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Tucker in this video said that sanctions against Russia aren't hurting Putin and its side-effects are just hurting US people by raising gas price.

Do US sanctions against Russia really not have any notable impact on Russia's economy to stop it from invading Ukraine? I think it's obvious that banning oil import hurts Russia's economy, but how much? Is it really remarkable? And will the effects be felt in the short term?

Timur Shtatland
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Amir reza Riahi
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    Tucker isn't really a very credible source. But of course the topic can also be discussed without him. Trade theory says that mutual trade is beneficial. That's why the absence of it must be detrimental. Without a ban on the import of oil Russia could sell even more oil at even higher prices than now. Tucker seems to be wrong (once again). (Now much damage there really is... that is another and much more interesting and complicated question.) – NoDataDumpNoContribution Mar 27 '22 at 16:12
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    @Trilarion Of course banning oil import damages its economy. But can its impact be visible soon? Can it really shorten war period because it put Russia in an economic disaster? – Amir reza Riahi Mar 27 '22 at 16:18
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    @Trilarion I edited my question. – Amir reza Riahi Mar 27 '22 at 16:59
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    It's generally quite hard to quantify the separate effect of this in the basket of the other sanctions even after you know (after the fact) by how much Russia's GDP has fallen etc. It's clear however that the 2014 sanctions did have some effect. And those didn't even include an oil ban or a freezing of the central bank's assets. So when people say that this time the effect will be greater, you can believe that much. The bigger hitter on oil (and gas) is going to be the EU, because they import much more from Russia, but their plans for weaning off won't be detailed until May. – the gods from engineering Mar 27 '22 at 17:39
  • "does its impact would be appear in short-term" No, of course it's long term. Short term the weapon deliveries or freezing of overseas assets are much more important. As part of an overall package it makes sense though. Why leaving it out, even if the desired effect might not be too large? Therefore, from a US perspective, it should be done. – NoDataDumpNoContribution Mar 27 '22 at 17:41
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    The other thing is that if the US asked the EU to not buy from Russia, but they themselves do so, it would much harder for the EU to take that seriously, given the larger disruption it would have on the EU market. – the gods from engineering Mar 27 '22 at 17:42
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    @AmirrezaRiahi Tucker who? This one? "Carlson has promoted conspiracy theories about topics such as demographic replacement,[24][25] COVID-19,[26][27] and the 2021 U.S. Capitol attack.[28][29]" See: https://en.wikipedia.org/wiki/Tucker_Carlson . If this is the same Tucker, then your sole reference is one Google search away from a pretty interesting description. Could you pls add more refs? – Timur Shtatland Mar 27 '22 at 18:42
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    @TimurShtatland You can ignore that part. The question is independent of Tucker Carlson. – Amir reza Riahi Mar 27 '22 at 18:51
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    its side-effects are just hurting US people — that makes no sense. How could they hurt only US people and not anyone else, such as Russian or other European people? – gerrit Mar 28 '22 at 10:46
  • @Trilarion : "That's why the absence of it must be detrimental.", yes, but the question is how detrimental. If it only has relatively small effects on Russia, compared to the USA and EU, then you're only arguing about semantics and the basic premise of Tucker would be true. – vsz Mar 28 '22 at 13:16
  • @vsz In the beginning the question was a simple yes/no question which can be answered quickly with high confidence. It kind of still is. If we want to make it a quantitative one and Tucker Carlson somehow meant that the damage will be rather small in his opinion, then I'm all for discussing it. – NoDataDumpNoContribution Mar 28 '22 at 13:22
  • @Trilarion : indeed, the question is formulated in a yes/no way, and this means that if hypothetically the damage would be 0.00000000001% instead of exactly 0% (I took deliberately an over-exaggerated example) then you could say it is sufficient to say it's a "yes". But that wouldn't help at all in understanding the issue the question is about. – vsz Mar 28 '22 at 13:28
  • @vsz It's what I said in the very first comment (at the end). – NoDataDumpNoContribution Mar 28 '22 at 13:36
  • I don't have enough info to make an answer, but 2 very important considerations are: i) who Russia will sell to if not the US (and, most importantly, what that alternate buyer can pay - if it's a lot less, then it will hurt Russia), and ii) any additional transactions costs Russia faces in dealing with a different buyer (e.g. establishing shipping routes, additional shipping costs etc). I'm not sure by how much, but I would strongly assume that it would damage Russia's economy at least a little, possibly more than a little. – stevec Mar 29 '22 at 10:57

6 Answers6

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Tucker Carlson would appear to be wrong about this. He has been talking a remarkably pro-Putin line since the Russo-Ukrainian war heated up, and this doesn't seem to have much contact with reality.

