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For Whom The Bell Tolls, Really The Impact Of The Sanctions Against Russia

For Whom The Bell Tolls, Really The Impact Of The Sanctions Against Russia by Dr. Dan Steinbock, Difference Group

The sanctions against Russia are working; but not for Russia, Ukraine, the EU, or even the US.

In the 2nd quarter, Russia’s GDP contracted 4.6 percent from a year earlier, following a 2.2 percent contraction in the 1st quarter. A severe contraction was expected after the selloff in oil, currency crisis and the consequent plunge of consumer demand. But the plunge was worse than anticipated and most since 2009.

As Moscow has struggled to speed up the diversification of its industrial structure and to defuse the repercussions of the plunging energy prices, it has also sought to shift its economic relationships from the transatlantic axis to the East. Nevertheless, in the past 12 months, the ruble has depreciated over 43 percent against the dollar.

In Washington, the consensus is that “the sanctions are working.” However, the question is, for whom?

Sanctions Unified Russia

In March 2014, Washington and Brussels initiated sanctions against Russian individuals and interests in response to developments in Crimea and Eastern Ukraine. For 1.5 years, the hope has been that sanctions and the Ukraine crisis would quash President Putin’s popularity. In reality, Ukraine has been pushed close to default, while the sanctions have united Russians behind Putin.

Before the Ukraine crisis, diminished economic prospects caused Putin’s approval rating to plunge to 61 percent; the lowest since 2000. In 2014, the sanctions and the annexation of Crimea galvanized public opinion behind Moscow. Today, Putin’s approval ratings remain at 87 percent, according to Levada Center.

Currently, some 56 percent of Russians support Putin’s “Unified Russia” Party, while communists, militant and nationalists, and social-democrats together have about 15 percent, according to the Russian Public Opinion Research Center.

In the US, many observers suspect that putinism and statism are on the rise because barely 65 percent of Russians support the prime minister and the government, and just 45 percent are behind the parliament. However, that’s a tricky argument. After all, in the US, the approval of the Obama administration and the Congress is about 40% and 15%, respectively, according to public polls and Gallup. In other words, president Obama’s support in the US is barely half of that of Putin’s in Russia. Even worse, the support of the parliament in Russia is three times higher than that of Congress in the US.

Yet, the West continues to rely on the idea that “Putin is the problem, Russia is with us.” In reality, Putin’s actions reflect the wishes of the Russian people, including the moderate majority and the emerging middle classes. Before the global crisis, the latter accounted for almost fifth of the population; today, only a half or a third of that.

Months of sanctions have hardened sentiments across-the board and on all sides. In Russia, moderate centrists have turned into assertive nationalists and informed social-democrats into passionate communists.

Before the sanctions, more than half of Russians held positive views of America. Today, that figure has plunged to just 15 percent. Similarly, support for President Obama in Russia has fallen from 40 percent to barely 11 percent, according to Pew. In turn, the number of Americans who see Russia as US’s greatest enemy has doubled to 18 percent.

These findings come amid rising, but diverging tensions between Russia, Ukraine, the US and Europe. Brussels is not eager to extend further sanctions in the near term but nor will it readily remove them.

In the US, the 2016 presidential campaigns are likely to increase anti-Putin volume, while members of the Congress have...