In one way or another, nations have long sought to enforce their will by mounting sanctions against their rivals through the banning or limiting of trade. This is economic rather than military warfare. Napoleon reckoned that he could bring Great Britain to its knees by imposing an economic blockade throughout the countries of Europe that he had occupied and by bullying the Russians to comply as well. The international community sought to end white rule in South Africa through a long sanctions campaign, which was frustrated by profit-seeking middlemen who on occasions acted on behalf of major multinationals, including banks and oil companies. Now Washington and Brussels are preparing to punish Putin's Russia with sanctions in response to its actions in Crimea. The first have been mounted against individuals, but it is fully expected that a wide range of bans and limitations will also be imposed on Russian business and finance. Yet how likely is it that this disruption to Russia's foreign business - the EU is by far and away its largest trading partner - will cause Vladimir Putin to cancel his takeover of Crimea and restore the territory to the Ukraine? Is Moscow really going to be brought to its knees by the raft of economic consequences it now faces? Or is the Obama-led initiative going to turn out to be a politically pointless gesture that cannot, however, be abandoned because Western leaders feel that they must be seen to be doing something in the face of the most provocative act by the Kremlin since the end of the Cold War? If some sectors of the international markets are to be believed, anti-Russian sanctions will be a thoroughly damp squib. The rouble, already weakened by the country's increasingly poor economic performance, has begun to fall sharply in value. So too have Russian stocks and shares, as Russians themselves panic and try to convert their investments to cash to be held offshore in foreign currencies. Yet savvy international investors have begun to move their funds in the opposite direction. It was noted on Monday that some leading Western fund managers were actually snapping up Russian shares as their prices fell. Though it seems that the sell-off is far from over, meaning that prices will decline further, these outside investors are taking a long-term view that they will have acquired valuable Russian assets at knockdown prices. The Russian reaction to sanctions is likely to pose problems for Washington and Brussels. Russian banks and companies are believed to owe creditors around the world something approaching $1 trillion. Financial sanctions will almost certainly cause defaults on these debts. Russian gas supplies to Europe are likely to be interrupted, if not halted. Likewise, the important supplies of Russian wheat. Major Western investments in Russia, particularly in the energy sector, may be compromised, even confiscated. Deprived of access to further international credits, some Russian businesses will certainly suffer. The multi-billionaire oligarchs who underpin Putin's rule may find their debt-fueled empires struggling to survive. But this is an economy in between a free market and central control. The Kremlin has enough temporary fixes to keep it afloat, perhaps for long enough to defy Western sanctions and make them seem more costly to those nations that have imposed them.