For example, here's a story about the re-opening of the Russian stock market. It re-opened on Thursday March 24th, and rose slightly, so things are good with the Russian economy, no?

No. Foreign investors, who hold about 80% of the total shares in the Russian market, were not permitted to sell shares, at all. No short-selling is allowed, by anyone. Only a restricted list of companies, 33 blue-chip stocks by Russian standards, could be traded. This does not give any kind of truthful indication of business confidence in Russia. The Biden Administration's description of it as a "charade" seems accurate. If the sanctions weren't having an effect, these restrictions would not be needed.

Tucker Carlson has supported Putin's actions with such consistency and vehemence that a Republican political strategist suggested that he should be investigated by the Department of Justice as a "foreign asset" who is "shilling for Putin." It's not clear why he's doing this, but he is not a reliable source on this subject.

Quantifying the impact on the Russian economy of the oil and gas sanctions is difficult, because it's a moving target, with complex effects. Oil and gas exports are Russia's main source of foreign exchange, which means that their ability to import goods will be severely limited. The fall in the value of the rouble has been significant, in spite of Russian attempts to prop it up.

Update, March 31st: The rouble is now trading at levels seen before the war escalated, but this is fairly artificial:

  • Base interest rates in Russia are at 20%.
  • Exporters are being required to convert 80% of their foreign currency holdings into roubles.
  • Foreigners cannot sell Russian securities.
  • Russian residents cannot transfer money out of Russia.

All of these things create an artificial demand for roubles, and thus push up its exchange rate. They also mean that nobody would want to buy Russian securities, or convert money into roubles unless they really needed to. If these restrictions remain in place, Russia would be cut off from much of the world economy even if the sanctions ended. However, if the restrictions are removed, the rouble will fall, probably quite seriously.

When the stock market was allowed to trade all Russian stocks, but with the other restrictions described above, it unsurprisingly fell.

Russia has also threatened to require payment for its natural gas exports in roubles, but has not actually done that yet.

S&P Global Market Intelligence reckons that the Russian economy is going into its deepest recession since the 1990s, with an expected 20% fall in GDP during 2022. Since oil and gas were Russia's main exports, the loss of sales due to sanctions will be the largest cause of this.

John Dallman
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    You seem to be answering "Is Tucker a credible person?" which is surely an interesting question, but what about the impact of the oil embargo. Can it be quantified? – NoDataDumpNoContribution Mar 27 '22 at 17:43
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    re: "it's not clear..." A romantic could hope that Tucker is doing it because he knows that the boundaries of reasonable opinions cannot be discovered without some, however ridiculous, push back. He is entirely too clever, and too well-versed in history, to be making the argument as mediocre as he is making. He once literally quoted Chamberlain's famous quote when giving reasons for not supporting NATO. In other words, he could very well be consciously serving the role of a Devi's advocate just so that the counterpoints are publicly known even when they are not relevant. – wrod Mar 27 '22 at 18:02
  • @Trilarion: It's not easy, but here's a bit. – John Dallman Mar 27 '22 at 19:24
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    Providing evidence that Tucker Carlson is wrong about things within some topic is kind of pointless. Most people presumably either don't trust a single word that comes out of his mouth on any topic (due to his track record) or just blindly trust whatever he says, or they barely know who he is. In any case, this is a bit of an ad hominem fallacy: Carlson being untrustworthy would mean you generally shouldn't care much about anything he says, but that fact doesn't directly refute any given claim he makes (his general trustworthiness is probably best left as a footnote). – NotThatGuy Mar 28 '22 at 10:05
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    @NotThatGuy In the end Tucker Carlson is not a credible source. It's best to find other sources to corroborate claims (and if the claim is substantial it should be easy to find them) or people simply discuss the credibility of the source instead, which can be done but only as a side note. This answer only answers the question in the last paragraph really. – NoDataDumpNoContribution Mar 28 '22 at 13:13
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    "Tucker Carlson is not a credible source" - says who, exactly? I'm only seeing internet commentators making this remark, and they're not exactly credible either. – SE Does Not Like Dissent Mar 28 '22 at 20:30
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    @SEDoesNotLikeDissent, per Fox News' own arguments in a court case, as at Law & Crime, among other places. From the court records (also at link): "Fox persuasively argues, see Def Br. at 13-15, that given Mr. Carlson’s reputation, any reasonable viewer “arrive[s] with an appropriate amount of skepticism” about the statements he makes." See also a general Google search for court case "tucker carlson" not trustworthy. – Eiríkr Útlendi Mar 28 '22 at 22:14
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Russian state-controlled TV Channel 1 has been dedicating lately an unusually large portion of time and a prominent position on its 9 PM Moscow Time "Time" ("Время") news program (sorry for saying the word "time" so many times!) to the horrible, horrible inflation in the West and sky-high gas prices. These were explained to the viewers as "caused by oil sanctions against Russia". In my experience of watching "Time" from 1980s until now, they typically have a reason for showing specific segments about the West, unless it is fluff, and gas prices now are far from fluff.

