Russia’s economy is contracting so in what sense are sanctions not working? They aren’t 100% effective but they do appear to be having an effect and long term the effects, if sanctions remain, will force Russia into a pseudo vassal client of China.
If the intent of Russian sanctions was to increase prices of food and fuel in USA to harm the working poor in USA, then Russian sanctions are going great.
They were already poor. They’ll get a little poorer. But they’ll have enough to eat and enough to heat their homes. And they’ll still believe that Russian pride is intact, and that’s all that matters.
The entire sanctions approach fails so spectacularly because the capitalist Western ideology sees everything in terms of money and wealth. Outside of the west, most people will happily suffer if they believe that their pride and identity is being protected. This is something Americans just don’t understand at all.
1. The gas is just being arbitraged via China. It's a commodity, it makes no sense to stop buying from source A and start buying from source B if B is willing to buy from A.
2. Gazprom is now making record-breaking profits.
Europe is now facing an unprecedented and mostly self inflicted crisis of the type that didn't occur even during the cold war. The Russians claim they are willing to fill up to half of Nord Stream 2 the moment Germany decides to accept it. If that's a lie then the energy crisis is real. If it's not a lie then European leaders are manipulating the public - sanctioning Russia so they feel good and virtuous whilst simultaneously claiming the sanctions are the other way around and there's nothing they can do to get more gas.
Sanctions on non-commodities like chips, specialist tools, infrastructure access? That can work and is probably having an impact. Sanctions on a commodity that can be moved around as a liquid? That can only work in theory if everyone does it despite the huge incentives to defect.
Of course Gazprom is making record profit it is currently an unregulated adversarial monopoly. The sanction effect are thing like how the other week Russia was unable to operate some of its warship for lack of replacement parts.
The point of sanctions is a combination of two things. One is to punish a country and the other is to make a moral stance. If in the course of punishing the country a particular company makes more money that does not necessarily negate the efficacy of the sanctions or necessarily negate the morality of the sanctions.
The reason there's a price spike across Europe is that Germany is suddenly trying to buy the supplies it needs from elsewhere, and gas is a (mostly) fungible commodity. So there's effectively less supply now in Europe, but with same or greater demand (to fill storage), which means the global LNG price goes up for everyone.
"The point of sanctions is a combination of two things. One is to punish a country and the other is to make a moral stance."
For as long as any country is willing to arbitrage gas it simply punishes the buyer, not the seller. From this whole thread it seems the basic economics of this seem to have got lost somewhere so let's do a worked example:
1. Russia sells $1000 worth of gas per day to Europe and $500 worth to China (or India, or wherever).
2. Europe says to Russia we don't want to buy your gas anymore. Russia is now $1000/day poorer, but has lots of spare gas. Now Europe needs to buy $1000 worth from somewhere else like China.
3. China looks at its natural reserves and thinks, well, we don't really have much more to sell from local production. But hey, we have pipelines and LNG terminals and gas is the same no matter where it comes from. Russia, would you be willing to sell us all your spare gas?
4. Russia says sure, that'll be $1000/day. China says OK, we'll take it.
5. Now China turns around to Europe and says sure, we can sell you gas. That'll be $1200/day. Europe is desperate for gas and so says yes; they don't have many other options because most sellers can't meet such a huge block of demand.
Result: Russia makes the same money as before and doesn't care, China takes a profit off the top, Europe ends up shooting itself in the foot. But at least its politicians can feel virtuous.
What's happening isn't as pure cut as that example. Obviously, Europe is trying to get gas from lots of alternative locations, only some is being arbitraged via third party countries. And in reality the arbitrageurs would pay less because there's greater supply, pushing down the price. But in any situation where you're trying to buy something that is a fungible commodity sanctions like that only make sense if there are no groups that break them. The moment someone does they make huge profits. So it doesn't make sense in an international market, it'd be like trying to sanction oil or grain. Someone will just buy it at the new lower price, relabel it and sell it back to you.
As for the moral stance argument, German politicians have no moral authority to bankrupt the poor throughout Europe or break down the electricity grid. They were not elected to do that, and it is deeply immoral to do that even if it worked which it does not. The working classes of Europe are not cannon fodder to freeze to death so Scholz can take a "moral stance".
The fact is Russia hasn’t been stably non expansionist for centuries and it is they who have been aggressors in Moldova, Ukraine, Belarus, and Georgia. At some point it’s a reasonable response by those threatened by Russia (the Baltics) to respond by demanding action by their allies. Russia alone is at fault and it alone deserves ire.
The moral imperative clearly lies with those desiring sanctions. Europe is going through the painful process to divest itself now of Russian resources. This will pay dividends in the future.
Economic war? This is a new cold war with countries* being compelled to choose sides and split banking channels. The war material manufacturers are creating career paths for their grand children.
* Turkey is attempting to make money from everyone, while remaining in NATO.