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Putin’s Dilemma

The West's sanctions on Russia are already having a powerful effect, and the expectation that they will be tightened further is a huge concern for investors and the Russian government. And, though some Russians dream of autarky, the need to maintain living standards – the foundation of Putin’s domestic support – rules it out.

PARIS – Many critics argue that the sanctions imposed on Russia for its actions in Ukraine are ineffective, because they are too limited in scale and scope. Moreover, sanctions are seen as allowing President Vladimir Putin to blame the West for Russia’s internal problems. Indeed, some of Putin’s supporters within Russia welcome the sanctions as a means to compel Russian autarky – and thus strategic independence from the West.

These arguments are wrong. Though the sanctions are not backed by China, they are already having a powerful effect, and the expectation that they will be tightened further is a huge concern for investors and the Russian government. Full autarky, meanwhile, would imply a dramatic decline in Russian living standards – the foundation of Putin’s domestic support.

The latest sanctions are unprecedented. The European Union went even further than the United States. Exposure to Russian markets varies widely among EU countries – and between the EU and the US. But, after the downing of Malaysia Airlines Flight 17, Russia can no longer pursue a divide-and-rule strategy that leverages these differences.

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