaker 3: are very very interlinked.
Speaker 1: With the stress points that we were seeing, whether it's
Speaker 1: Russia Ukraine and then the allies lining up on either side,
Speaker 1: or what's going on in the Middle East. How are
Speaker 1: you thinking about foreign policy evolving right now?
Speaker 3: Yeah, so I think that since the invasion of Ukraine, right,
Speaker 3: and the sanctions responds to Russia, this is very much
Speaker 3: the use of economic tools, right, These sanctions tools as
Speaker 3: a means to achieve foreign policy. So these economic sanctions
Speaker 3: all have these foreign policy but they affect private parties
Speaker 3: and entities in their quest to do so.
Speaker 2: So when you think about the actual effects on Russia,
Speaker 2: I think we're I think a lot of people are
Speaker 2: really surprised today, professor, to see that this war is
Speaker 2: still going on to the extent that well, Russia hasn't
Speaker 2: clearly won. I mean almost two years ago, so many
Speaker 2: people were sitting here saying this is going to be
Speaker 2: a matter of days, not weeks, when Russia is success
Speaker 2: in its campaign. And then as the war started playing
Speaker 2: out and you started seeing companies and countries sever ties
Speaker 2: with Russia, a lot of people thought wait a second, now,
Speaker 2: maybe we will start to see the Russian people push
Speaker 2: back against the government. That hasn't happened to the extent
Speaker 2: that actually weakens the government and says, okay, you know
Speaker 2: the Russian government is pulling out and is no longer
Speaker 2: invading Ukraine. Are you surprised by that?
Speaker 3: No, because I think that so much of what affects
Speaker 3: these issues is the military aspect as well, right, And
Speaker 3: so I think that in the coming months and perhaps years,
Speaker 3: what we'll see is pressure on Putin as a result
Speaker 3: of lack of military gains in the battlefield, as a
Speaker 3: result of Russians being conscripted. I think that that certainly
Speaker 3: will cause domestic pressure. And I think that in the
Speaker 3: long run, economic sanctions do have significant power, but rarely
Speaker 3: do economic sanctions themselves affects change. It's these other factors
Speaker 3: that help spark those sorts of things as well.
Speaker 2: I'm not trying to be glib, but what about people
Speaker 2: going from being able to buy iPhones and you know,
Speaker 2: a McDonald's burger to not being able to do that
Speaker 2: in a matter of days.
Speaker 3: Well, I think that's that's really interesting because China has
Speaker 3: become more economically intertwined with Russians, so they're able to
Speaker 3: to replace many of the products that are no longer
Speaker 3: available to Russians because of the sanctions. Right, So they're
Speaker 3: not always a perfect substitute, but oftentimes certain consumer products
Speaker 3: are available. That's not to say that that's always the case,
Speaker 3: but certainly in the long run, I think that some
Speaker 3: of the most notable economics effects we'll see are as
Speaker 3: a result of export controls, where maybe higher tech items
Speaker 3: are provided to Russia because of the sanctions.
Speaker 1: Professor, we only have about thirty forty second here. In
Speaker 1: his New Year's Address, President j talked about China's reunification
Speaker 1: with Taiwan. Would you anticipate a coordinated action effort by
Speaker 1: global allies if we start to see you know, you
Speaker 1: talk about the principle of territorial integrity in your book.
Speaker 1: Would you expect to see a global coordinated effort in
Speaker 1: terms of sanctions or other efforts against China if that
Speaker 1: was to happen just very quickly.
Speaker 3: I think it's different from the Russian situation because of
Speaker 3: the extent of economic interdependence between the US and China
Speaker 3: in a way that US and Russia are not so
Speaker 3: heavily linked.
Speaker 1: All right, certainly a lot to think about in this
Speaker 1: year that is going to be probably once again jimp
Speaker 1: pac geopolitically. Thank you so much, Christine Able. She is
Speaker 1: Assistant Professor in Contracts and International Business at New England
Speaker 1: Law on Zoom from Boston. Her new book, The Russian
Speaker 1: Sanctions