POLICY BRIEF 27 / 2020 Sanctions Against Russia: A Look Into 2020 Ivan Timofeev, Vladimir Morozov, Yulia Timofeeva RUSSIAN INTERNATIONAL AFFAIRS COUNCIL BOARD OF TRUSTEES PRESIDIUM Sergey Lavrov – Chairman Mikhail Margelov Petr Aven of the Board of Trustees Yury Osipov Igor Ivanov – President Herman Gref Sergey Prikhodko Andrey Kortunov – Director General Aleksandr Dzasokhov Anatoly Torkunov Fyodor Lukyanov Leonid Drachevsky Andrey Fursenko Igor Morgulov Aleksandr Dynkin Aleksandr Shokhin Dmitry Peskov Mikhail Komissar Igor Yurgens Konstantin Kosachev Editors: Ivan Timofeev, Ph.D. in Political Science Vladimir Morozov Lora Chkoniya Russian International Affairs Council (RIAC) is a membership-based non-profit Russian organization. RIAC’s activities are aimed at strengthening peace, friendship and solidarity between peoples, preventing international conflicts and promoting crisis resolution. The Council was founded in accordance with Russian Presidential Order No. 59-rp ”On the Creation of the Russian International Affairs Council non- profit partnership,” dated February 2, 2010. FOUNDERS Ministry of Foreign Affairs of the Russian Federation Ministry of Education and Science of the Russian Federation Russian Academy of Sciences Russian Union of Industrialists and Entrepreneurs Interfax News Agency RIAC MISSION The mission of RIAC is to promote Russia’s prosperity by integrating it into the global world. RIAC operates as a link between the state, scholarly community, business and civil society in an effort to find solutions to foreign policy issues. The views expressed herein do not necessarily reflect those of RIAC. Russian International Affairs Council Sanctions Against Russia: A Look Into 2020 Executive Summary • The report asesses the risks of sanctions United States. The Congress, the media and against Russia over the year. think tanks will likely raise the question of pre- emptive sanctions against Russia. However, • By 2020, the use of sanctions against Russia discussing possible measures does not mean had gained much more stability compared they will automatically be adopted. to previous years. The damage caused by the new restrictive measures can be considered • Thus far, the situation in the Middle East is limited. The key issue is whether the situation in not fraught with a high risk of sanctions for the coming year will remain stable? Russia. However, the United States continues to impose sanctions on Iran, which increases • Given the scale of Russian economy, the the danger of secondary sanctions for current sanctions are unlikely to derail it. international businesses, including Russian However, sanctions can cause grave problems companies. for individual companies and projects. The • The United States may very well crank up risk of new sanctions stems from a series sanctions against China in 2020, although not of political factors: the Ukrainian crisis and exponentially. The effect of such sanctions on conflict in Donbass, the U.S. elections and the Russia will be limited. alleged meddling, the developments in the Middle East, etc. • Our base scenario for 2020 envisions further stabilization of sanction risks for Russia. Even • In the Ukraine the crisis has noticeably though the current sanctions are detrimental stabilized. However, we should not expect to the Russian economy and individual any significant breakthroughs in terms of companies, it is unlikely that they will escalate. compliance with the Minsk Agreements in the Sanctions might be introduced from time to coming year. The stabilization of the situation time in response to individual developments, in Donbass significantly decreases the risk of but they will not have a systemic effect on the new sanctions, yet this improvement will not overall development. result in the proportionate lifting of current restrictions. • It is unlikely that we will see a scenario in which relations between Russia and the West • The problem of Russia’s alleged electoral improve markedly. There is no reason to meddling is likely to exacerbate in view of the expect a significant easing of sanctions in the upcoming 2020 presidential elections in the foreseeable future. Introduction The U.S. sanctions represent one of the key more predictable. For instance, it is extremely political risks for Russian and international busi- unlikely that the country will experience severe nesses today. They create problems for foreign domestic political shocks, although this possibil- investors looking to pump money into the Rus- ity should not be disregarded entirely. The same sian economy and for foreign partners of Russian is true for the risk of Russia participating in a companies. The uncertainty over applying the major armed conflict, as any such development existing restrictive