Sanctions

If Oliver Bullough's recently published Butler to the World: How Britain Became the Servant of Tycoons, Tax Dodgers, Kleptocrats and Criminals has been fortunate in its timing, the same could also be said of Nicholas Mulder's The Economic Weapon: The Rise of Sanctions as a Tool of Modern War. What these works share, apart from explanatory subtitles with a slightly antique air, is a focus on international relations. Though Bullough employs the prism of Britain and provides anecdotes about status-hungry oligarchs and privacy-obsessed money launderers, the economic regime he describes is simply that of globalised capital: deracinated wealth moving through the City of London in search of high returns as much as the avoidance of tax. Likewise, Mulder's concern is with states as the monopolists of violence. But sanctions are also a tool that governments increasingly deploy against their own citizens. Where once this would be seen mainly in the form of financial measures against organised labour, such as the sequestration of trade union funds in the 1980s, today its chief form is that of benefit sanctions: the disciplining of atomised labour through the conditional withholding of welfare. Another form is restrictions and fines based on probability rather than proven guilt, such as criminal behaviour orders (the successors of ASBOs) and fixed penalty notices.

Sanctions can also be deployed against businesses and other economic actors, as we've seen with the freezing of Russian oligarch assets or the threats to penalise social media platforms that don't adequately police content. But generally government is reluctant to sanction business when it is exercising the prerogatives of capital, particularly when it does so in direct conflict with labour, such as P&O firing its UK staff so that it can employ foreign workers on lower wages and worse conditions. The greater willingness to sanction oligarchs arises from changing attitudes towards private property. While proprietarianism remains hegemonic, the galloping wealth inequality of the last forty years, and the tendency for the super-rich to distribute their assets across multiple jurisdictions, has seen tentative steps towards the acceptance of expropriation as a legitimate tool of the liberal state at the margin. But this isn't to suggest that the state has decided to embrace the prescriptions of Piketty et al and tax excessive wealth across the board, any more than it has decided that oligarch mansions can be squatted. Rather it aims to preserve the bulk of wealth by sacrificing those deemed lacking in virtue, such as Roman Abramovich. It's also no coincidence that those singled out happen to be foreigners.

The current exception to the principle that property is sacrosanct is premised on the idea that UK-based property owned by foreigners may be ill-gotten: the product of corruption or looting in other countries. The introduction of unexplained wealth orders in 2017 provided a legal basis for confiscation, but these instruments have rarely been used and are likely to be successful only in the most egregious cases. What UWOs have done however is normalise the idea that the UK-based assets of foreigners are essentially held on licence. Behind this emergent idea lies the xenophobic belief that a foreigner owning British property is inherently questionable. This is part of a wider prejudice that occasionally breaks the surface, for example in the suspicion that immigrants get preferential treatment in the allocation of social housing, or in bigots like Jim Davidson claiming that homeless ex-service people should be prioritised over Ukrainian refugees. Implicit in this is the idea of a national patrimony, which in turn drives the popular distaste for benefit cheats and the consequent acceptance of benefit sanctions: protecting "our" money.

It's worth dwelling for a moment on the concept of ill-gotten gains, given that this is central to the "culture war" over the history and representation of empire. It's also worth noting that the suspicion that great wealth repatriated to the UK was the product of corruption and looting in other countries is not a recent development. Consider the impact of the East India Company's nabobs on eighteenth century aristocratic society or the trial of Warren Hastings. While current debates understandably focus on the great crime of slavery in the Caribbean, we shouldn't forget that wealth was criminally extracted from every corner of the empire and invested in the UK, and in nascent industry as much as stately homes. The excuse offered for the persistence of this money in British society, and the corresponding refusal to consider reparations, is the passage of time. Thus David Cameron's inheritance of wealth built on slavery did not preclude him from becoming Prime Minister, any more than his responsibility for an austerity programme that increased poverty precludes him from volunteering for a food-bank. We can see this process in real-time too as Evgeny Lebedev disassociates himself from his own father and pledges loyalty to a UK that generously ennobled him in return for his opaque wealth being funneled into British journalism. 

