Some Additional Thoughts on Sanctions and Russia

by robekulick

In this post, I’ll try to add a little to the discussion of sanctions initiated by Tom in his post. But before I start, I just want to say again how excited I am to have Tom blogging with me. 

Anyway, In Tom’s first post he made two arguments that I find compelling:

(1) There is an inherent commitment problem that will likely limit the extent of Western sanctions (much less the use of force) against Russia.

(2) Western sanctions are likely not to be particularly effective in deterring Russia from its aggressive policy.

For my contribution, I’ll attempt to apply the logic of Bruce Buena de Mesquita’s (BBdM’s)“Selectorate Model” to these issues. The Selectorate Model is a game-theoretic construct that analyzes Nations’ behavior in terms of the relationship between the leader and the group that allows the leader to maintain power (the Selectorate). One of BBdM’s key insights is that whether a government is a tyrannical dictatorship or a democracy, the government still must rely on some coalition to maintain power. What distinguishes dictatorships from democracies is the nature of the Selectorate. In a dictatorship like Russia has once again become, the Selectorate tends to be a small body of elites (think Oligarchs). In democracies like the United States and those of Western Europe, the Selectorate is basically synonymous with the set of voters (For the purposes of this use of the model, there is no need to get into a more nuanced discussion of how democracies work in practice).

In terms of the West, thinking in terms of the Selectorate can help us to understand the contrast between the United States and Western Europe. Germany, for instance, relies heavily on Russian natural gas, oil, and coal imports. However, as Tom has pointed out, Russia is not a terribly important trading partner for the United States, and, with our vast energy resources, Russia is not critical to our long-term economic health.

Both the Selectorates of Germany and the United States generally find Putin’s behavior reprehensible. However, the Selectorates in Germany and other European Countries face the potential for real economic hardship as a result of sanctions at a time when Europe can scarcely afford more economic bad news. According to the Selectorate Model, it would be very unlikely to see European leaders to commit to harsh long-term sanctions. On the other hand, in the United States, voters are unlikely to notice the effects of sanctions. Thus, moral outrage will likely be a strong enough impetus for our leaders to impose and maintain sanctions. Yet, given that Europe is a much more important trading partner for Russia, taken as a whole, Western sanctions are a weak threat.

Applying the Selectorate Model to an analysis of Russia is necessarily more speculative, as Putin’s Russia is a very new entity and, despite being effectively a dictatorship, his regime is generally popular. However, with that caveat in mind, applying the analysis to Russia suggests additional reasons that Western sanctions may not be effective. Although popular, as a dictator, Putin does not necessarily have to rely on the people for his continued political existence. Certainly, since trade with the West is important to Russia, strict sanctions would hurt the Russian economy. However, Putin may be able to use his considerable political power to compensate a small, elite coalition for their suffering, while leaving the rest of Russia to bear the brunt of the sanctions. It is of course true that sanctions would stifle economic activity hurting business concerns owned primarily by elites. But Putin only needs to maintain a critical coalition of elites and has wide latitude to compensate the coalition keeping him in power. We should not expect that simply by making the Russian population question the direction of Putin’s leadership, we will induce change.

Does that mean that the United States should abandon sanctions? Despite the bleak nature of my analysis above, my instinct is that we still have to go forward with sanctions. In the long-term, it is possible that U.S. policy will eventually cause enough distress to the Russian Selectorate to affect change. But as the Economist observed in its lead story this week, we are yet again playing “the long game” with Russia.