measures or introducing new would change the rules of the game drastically. ones remains. Such conflict is unlikely today. The risks for busi- Russia has other political risks as well. However, nesses stemming from the actions of individual unlike sanctions, they are either less probable or regulators are possible. Still, they have been tak- ABOUT THE AUTHORS: Ivan Timofeev, Ph.D. in Political Science, Director of Programs, Russian International Affairs Council (RIAC) Vladimir Morozov, Program Manager, Russian International Affairs Council (RIAC) Yulia Timofeeva, Program Assistant, Russian International Affairs Council (RIAC) 3 Ivan Timofeev, Vladimir Morozov, Yulia Timofeeva Sanctions Against Russia: A Look Into 2020 ing shape for years, and companies know what mechanism is launched, even a local event may to expect. Additionally, a radical change in the lead to further restrictive measures. On the other current situation is unlikely. hand, an improvement in political relations will not necessarily result in the lifting or easing of As for the sanctions, the uncertainty is higher sanctions. Given the scale of the Russian economy, even within a one-year outlook. Sanctions change the current sanctions are unlikely to destabilize it. along with shifts in the political situation. The However, these sanctions can cause problems for problem is that the connection between sanc- individual companies and projects. tions and politics is non-linear. Once the sanctions Sanctions against Russia: Perceived Stabilization? By 2020, the use of sanctions against Russia has The presidential administration kept up with become much more stable compared to previ- the developments and steered a careful, yet ous years. Last year was the quietest in terms consistent course for tightening the sanctions. of the introduction of new sanctions since the Few people doubted Russia would interfere in Ukrainian crisis broke out in 2014. Still, it can the midterm elections. The first versions of the hardly be described as trouble-free. Restrictive now-infamous Defending American Security measures, sometimes very unpleasant ones, from Kremlin Aggression (DASKA) and Defend- were introduced against Russia, individual citi- ing Elections from Threats by Establishing zens and companies. However, for the first time Redlines (DETER) acts also appeared in 2018. On in five years, the anti-Russian sanctions policy the whole, the European Union distanced itself was not given a fresh political boost. Through- from the American enthusiasm, although the out 2019, sanctions were introduced on the topic of meddling did hurt relations between basis of known political problems that had Moscow and Brussels. Just when these relations emerged in previous years. None of the existing appeared to have hit yet another low, the Skri- problems in the relations between Russia and pal case blew up, which generated its own track the West were solved, but none of them were of anti-Russian sanctions. The “chemical” topic exacerbated either. augmented the incidents involving the use of In previous years, the situation had developed weapons of mass destruction (WMDs) in Syria: along entirely different lines. The Ukrainian crisis Moscow was accused of supporting the govern- broke out in 2014, and the United States, Euro- ment of Bashar al-Assad. In late 2018, the Kerch pean Union and several other states responded Strait incident happened and foregrounded the by imposing sectoral and individual sanctions on Ukrainian situa tion once again. Russia. Despite the Minsk Agreements, the crisis The accumulation of all these events made for worsened in 2015. The sanctions were now tied grim expectations regarding new sanctions. to agreements that were hard to comply with Indeed, virtually all the developments resulted in even theoretically. Then Russia launched its cam- the United States and the European Union either paign in Syria, which became another reason, imposing new restrictive measures on Russia in albeit a minor one, to impose sanctions. In 2016, 2019 or preserving them as legal initiatives that a scandal broke out around hacker attacks on may be developed further in the future. The the DNC servers, which resulted in end-of-year United States was particularly active in terms of sanctions. In 2017, the situation evolved into a introducing restrictive measures, although the full-fledged tsunami in connection with Russia’s European Union did introduce some sanctions of alleged meddling in the U.S. elections. Ukraine, its own. Syria and the alleged meddling became fertile ground for the United States to codify its sanc- The “chemical” topic related to the Skripal case tions into law, which significantly complicated was used to introduce sanctions under Execu- the prospect of lifting