Because Russia started this war, Russia will need to end it by leaving Ukraine. I don't think it likely that Ukraine, the US and the EU will countenance any other outcome, as it would deliver a message that powerful countries can invade and annex neighbouring countries with impunity, not an acceptable world order. Only then will it become relevant to consider the joint problems of sanctions and reparations, as relief from the former will likely be the leverage for exacting the latter, and that process can extend over decades.

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I strongly recommend the YouTube videos by ‘Joe Blogs’ on the effect on sanctions on the Russian economy. They appear to be kicking in significantly. The cap of $60 a barrel on Russian crude is being widely observed. Consumers – especially China and India- rather like cheap oil and know that Russia has nowhere else to go. My understanding is that they are negotiating prices below the cap. This price cap has only kicked in late 2022/early 2023. Furthermore China and India have no interest buying refined oil product because they have their own refineries and can make more money buying cheap Russian oil and refining it themselves. Income from gas and oil are down over 40% compared to last year and that’s going to hurt. Russia’s arms export industry is struggling to find electronic components and this war has hardly been a good advertisement for it. While the rouble recovered in mid-2022 it has been steadily declining in the last 3 months and dropping not only against the US currency but also the Chinese and Indian.

My feeling is the medium to long term outlook for Russia’s economy is somewhere between bad and grim. My feelings is that sanctions tend to be sticky and I can’t see Western governments are going to resist pressure of large businesses clamoring to go back to Russia. The Russian market is not remotely as attractive as the Chinese. As for the Western dilemma of what to do if the Russians go back to the Feb 2022 boundaries – I’ll believe that when it happens!

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A question related to the lifting of sanctions is to what extent will western businesses/countries re-engage with Russia in the absence of sanctions?

In some cases, for example oil and gas exports, the experience of this war has highlighted the dangers of relying on Russia as a supplier of energy, incentivizing shifts to other forms (nuclear and other green power sources) or suppliers of energy (e.g., natural gas imports from the US). Russia could withdraw from Ukraine tomorrow and we could drop all sanctions, but it’s far from clear that it would regain its former market share in Europe’s energy market.

In other cases, absent radical regime change, will Western companies return to Russia? Certainly, in the short run, it seems unlikely. Will the Pepsi’s or MacDonald’s of the world run the risk of upsetting western consumers and damaging their brand for the fairly marginal benefits of operating in Russia? Similarly, one might expect that the experience of the past year has caused CEO’s to permanently reprice the risk of operating in totalitarian countries like Russia (and others… cough, cough, China). Having had to shut down or sell their operations last year (or in some instances having them nationalized), do Western companies still see Russia as a market worth returning to? Not clear that the simple lifting of sanctions addresses any of those concerns.

Sanctions can come and go, but the war itself has probably caused long-term damage to Russia’s ability to do business with the West that can’t be readily fixed absent fairly radical changes in Russia.

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An interesting analysis Lawrence. It’s true that what to do with sanctions - albeit not a pressing issue - will have to be addressed sometime and requires a considered plan for that moment. That said, the Russian sanctions experience raises interesting questions as to their effectiveness (or not) as deterrents when thinking of potential increased friction with China. Food for thought.

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Apr 26·edited Apr 26

Enjoyed this multifaceted discussion.

Some concerns:

First, in reading the admittedly very limited accounts of Ukraine's offensive, it appears that they are running out of ammunition. I am doubtful that the Ukrainian army is sufficiently well armed to push back the current position of the Russians. And it is not just a matter of ammunition. Some of the things I have read in the press lead me to believe that the leadership of the Ukrainian army doesn't know how to lead a major offensive. (I admit that I am only discerning this from limited accounts in the press.)

Second, I read that Russia is finding ways to get around petroleum sanctions:


If so, I suspect that Russia could be dug in for the longer term, regardless of what the war does to their overall economy.

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Is Xi a subscriber?

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Are there going to be any more Q&A sessions? Something I’d be interested in seeing discussed is the extent to which the outcome of the war may be determined by the input of the US on the one side & China on the other.

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Apr 30·edited Apr 30

Sanctions are a crude tool and leaky but what other than full scale war? That said, there will be no change in Russia with Putin still in power and the Russian people feeling next to nothing, or coping, more assured of their righteousness as time goes on. We don't know what comes after Putin, maybe worse, maybe a long wait, unaffordable. Thus we (the US,NATO, allies) find ourselves in the dilemma of not wanting to admit that it is we who are actually in this war with Russia, not merely aiding Ukraine. We are not merely helping Ukraine, nor is Ukraine totally a proxy. There is more at stake. At the same time this is unfortunately tying our (Biden's?) hands for fear or what Russia will do if we are not careful and give Ukraine what it needs to succeed.The Ukrainians are having to pay the very high price- a steep one. We get to beef up our war industries and related ones. We (the military industry and security) get to see how well new technology works goes for future wars. "Conventional" deterrence needs keep expanding. Bad actors keep coming. What kind of world do we want if we manage to save it from climate disaster?

I see Russia becoming more of a gangster state, a terrorist state and internally more totalitarian and/or more repressive. This also has consequence.

China wants to be a peacemaker but XI is not trustworthy. Brilliantly Zelensky wants China to push Putin to return the Ukrainian deportees, especially the children that Russians are now apparently reeducating and adopting.

The Ukrainians know that Russia internally has to feel this more but they too are being careful.

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