Re: Yup. had that in apartheid South Africa
Various people have been thinking about sanctions, for years. As you say, they had limited effect on South Africa. And even less on Iraq, where Saddam didn't care about the effects on the population.
But things have changed. The world economy is more tightly knit. Russia is more integrated with that economy. Russia's biggest single market is the EU.
Also, Russia is reliant on its oil and gas industry. That's where most of its government revenues come from. I believe the standard calculation is that if the oil price (gas prices are linked to oil prices) drops below $100-$110 a barrel, then the Russian government goes into deficit. No problem, they've got huge reserves. But what if Europe stops buying their gas? Or Ukraine blows up the pipeline? Then government revenues collapse. Then it's either massive cuts, or massive tax rises. Calculated to make a government popular...
Now add in the fact that Russia was already going into recession before the sanctions started. And that over the last 2 years it's lost a net $150 billlion in capital flight. That's accelerated since too.
Now add in the fact that the Russian oil and gas industry needs massive investment and modernisation. Who's going to lend them the money? Who's going to sell them the kit. The global oil and gas companies are all Western.
Russia can sell its gas to China. Once it's built a pipeline. Which will take 5 years. China agreed a price that was about a third less than what Europe is currently paying, and half what they now charge Ukraine.
The other thing that has changed is the importance of global finance. I don't just mean speculation, but loans, insurance, transfers. I've seen two rujmours from the EU negotiations on the next round of sanctions. One that Cameron suggested kicking Russia off the SWIFT payment network. Done to Iran. Then Russian companies would struggle to pay their bills, and their banks would be buggered. This can be worked round, but would waste time and money. The second was that no EU firm/bank would be able to give more than 30 days credit to a Russian one. So Russian companies would struggle to get trade financing to buy. And finance for long-term investment, which mostly comes from Western sources. That way our companies would still be able to trade with them, and the disadvantages would be equal for any company they buy from, Western or otherwise.
Of course Russia could then retaliate against Western companies. I guess they'd do that where they could get as good alternatives elsewhere.
One query with the article. Saying sanctions have had little effect so far. According to the Telegraph, no Russian company has managed to issue a bond on the Russian bond market (or the European one) since the end of June! Apparently Russia's corporate finance needs are nearly $200bn this year, just to refinance maturing debt. And according to the German government exports to Russia in July were down 60% on last year.
Finally the most developed financial markets are Europe and the US. But moving to far Eastern markets doesn't help much. The biggest banks in Hong Kong, Japan and Singapore also operate in the US and EU. So have to comply with their laws. Is it worth Japanese and Singaporean banks cutting off their trade with the West, just to win some trade with Russia? Maybe some China-only banks might? But I doubt that gives Russia the cash it needs. And the terms would be awful.