Bloomberg is reporting that
Russia’s credit rating was cut to junk by Standard & Poor’s, putting it below investment grade for the first time in a decade.
And:
The world’s biggest energy exporter is on the brink of a recession after oil prices fell to the lowest since 2009 and the U.S. and its allies imposed sanctions over President Vladimir Putin’s actions in Ukraine. The penalties have locked Russian corporate borrowers out of international debt markets and curbed investor appetite for the ruble, stocks and bonds.
So sanctions have “worked,” in the sense that they have caused Russia significant economic pain. There are, however, two things to keep in mind.
* The first people hurt by sanctions, embargoes, blockades and other forms of economic warfare are not the dictators and their cronies whom we wish to punish. Putin will not be cutting back on his discretionary spending any time soon.
And:
* The target of this sort of economic punishment can choose either to mend his ways and behave in a fashion that will bring relief or … he can strike back. With Europe in distress (recently, the vote in Greece), one suspects that Mr. Putin will sense opportunity.
