SANCTIONS STRENGHTHEN THE TARGETED REGIME: evidence from the 2014 sanctions imposition on Russia

16 Apr 2019

Sanctions imposition increases the targeted country regime’s electoral approval, according to research by Aleksandra Peeva, to be presented at the Royal Economic Society annual conference at the University of Warwick in April 2019. The Western targeted measures against Russian firms and individuals introduced after 2014 have had a substantial effect on the vote share change between the 2012 and 2018 Russian presidential elections. Presidential candidate Vladimir Putin gained on average additional 1.5 percentage points at those polling stations that had a sanctioned firm in immediate vicinity.

 

In the past, sanctions have had contradictory outcomes in practice. In some cases, sanctions have helped reduce the political and economic resources of the ruling elites in the target country, thereby changing the domestic political equilibrium and bringing about a change in policy in the direction aimed by the sanction senders, as has been the case in Iraq or in former Yugoslavia. Other times sanctions imposition have induced the target country’s citizens to reject foreign interference by increasing their support for the rulers and thereby reinforcing the sanctioned policy or behavior, a phenomenon termed “rally-around-the-flag”. Such has been the Iranian and the North Korean experience more recently.

 

Aware of the potential unintended consequences of regime strengthening, during the last two decades sanction policymakers have started applying so-called “smart” or targeted sanctions, i.e., sanction programs which meticulously target only a country’s ruler and her closest supporters.

 

Understanding the impact of this new type of sanctions is of interest not only for sanctions policymakers and the sanctions literature but also for models of political support and state legitimacy. And for those taking the decisions on sanctions, if smart sanctions increase the popular support of a targeted government, then sanctions in general may turn out to be an obsolete, ineffective foreign policy tool.

 

Using the US- and EU-led sanctions imposition on Russia after 2014, the study provides some answers. Several hundreds of Russian firms, spread all across the country, have been sanctioned. The researcher exploits the targeted manner of sanctioning which created substantial geographical variation in direct exposure to sanctions. Russians living close to and potentially working at sanctioned firms may have experienced sanctions in a different way than the average Russian citizen. Using a comprehensive dataset on polling station-level election outcomes and geographical and financial data on sanctioned Russian firms, the author finds that local presence of a sanctioned firm significantly increased Presidential candidate Putin’s vote share in the 2018 presidential elections by 1.5 percentage points.

 

Understanding the channels that drive up Presidential candidate Putin’s support at polling stations close to sanctioned firms is important for the design of effective sanction programs. The local presence of sanctioned firms may have induced defiant attitudes against foreign influence and awakened or strengthened ideas of nationalism or of Russia’s distinct course of development from which President Putin’s regime benefits. At the same time, sanctioned firms may have contributed to worsening local economic conditions, for which Western interference could be blamed.

 

To this end, the researcher explores employment changes at the sanctioned firms as well as prospective voters’ attitude changes towards the West and Russia over time. Results show that the sanctioned firm effect on voting is only present for those firms that do not lay off employees over the sanctions period. Whereas citizens’ attitudes towards the US and the EU plummet at those polling stations close to a sanctioned firm, the approval of President Putin shows a significant upward spike right after sanctions imposition.

These effects underscore that the exposure to a sanctioned firm has led to a rising political antagonism against the West and an increase in popular support for President Putin.

 

“Did Sanctions Help Putin?” by Aleksandra Peeva is presented at the Royal Economic Society Annual Conference in April 2019.

 

Aleksandra Peeva

Free University Berlin, Germany | +49 176 728 55 364 | aleksandra.peeva@fu-berlin.de