Premature to Write-Off Russian Sanctions: Mallaby

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March 26 (Bloomberg) -- Sebastian Mallaby of Council on Foreign Relations explains why sanctions can be effective in deterring Russia after its action in Ukraine and the politics that plays in to the coordinated response from the West on Bloomberg Television’s “Market Makers.”

Implications of what vladimir putin has done so far and the way the west has responded.

In terms of russia and sanctions, we know from history that sanctions take a long time to work.

We know this from the case of south africa.

We should remind everybody that you wrote a book about this.

I did.

It took several years to change policies.

To write off sanctions after a week seems premature.

If you look at the market, it down about 7.5%. they only got about 10% performance pain.

I think sanctions can work.

They can go farther and do more.

But we could not write them off here.

Is it fair to say that part of prudent strategy is to wait a breakdown of the multilateral solidarity?

Barack obama and the congress cannot get behind some of this.

We know that the british have ambivalence in the very least because of the way the oligarch in russia can play in the u.k. economy.

You take the city of london and the underwriting fees, these are legal fees because the rule of law allows them to sue each other in british court.

These fees are about $100 million a year for russian parents sending their children to school.

These are tougher sanctions than you think they are.

The russian economy itself is pretty weak.

And i'm of longer waiting game, they are going to lose.

They've got a declining population and inflation at seven percent.

This is not a rising power.

I think that in the longer term, they have feet of clay.

I want to work motive into this along with the waiting game.

In the washington journal today, prudence challenge to the west means that while he has no apparent desire to re-create the soviet union, he is trying to create a fear of russia.

There is no opportunity.

He is playing along game.

Does he have the patience to play this long game?

The biggest failure of the u.s. posture in the last month, it's not that the russians took crimea.

If you think about the united states at the peak of its international power, at the end of the second world war, the soviet union gobbled up the entire eastern europe.

That is not a new thing.

What is a new thing is that in those days, it created the world bank.

It created an international symptom -- system that was like a. -- like a fourth multiplier for u.s. power.

That is the contrast between modern united states and the u.s. in its heyday.

Do you think ultimately he will see this shakeout as the rest of the economy suffers from sanctions and diplomatic isolation, etc.? but what about the other side?

American companies, for example.

The western economy is so predicated on globalization, access to markets, and the free movement of goods and services, including russia and ultimately china as well.

Doesn't this situation expose fundamental weakness there?

You have to be willing to incur some loss to your self if you want the sanctions to work.

You have to put boots on the ground if you're going to war.

In an economic war, there will be costs.

It is true that the united states has joint ventures with russia.

It's true that russia has integrated our financial system.

If we try to cut them out, they will say, gee, guys, we will not pay your bank.

What do you think about that?

If the russian said we are not paying you, that would be a big hit for the entire european banking system.

And our credibility in the west depends on some ability to sustain ourselves.

Has the west overplayed its hand on the interconnectedness?

I think to some extent this is the way of the world and it is unstoppable.

If we are saying we are interconnected and that solves everything, that would be a mistake.

But if the -- if they say we are interconnected and we can use that interconnectedness, as has happened in iran with it sanctions, then they can stick to that end i think the economics are on our side to prevail.

Sebastian is not just an

This text has been automatically generated. It may not be 100% accurate.

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