The Australian government will implement a raft of sanctions against Russia, insisting there “must be consequences” for Moscow’s recent military actions along its border with Ukraine, and recognition of separatist-controlled regions in the east of the country.
Prime minister Scott Morrison unveiled the “first tranche” of sanctions on Wednesday, bringing Australia in line with the US, UK and European allies’ initial responses to Russian president Vladimir Putin’s actions in relation to Ukraine.
Western powers have responded with outrage to Putin’s moves to recognise as independent the republics of Donetsk and Luhansk and send so-called “peacekeeping” troops into Ukrainian territory to secure the new statelets’ proclaimed borders.
Australia’s sanctions would target specific Russian individuals, corporations and industries in the hope of pressuring the Russian government to stop “behaving like thugs and bullies”, Morrison said.
Here’s what we know about Australia’s new sanctions on Russia, what they’re designed to do, and what their impact might be.
What are the sanctions?
Eight members of the Russian Federation’s security council will be targeted with financial sanctions. Australian law will now prohibit dealing with these individuals financially, as well as facilitating another person to deal with these individuals or assets they own or control.
In effect this freezes their assets in Australia – which can include property as well as financial holdings.
Travel bans will also be placed on the eight individuals, barring them from entering Australia.
Several Russian financial institutions will also be barred from transacting with Australian banks. The banks are the Russian State Development Bank, VEB, the military bank Promsvyazbank, Rossiya, IS Bank, the General Bank and the Black Sea Bank.
Morrison announced Australia would extend sanctions that it already had in place for Crimea and Sevasatopol – Ukrainian territory which Russia annexed in 2014 – to include the breakaway Donetsk and Luhansk regions now recognised as independent by Russia. The expansion of those sanctions would focus on sectors including transport, energy, telecommunications, oil, gas and mineral reserves, Morrison said.
What are other countries doing?
After Russia announced it would recognise the breakaway regions as independent states and send in “peacekeeping” troops, the US, UK and EU said they would introduce sanctions. The US president, Joe Biden, announced sanctions that target VEB (Russia’s state development bank) and the Russian military bank, as well as the country’s sovereign debt and five Russian elites and their families, saying: “Who in the Lord’s name does Putin think gives him the right to declare new so-called countries on territory that belonged to his neighbours?”
The EU and the UK also announced sanctions in a show of concerted western resolve, with EU foreign ministers banning Russian bond trades in the European market, and the British prime minister, Boris Johnson, unveiling a package of asset freezes on five Russian banks and three individuals.
Germany also announced it would halt the approval process for the Nord Stream 2 gas pipeline from Russia.
Morrison said Australia’s sanctions “ensure that we are in lockstep with the United States and the United Kingdom in the sanctions that they are imposing”.
Both Morrison and foreign powers, including Biden, have warned of a ramp up in sanctions if the situation in Ukraine deteriorates.
What’s the point of targeting sanctions in this way?
The first tranche of sanctions were designed to target “persons and entities of what is termed strategic and economic significance to Russia”, according to Morrison.
In relation to the eight members of Russia’s security council, Morrison said these individuals were being targeted because the body had “provided policy advice and justification” to Putin which led to him recognising the breakaway republics – a decision which “fundamentally undermines Ukraine’s sovereignty and territorial integrity, and it has no validity under international law”.
Dr William A Stoltz, from the Australian National University’s national security college, said the sanctions “clearly focused on pressuring those people who are part of Putin’s inner circle”.
“These would be the people that we would want to prevail upon Vladimir Putin to take a different course of action … the people who are powerful enough to put pressure on Putin to retreat, so it makes sense to put the screws on them personally.”
Will Australia’s sanctions have an impact?
Stoltz said Australia’s sanctions alone were unlikely to significantly sway Russia’s behaviours – noting the relatively small trade volumes between the two countries.
“Our economic exchange with Russia is pretty small, so we don’t have a great deal of leverage over Russia in that regard.”
However, he said Australia bringing in similar sanctions to those introduced by the US and European nations was important.
“For sanctions to have an effect you need to create a situation where there isn’t a safe haven country for those designated by the sanctions to turn to. So Australia has to be in lockstep with the European and North American countries.”
If major countries are united, will that be enough?
Stoltz is pessimistic that the initial wave of sanctions will have a significant impact.
He notes Australia implemented sanctions against Russia in response to the MH17 passenger flight that was shot down while flying over eastern Ukraine in 2014.
“We implemented concerted sanctions over MH17, and to put it brutally honestly, they’ve not been very effective. The Russians still haven’t come to the table for the investigation, they’ve really prevented justice for the families of the victims,” Stoltz said.
What more can be done with sanctions?
A large part of the ineffectiveness of sanctions against Russia, Stoltz said, had been the country’s economic resilience to foreign financial punishments.
“Over the past 20 years Russia has hardened itself to the impact of sanctions, and the Russians are quite used to sanctions by now, they almost wear sanctions like a badge of honour, especially in a situation such as now where they’re kind of martyring themselves in the national interest,” Stoltz said.
Oligarchs had previously been the target of foreign sanctions – with their lives in foreign countries upended and assets frozen – in an attempt to pressure them to use their influence over the country’s leadership.
“The oligarchic class has experienced a net falling over them over the past 20 years, over their ability to travel freely and spend their money. Rules have been continuously tightened, and there’s a sense in Russia that it is hurting that class as they’re not able to live the luxurious life they’re used to.
“So far that hasn’t affected Putin, who has put in place protections for the oligarchs to get around sanctions … and technologies like crypto [currency] make it difficult to police the sanctions. But that could stop if he goes too far and sanctions further impact the oligarchic class. He is getting older and he doesn’t have an anointed successor.”
While western sanctions were designed “to influence wealthy elites by stopping them from buying homes and going Christmas shopping overseas”, Stoltz said sanctions could go much further.
“There is probably going to have to be an attempt to target everyday Russian people, the general population, perhaps by constraining their access to certain everyday goods. That’s an ethically challenging thing to do.
“Short of doing that, economic sanctions against Russia, especially by Australia, are largely symbolic at this point.”