Using deduction, the reason Russian TV Channel 1 shows this segment is because of some negative actual or perceived effect that the oil sanctions are having on Russia itself. It is likely an actual effect; the position and length of the gas price segments speaks of the effect's significance.

Timur Shtatland
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    Why do you assume this is an actual effect of gas sanctions and not of other kinds of sanctions, most specifically trade bans with EU? – alamar Mar 27 '22 at 20:33
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    @alamar Because that’s what the segment was about. US gas sanctions bad. That’s what Channel 1 said. Not me. I am just selling you what I bought from Putin’s mouth’s mouth. – Timur Shtatland Mar 27 '22 at 20:44
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    You are sharing the results of your deduction, but it is not watertight. – alamar Mar 27 '22 at 21:21
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    I think it's undisputed that it has an effect (if Tucker Carlson is ignored for the moment) and the only question is how much of an effect, but the magnitude of "the topic appeared in a TV show" is difficult to compare with real world phenomena. Is it bad, real bad or just annoying if Russian TV speaks about it? – NoDataDumpNoContribution Mar 27 '22 at 21:28
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    @Trilarion You are 100% right. Yes, my answer is very weak on numbers, and even on the size of an effect. Criticism received and understood. In fact, my A is worth +20 rubber points at most, IMHO, not +110-2=108 that it earned in reality. I will give away my ill-gotten gains in the form of bounties, I promise. And, perhaps, like you, I am still waiting for someone really good, who can analyze this Q for real, write the A with numbers, and without using Channel 1. – Timur Shtatland Mar 29 '22 at 15:26
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    :) 11 people think it's a great answer and meaningful. Who am I to argue with them. I should watch (more) Russian TV to know what is hot and what is not. – NoDataDumpNoContribution Mar 29 '22 at 15:31
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There is a bit of misunderstanding in the Question.

This is how economic pressure in more or less democratic countries work: people pressure their elected government to act in a way not hurting the economy. The government has a limited resource of non-listening to people before losing the next elections.

Russia is not much of a democracy. Russia is like 5% democracy, 95% dictatorship supported by oligarchs (numbers made by me using my own knowledge of Russian society).

This is how economic pressure in dictatorships work: The high-rank dictator supporters try to persuade their dictator to act in a way not hurting their income. The dictator may listen to them as long as risks of him becoming a non-dictator are acceptably low.

And now, some interesting part: Oil and gas are disproportionately represented in the Russian government income. While these make up less than 25% of the economy, they bring 39% of what the government can spend.

This keeps the taxes low (good when you want to stay in power), but backfires when the oil/gas export suffers. The government weakens in regard to some oligarchs that are less connected to oil/gas business.

In short, oil export is disproportionately heavy in Russian government decision-making.

This is hard to quantify, but it is worth mentioning that all Russian military exersizes in neighbouring countries happen when the oil market is high.

