How Sanctions Failed

Apologies. I have a few things going on today, and there are actually a variety of interesting topics out on the internet. Let’s do just one. Arnaud Bertrand, who most recently did a transcript of a former French foreign minister taking apart Macron’s insanely reckless rhetoric about sending troops to Russia (never mind that it’s nonsensical), has done another partial transcript. This time it features an economics professor—James K. Galbraith at UT Austin—explaining why the sanctions war on Russia was a complete backfire. Not just a failure, but a backfire, in the sense that the sanctions actually helped Russia.

Recall, the sanctions war, according to Neocon strategery, was supposed to collapse Russian within weeks and lead to Putin being regime changed—which usually leads to death, if you follow American led regime changes. That in turn would lead to the collective West raping and looting Russia, just like in the good old 90s.

On the one hand, you won’t be surprised by anything Galbraith says—no real ‘Wow!’ moments. On the other hand, the key takeaway to be internalized is that our “intelligence” agencies are staffed by fools and idiots. Consider what Galbraith says. There’s nothing earth shaking in it, nothing that couldn’t have been foreseen. That’s the point. None of these results were foreseen because those in charge of foreseeing things had closed their eyes to these obvious possibilities—there were people out there warning that the sanctions wouldn’t work. None so blind as those who refuse to see. By the way, these are the same people who are still in charge of “intelligence” for America’s increasingly disastrous imperial escapades around the world.

Arnaud Bertrand @RnaudBertrand

This is hands-down the best explanation I've heard on why sanctions on Russia backfired, and why they were never going to succeed in the first place.

By economist James K. Galbraith, professor at the University of Texas at Austin.

Best quote of his explanation: "This is a situation in which the sanctions were imposed by one important sector of the world economy which then cut itself off from resources that it needs - and that's particularly true of Western Europe - in return for cutting Russia off from various things that Russia doesn't really need."

That’s the ~25 word version of why sanctions didn’t work. Now we move on to the longer “big backfire” part

Second best quote: "If you go back to the period before the introduction of the sanctions [...] the Russian economy was very heavily colonized by Western firms. That was true in automobiles, it was true in aircrafts, it was true in everything from fast food restaurants to big box stores. Western firms were present all throughout the Russian economy. A great many of them [...] either chose to exit Russia or were pressured to exit Russia after early 2022. So on what terms did they leave? Well, they were required, if they were leaving permanently, to sell their capital equipment, their factories and so forth, to let's say a Russian business which would get a loan from Russian banks or maybe have other sources of financing, at a very favorable price for the Russians. So effectively a lot of capital wealth, which was partly owned by the West, has been transferred to Russian ownership. And you now have an economy which is moving forward and has the advantage compared to Europe of relatively low resource costs because Russia is a great producer of resources, oil and gas and fertilizer and food stuff and so forth. And so while the Europeans are paying maybe twice in Germany what they were paying for energy, the Russians are not, they're paying perhaps less than they were paying before the war. So again I characterize the effect of the sanctions, in fact as being in certain respects a gift to the Russian economy. And this is, I think, quite different from what the authors of the sanctions expected. [...] And the essence of the situation is this would not have happened without the sanctions. You could have had the war, and it would have gone pretty much as it has gone. But the Russian government in 2022 was in no position to force the exit of Western firms. It didn't want to, wouldn't have done that. It was in no position to force its oligarchs to choose between Russia and the West. It didn't wish to do that. These choices were imposed by the West, and the results were actually, in many respects, favorable to the long-term independent development of the Russian Federation's economy."

3:27 / 12:09

9:15 PM · Mar 10, 2024