The truth is that money-laundering and reputation-laundering were both central to the development of empire, rather than being a new grift that the UK stumbled on after the 1956 Suez crisis in Bullough's telling. Indeed the apogee of this was the formalisation of empire in the mid-nineteenth century as the privateering approach of the merchant companies gave way to imperial government and the self-serving idea that Britain was engaged in a civilising mission. In practice, much of this mission was trade-oriented policing operations against weaker states, particularly in Africa and the Far East, most famously the humiliations suffered by China at the hands of multiple imperial powers. While gunboat diplomacy often meant war, it increasingly meant economic sanctions as well, particularly during the first era of globalisation after 1870. The preference for sanctions in the twentieth century was not simply revulsion over the carnage occasioned by the First World War - blockade and sanctions killed millions, after all - but a recognition that the world was governed by international capital. The UK was the world's policeman because of the City of London as much as the Royal Navy. 

Though the sanctions imposed by the League of Nations in the interwar period were held to be a failure in stopping the rise of Fascism (and Mulder would argue they perhaps encouraged it), there was no let up in their use after the Second World War, particularly by the new global policeman, the USA. What was also notable was the continuation of sanctions that directly affected the mass of the population in the form of basic commodities such as fuel, food and medicine, as seen in the coercive regimes imposed on Cuba, Iran and Iraq. The use of targeted sanctions against a country's social elite was often more controversial, for example in the case of sporting and cultural sanctions against South Africa. The current sanctions being imposed against named Russian oligarchs shouldn't lead us to imagine that there has been a shift in policy towards targeting the rich. This is simply a reflection of the fact that the Russian elite's wealth has been internationalised, much as it has been in other countries (see the Panama Papers, Pandora Papers, Swiss Leaks etc). What we're looking at is the product of globalisation and the consequent moves by the leading economies to start to rein in the worst abuses of tax havens, from Luxembourg to the Virgin Islands.

The reality is that sanctions are still being imposed on ordinary Russian people and they will suffer more than any oligarchs. While they may not own foreign bank assets, the freezing of these is causing an increase in the cost of imported goods as well as the cost of servicing overdrafts and mortgages. The withdrawal of foreign businesses and capital will also lead to higher unemployment, even allowing for greater import substitution. Many domestic producers are dependent on foreign technology and cannot substitute for imports. It probably won't be as bad as the shock therapy of the 1990s, but just as that was a form of purgative meant to extirpate homo sovieticus, so the new sanctions are intended to encourage regime change in Moscow rather than military withdrawal from Ukraine. But punishing ordinary Russians for the sins of Vladimir Putin is likely to be counter-productive. Russia has moved rapidly from a pro-Western position in the early-90s, hopeful even of joining NATO, to a position of mistrust and antagonistic chauvinism. Putin has been preparing Russian society for Western sanctions since the Georgian War of 2008, hence the growing paranoia and the insistence on a civilisational clash. While he might have optimistically hoped that the invasion of Ukraine would end with a swift victory, he can't have been under any illusions that sanctions, however patchy, would persist for a long time afterwards.

One part of the quickly-assembled consensus on the Ukraine catastrophe is that it had been coming since the Orange Revolution of 2004, and perhaps since the start of the Second Chechen War in 1999. But this geopolitical interpretation serves to obscure the material, specifically the turn against globalisation that began around the millennium and the division of society by age that this has given rise to: on the one hand, those who benefited from the original process in the form of property wealth but who resented the cultural disruption; on the other hand, those with no chance of benefiting to the same degree but for whom the cultural changes reflect their own history. This division is seen in all societies affected by globalisation, but it tends to be more acute in those areas where the old are more fearful of loss, whether because of past economic trauma or rapid social change, and the young more likely to leave due to limited opportunities, whether that be small towns in Northern England or small towns in Eastern Ukraine. 

Despite the emphasis on Zelensky's relative youth, Ukraine, like Russia, is an ageing society, and this is likely to be accelerated by the current movement of refugees into the European Union. In contrast, youth is becoming more politically important in countries like the UK, not least because migration is offsetting declining birth rates, even after Brexit. Resistance to this demographic change has prompted a regressive politics focused on the priorities of the old and the deliberate alienation of the young (Labour's ejection of the "Corbynistas" is largely a generational purge), but this looks like simply delaying the inevitable. One sign of the growing importance of youth is an increasing antipathy to domestic sanctions and the coercive functions of the state (such as the police), which disproportionately impact the young. In contrast, in countries like Russia and Ukraine there will likely be growing support for domestic sanctions as the population ages, which means repression of the young, performative bigotry (anti-gay rights, anti-immigrant etc) and the permanent hunt for internal enemies. This will only be exacerbated by external sanctions. In choosing financial measures and cultural boycotts over more risky intervention in Ukraine, the West is simply reinforcing the conditions that gave rise to the crisis.