If we could keep the oil below $50, Russia is a good neighbour. If we can't, limiting the oil trade with Russia is a working second option.

import huh
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fraxinus
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  • In the last 15 years, oil spent a total of 2-3 years in the sub-50$ range. Don't see how "you" could keep it there. – alamar Mar 28 '22 at 08:14
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    Well, $50 is a bit cruel to Russians, but allows for a safety margin for everyone else. Either way, 2008 $120 peak can be associated with Russia vs Georgia, the prolonged ~$100 in 2010-2014 with Russia vs Ukraine 2014 and the recent increase (Nov-Dec 2021 and into Feb 2022) with Russia vs Kazakhstan (quickly abandoned) and Russia vs Ukraine (ongoing). – fraxinus Mar 28 '22 at 08:26
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    You can see a feedback loop here: Russia entering a conflict props its incomes whereas disengaging leads to price stagnation. – alamar Mar 28 '22 at 08:39
  • Look at the timing. – fraxinus Mar 28 '22 at 09:07
  • people pressure their elected government to act in a way not hurting the economy, that's probably true for The Netherlands, but in normal countries, there are other factors besides "the economy" (freedom, democracy, rule of law, clean environment, housing, security, mobility, education, healthcare, and many others) – gerrit Mar 28 '22 at 10:49
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    If somebody prefers audiovisual representations, CGP Grey dubbed this "The Rules for Rulers" https://youtu.be/rStL7niR7gs – D. Kovács Mar 28 '22 at 12:19
  • @gerrit I am not familiar with the Netherlands in particular, but other factors are always present. It just happens that the Question is about the economic pressure. – fraxinus Mar 28 '22 at 13:07
  • @fraxinus, your assessment of the power structure, dictatorship supported by oligarchs, is correct regarding a few years ago. However, it recently shifted to dictatorship alone. Putin has already confiscated some of the oligarchs' wealth and at least 8 of them fled the country, and more power has been granted to "силовики", which is a general term for all kinds of enforcement structures. This includes FSB, National Guard (which is equipped with mostly anti-riot gear), Police, etc. Putin is no longer relying on oligarch; it's pure autocracy now. – Michael Mar 29 '22 at 01:04
  • No matter who are the nearest people around Putin, he does not rule alone. "Siloviki" always played an important role in Russia. Now, they simply displaced (I think the Russian word is "отжали") the previous olygarchs and got the control over the important parts of the economy and administration. These are simply the new olygarchs. – fraxinus Mar 29 '22 at 07:22
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Not in the short term. With current de-facto bans on, like, half of everything else going into Russia, the Russian trade balance will be still positive. Russia actually does not need those money from oil sales unless it can buy something with them.

In the medium term, some noticiable pain will be inflicted on the economy of Russia, mostly by bans on goods going into Russia, but maybe by bans in the other direction to a lesser extent. In the long term, it will be bearable as long as China does not side with the west.

Nothing of this will change Putin's actions. The current sanctions were more or less "priced into" his analysis when he authorized the war, they were not surprising, the sanctions did not work in the past and there is no reason to believe this time will be different (as long as China does not side with the west).

Eugene Ryabtsev
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  • "The current sanctions were more or less "priced into"..." But then it still has to be done, because otherwise there would be extra revenue for Russia which they could invest or do something else with it (whatever they can, not sure how well connected they are still with the rest of the world). It's a bit like falling swords. Russia has decided to go down the warpath and it's really difficult to turn around on that path. – NoDataDumpNoContribution Jun 14 '22 at 07:56
  • @Trilarion I agree that it had to be done by the west, for multiple reasons, including "doing something" short of a hot war. It can be seen now that the pain is inflicted on both ends, but it is highly asymmetric, so it has to be seen what ultimately comes out of it. I can add a comment on private person's view of "connectedness": people and companies are working on shipping goods from US to Russia and having some success, so it's not a total blockade. The East should be still mostly open een if there are exceptions. – Eugene Ryabtsev Jun 14 '22 at 08:50
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On a short term seems that it just does not, because the oil prices have surged up, compensating. Also, some sanctions have the transition period. During that period there are no actually any restrictions applied yet but everyone buys like mad (last time to buy!). But this may not be forever.

Long term, another question. The price bubbles have a habit to burst.

Stančikas
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No effect on bottom line. As mentioned by alamar and fraxinus elsewhere

Russian Weekly Oil Exports Drop 26% as Buyers Look Elsewhere Still, the Russian budget could escape much of the pain thanks to the rally in crude prices and the cheaper ruble.

-Bloomber News

paulj
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