Warwick Lightfoot is an economist, and a former Special Adviser to three Chancellors of the Exchequer.

An assertive military power that is well-armed and possessed of political purpose is not deterred by economic inconvenience. The history of sanctions from Napoleon’s continental system that blockaded British trade in the eighteenth century to those imposed on North Korea during this century is that sanctions fail in their military and political purpose, and often do not achieve their narrow economic and commercial intent.

Despite Napoleon’s continental system, British exports to Europe rose.  Walter Russell Meade  has recently reminded the readers of the Wall Street Journal of this history.

Meade also made a broader point about the military ineffectiveness of sanctions – drawing on the example of Jefferson’s embargo on British trade in 1807; on the Confederate South during the American civil war in the 1860s, and on Iraq, Iran and North Korea. Their failure to influence Italy over Abyssinia during the 1930s could be added to the score card.

Joe Biden, Boris Johnson and the leaders of the EU should not mislead themselves about the efficacy of sanctions in constraining the belligerent use of military power. Confiscating an oligarch’s Knightsbridge house or impounding his yacht will offer an important gesture of political repugnance and may well be merited, yet achieve little in effective military terms.

Russian has a number of commodities that are in demand: oil, gas, copper, gold, palladium and other minerals. As a result of Covid, supply chain disruptions, the green agenda and clear overheating in western economies, there appears to be both a short-term and longer term commodity super-price cycle in play which is amplifying that demand.

It will be increased by the effects of a lower Russian exchange rate that makes the relative price of these commodities lower.  One way or another, even in the context of a full military blockade, trade happens when it suits the parties involved.

In terms of normal economic welfare and utility, the present economic measures may well bring misery and inconvenience for the people involved. But will they cripple Russia’s military machine in the short and medium term? A careful answer would suggest probably no.

Germany’s army was still in the field during the autumn of 1918, after more than for years of determined and comprehensive blockade – during which ships, including those of neutral nations, were stopped and even sunk in order to enforce it.

Did this make life difficult for the German economy?  Yes. Did it cripple the German economy to such an extent that it was bound to collapse in by 1918? Probably not. Indeed, the Allies expected the war to go on until at least the spring of 1919, despite the reduction of Germany to near starvation.

Likewise, Germany under the Nazis had a policy of autarky, controls and interference during the 1930s that, in terms of economic inefficiency, were almost beyond description in their misdirection.

Yet Adam Tooze’s book The Wages of Destruction demonstrates that this hugely malign set of policies, in terms of any conventional criterion of economic welfare, did little to hinder the regime’s brutal agenda of international adventure.

Cutting out Russia from Swift is an effective way of making life difficult for it. But it will be possible to carry out transactions outside Swift? The answer is yes – though the process will be more expensive, slower and less reliable.

For among the parties involved, it should be possible for transactions to take place. Countries such as China, Russia, Pakistan, Cuba andVenezuela may choose to create a sort of naughty people’s Swift and, given the role that Russian commodities play in markets and Chinese scale and weight in economic activity, such a scheme will probably work, after a fashion.

Normal prudent people will not want to use it, given the risk of theft, divergence and the capacity of the Chinese and Russian states to confiscate your property on a whim. Yet transactions should still be possible.

Both the Russian and the Chinese economies are very different from the socialist planned economies based around net material product of 30 years ago. There are interesting companies in Russia, mainly in the extractive and mining sector – in the same way that there are interesting equity investments to be found in China on a larger scale.

The big question is whether an investor would ever get the returns that are hoped for, or whether they will be stolen or confiscated by the governments involved. Chinese equities owned by foreign investment trusts are never apparently directly owned by an investor, but indirectly allocated by a Chinese entity that holds the ultimate asset.

After the Russian financial crisis in 1998, it was fashionable to consider Russian assets for speculative portfolios.  But would an investor be confident of owning them after buying them? This has been BP’s problem for many years in Russia, and it is now pulling out.

However, the Russian economy is much more responsive now because it uses the price system, has modern technology and also has a friend next door. This is a very different situation from the position in 1990.

In terms of the impact of the sanctions on the role of the dollar and the US economy, and the extent to which they may lead to the dollar being replaced as a reserve currency, the possible consequences of the sanctions in themselves is probably exaggerated.

They will have little direct impact on the US economy because of the modest size of the Russian economy, which is about as big as Italy.  Countries and investors hold money in dollars by choice. It is convenient to hold dollars and invoice trade in the dollar because people are confident about the currency and are happy to hold it.

The Chinese and Russian currencies are not used by their own citizens when they have a choice. The exposed oligarch assets that invite attention and opprobrium are the visible manifestation of the desire for assets in any currency other than their own.

These sanctions will result in more future commodity businesses being invoiced in Yuan. The future of the dollar as a reserve currency will turn on its reliability as a store of value. That will be determined by America’s inflation performance which, on the basis of the Federal Reserve Chair’s recent evidence to Congress, looks more vulnerable than at any time since the inflation of the 1970s.  All this has little to do with either sanctions or Russia.

This analysis of the evidence about the military effectiveness of economic sanctions in foreign policy and war does not imply in any way that they should not be imposed. It simply yields the point that they are blunt instruments, will have unexpected consequences and, probably, have disappointing results in terms of their direct military consequences.