Anatole Kaletsky Ridicules Russia Sanctions
May 5, 2014 • 10:35AM

Anatole Kaletsky, a senior economic consultant and journalist in the UK, poured ridicule on the sanctions against Russia in an interview with Reuters May 1, comparing them to the British TV comedy "Yes, Minister," in which the pols repeatedly say: "Something must be done. This is something-- therefore it must be done."

The policy is "pathetically ineffectual in deterring Russia," he says in the Reuters column, arguing that "trying to resolve an ethical problem with economics" turns a "moral relationship into a commercial one."

He argues that Russia, and also China, would be willing to pay an economic penalty to gain their territorial demands, but more importantly notes the real fear in London (without reference to the Glazyev proposals):

"If economic sanctions start seriously threatening Russian wealth abroad, they will play into Putin's hands in the short-term by forcing the oligarchs to repatriate their foreign assets. The long-term effects of isolating Russia economically could be even more perverse. Russia today is a surprisingly open economy that makes less effort to protect its domestic industries from global competition than many other middle-income countries.... If economic sanctions were to force Russia onto a path of greater self-reliance and protectionism, its domestic manufacturing and service industries would almost certainly grow much bigger, even if their quality and productivity fell further behind Western standards. What would be the political impact in Russia of turning back from a consumer society relying on Western imports into something more akin to Soviet-style self-reliance, Brazilian-style protectionism or South African isolation under apartheid?"

He answers his own question: "It is probable that Putin, or an even more aggressive nationalist, would to go from strength to strength in such an autarkic environment, and that Russia's military power would grow, rather than erode. Certainly not the outcome that economic sanctions are supposed to produce."