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| What if the stick fails? | |
By Chukwuma Okonkwo (FMNES)
The power tussle between Russia and the United States backed by the European Union (EU) over the crisis in Ukraine is no longer new. Every day comes with a new dimension to the crisis, unfolding new forms of aggression. Though it seems like global dialogues and peace talks are gradually becoming mirages, as glimmer of hope for possible end to the crisis flicker at any given attempt, parties on the opposite sides of the table still continue to give diplomacy a shot. Having looked at the global political and economic permutations that have become known in recent time, particularly within the purview of economic sanctions that have been issued against Russia, and further economic sanctions that are being considered by the United States and the EU, I am skeptical about the credibility of the stick (punishment using economic sanctions) approach that the US and the EU are adopting on Russia. What if the stick approach fails? What if the economic sanctions are not credible? What if Russia decides to endure the pain and not let up its stand? What if EU states lack the will power to endure pains accruing to them as punishers?
Though President Putin and other top Russian officials are putting up cocky faces which signal that Russia’s economy is not hurting as a result of the economic sanctions in force, there is a clear tell-all sign that Russia’s economy is hitting recession. Russia is only trying to endure the pain, just like any strong economy that is not willing to back down would do!
It is a conventional wisdom (carrot-stick strategy in game theory) that punishment arising from using stick does not hurt only the party being punished but also the punisher. Though the EU has leverage over Russia (in terms of investments and trade relations with Russia), but its member states may be shooting themselves in the foot if they decide to come down hard on Russia with further severe economic sanctions. No doubt Russia needs trades with Europe to keep its head above water, but most EU countries need Russia’s trades more than they need America’s. This then puts a big question mark on the credibility of the stick approach, as severe economic sanctions will undoubtedly hurt both parties. Thus, it is unlikely that the EU countries would want to get hurt; this explains why they have been somewhat reluctant in confronting this issue directly. So if it hurts the punisher to punish then the punisher will be better off not punishing at all; hence making the stick approach not credible.
It is also a popular knowledge that punishments are not eternal, but temporary. Russia is still a big country with UNs veto power. Russia still has a lot of countries in its pocket, and remarkably President Putin still has behind his back massive support of the Russian people at home. It is noteworthy that Russians have different account of events in Ukraine, by courtesy of Russian media. The account of events that Russians have been made to believe is not in tandem with the accounts popular in Western media. For example, Russians believe that Ukrainian government is responsible for shooting down MH17 because of the claim that the Ukrainian government might have been trying to shoot down the plane thought to be President Putin’s plane. Russians’ great support to President Putin means less domestic pressure, which is really what concerns President Putin. Even though President Putin is getting isolated in the global arena, but he has the support of his people on his back, which is a motivation not to back down on its stand in Ukraine. If President Putin can paddle the Russian economy through the transient storm of US-EU economic sanctions while the domestic pressure is not on the rise, as President Putin remains popular in Russia, it is likely that the stick approach will be counterproductive.
However, if Russia is going to back down from its stand in Ukraine and buckle under the dictates of the West (which is most unlikely), that will depend greatly on how credible the punishment threats are, which in turn will depend on the severity and longevity of the punishments, which in turn will depend on willingness of all the parties dishing out the punishments (particularly the EU) to bear the pains that will accrue to them as punishers.
(Chukwuma Okonkwo (FMNES) is a Research Economist)
(Opinions expressed in write-ups/articles/Letters are the sole responsibility of the authors and they may not represent the scoopnews.in)
Editor, Scoop News
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