What’s life like in a pariah state that’s been cut off from the outside world? To find answers, Russia’s popular YouTube host, Aleksey Pivovarov, traveled to Teheran and filmed a documentary on “life under sanctions” in Iran. It’s no surprise that it has gone viral in Russia (over 8.6 million views as of early April), where ordinary Russians in all walks of life are anxiously asking themselves, How will we live under sanctions? How long will they last?
Pivovarov takes his viewers on a stroll through Teheran, visiting stores and talking to people. He shows how Iranians have adapted. He holds up a can of Coca-Cola, but explains that it is made in Iran and has nothing to do with the Western company. A look-alike of Danone yoghurt is sold under the name of “Danette.” Apple and Samsung smartphones are for sale everywhere, imported by middlemen from Turkey. There are uncensored social media; Iranians keep up with the Internet via virtual personal networks (VPN); and Telegram is wildly popular (as it is in Russia).
Pivovarov’s overall message to his fellow Russians is on the whole reassuring: Iranians have learned to live with sanctions, and Russians can too. “Everything can be done illegally,” says Pivovarov. “Iran is a country of risky schemes.” Moreover, Iranians do not believe that the sanctions will last, and they live their lives in the expectation that sanctions will be lifted soon, as they briefly were in 2015-16, when Iran agreed to restrictions on its nuclear enrichment program and enhanced transparency. The question, says Pivovarov, is not how long you can live with sanctions, but rather, For What? “Everyone needs to answer this question for themselves, as Iranians have been doing for decades, and as we need to do in Russia.”
But in actual fact the two cases are not remotely comparable. The sanctions against Iran are aimed at specific sectors and groups: they are directed mainly against Iranian energy exports, and they ban the import of goods that might contribute to the military or the nuclear weapons program. (Aviation has been a special target.) Individuals under sanctions are mainly those connected to the Iranian security elites. Iranian overseas financial assets have been frozen. Most consumer goods, however, are not banned.
In contrast, Russia has been hit by sanctions from over 40 different Western countries, a hurricane of thousands of documents covering everything from financial payments to oil exports, imports of high technology and key components, a wide range of consumer goods and services, and everything in-between.
Nothing on this scale, against so large a country and one so integrated into the world economy, has ever been tried before. The sanctions imposed since February 24 go far beyond those imposed on Russia in 2014-15 in the wake of the Crimean and Donbas occupations, in sweep, scope, and complexity. Unlike the partial sanctions adopted then, the post-invasion sanctions are aimed at paralyzing the entire Russian economy—its industry, its military, its financial system, and its consumer sector. It is effectively total economic war.
But the Russia sanctions are different from the Iran sanctions in two other key respects. First, unlike Iran, the Russia sanctions are not explicitly linked to concessions by the Russians. Second, Russia has the means and the will to retaliate.
To grasp the enormity of what has happened and what might happen next, let us take a brief historical detour.
A Quick Primer: What You Need to Know about Sanctions
Economic blockades have been used for centuries. Traditionally they were used as instruments of war, as part of ongoing hostilities. But after World War I they came to be perceived as alternatives to war, as a safer means of gaining victories without having to fight. Economic sanctions became increasingly popular after World War II. They were invoked against Cuba, North Korea, Rhodesia, South Africa, and above all against Iran.
But those were blunt instruments, which struck entire populations and economies, causing hardship and resentment. Beginning in the 1990s, this led to a search for something better. The “financialization” of the global economy made it possible to create a new model of sanctions, using financial levers aimed at the elites of targeted countries instead of their people. These so-called “smart sanctions,” were advertised as “surgical” and “tunable,” since they could be focused on specific sectors and ratcheted up or down by executive order, in exchange for concessions by the other side. Smart sanctions were notably used with considerable success in persuading Iran to limit its development of nuclear weapons.
“Smart sanctions” were also the main Western response to the Russian annexation of Crimea and its support for pro-Russian secessionists in the Ukrainian Donbas in 2014-15. They were carefully designed to strike at specific individuals in Putin’s entourage and specific parts of the Russian economy, but other parts were exempt. In the energy sector, for example, sanctions banned Western investment and technology for Arctic offshore projects and for “shale oil” (the revolutionary technology that has driven the recent boom in US oil production). But there was no attempt to embargo Russian oil exports overall, and the gas industry remained exempt. In the financial sector, certain banks that were considered close to the Putin circle were sanctioned—but Russia’s access to the global payments system, the so-called “Swift” network, was not. The explicit intent was to put selective pressure on the Putin leadership and to create leverage for negotiation, while limiting the impact on the Russian economy as a whole.
But the sanctions imposed since February 24 go far beyond the Crimea/Donbas sanctions of 2014-15. In place of “limited” and “surgical” sanctions, the latest US and EU sanctions aim at nothing less than the exclusion of Russia from the global economy, by embargoing its chief sources of export revenue (with the exception of gas, upon which Europe still depends), and extinguishing its ability to raise capital or to conduct basic financial operations. In short, the doctrine of “smart sanctions” has been laid aside (even if the tools are the same, such as financial sanctions against individuals and entities). If the earlier sanctions could be called limited warfare, the present all-out offensive amounts to total economic war, aimed at the population as much as the leadership itself. We are suddenly in unexplored territory.
A further key difference is the intent: the latest sanctions are not being used as instruments of diplomacy, but as weapons of moral punishment and revenge. In other words, they are not “surgical” or “tunable.” Unlike those of 2014-15, the new sanctions contain no indication of what concessions by the Russians might cause them to be lifted, in what order, or at what rate. Despite occasional informal statements by US policy-makers on what the Russians would be expected to do, there is no official US position, and the same is true of the EU sanctions. There is no apparent end-game. Indeed, with each new atrocity on the Ukrainian battlefield, the Western urge to punish only grows, new sanctions are adopted, and the tempest gains in intensity. At the present rate, there will soon not be much left to sanction.
Do sanctions work? The logic of economic sanctions is that they are—hopefully—substitutes for war, and an avenue to negotiations. If properly designed, they can be traded against political concessions. If carefully managed, they can be tuned up or down. But the West’s latest Russia sanctions are open-ended and they offer no concrete terms of trade. The Russian counter-sanctions and retaliations share the same fatal defect. And indeed, at this moment there is nothing on the table to negotiate. The two sides are locked into a seemingly inexorable escalation. The situation is highly unstable and unpredictable, and increasingly dangerous.
In short, Pivovarov’s message from Teheran may be too reassuring. Russia faces, not a storm, but an unprecedented hurricane. What has been its impact on Russia so far, and how have the Russians responded? That is the subject of my next post. Please join me.