Forcing Russia to Respect Minsk Protocols with dollar auction-game model

Abstract

Four years of active international sanctions against Russia have brought no signs of visible progress, neither in terms of respecting Ukrainian territorial integrity or the agreements of Minsk and Sevastopol, nor in terms of Putin's regime leaving power. The EU-US negative conditionality (sanctions) against Russia seems to be losing its momentum despite new measures taken and prolonged in 2017. Russia's annexation of Crimea as well as the separatist control across the strategically important industrial and resource rich cities of the Eastern Ukraine has not been effectively dealt with. Accordingly, in many aspects the situation meets Russian expectations to retain the occupied territories and wait for the softening of international reactions. Thus, there are good grounds for inquiring into the possibility of the West taking control over the situation in Ukraine and ending the geopolitical power struggle in the region. It is in this context that the game theory, and particularly the "dollar auction game" strategy, offer an intriguing insight into the dynamics of the escalation of the conflict and a dynamic model, thereby showing some future-oriented alternatives of how to get out of the crisis before the costs become excessive for all the "players" involved.

How the possibility of a fight-back strategy affects the consequences of a sanctions regime

“…• the structure of the game which is either simultaneous or sequential (Eaton & Engers, 1992;Taehee Whang, 2010) • the incomplete information (Eaton & Engers, 1999) • whether the threat to sanction is a choice or not (Afesorgbor, 2019;Lacy & Niou, 2004) • mixed strategy analysis (Shadiqi & Pradiptyo, 2011) • players' perception (Whang & Kim, 2015) • repetition of the game (McCormack & Pascoe, 2015;Veebel & Markus, 2018a) • players in addition to/except the sender and the target (Dong & Li, 2018;McLean & Whang, 2010;Morgan & Bapat, 2003) • the power of the targeted country (Brown, 2019) Game theory and some other methods have also been fruitful in explaining some parameters' effect on the results of a sanction episode. These parameters include:…”

“…• the importance of a sanction episode (Drezner, 1999) • the cost of sanctions for the sender (Dong & Li, 2018;Whang & Kim, 2015) • the stability and power of the leaders in the target country (Spaniel & Smith, 2015) • the power of the military force in the target country (McCormack & Pascoe, 2015) • the economic and political relations between the two countries (Taehee Whang, 2010) • the behavior of third parties (Han, 2018) • the effects of a countermeasure on individuals in both parties (Banse, Duric, Götz, & Laquai, 2019), or on the outcome of the game (Saparaliyev, Mokin, Movkebayeva, Saiymova, & Mustafina, 2019;Veebel & Markus, 2018a) • the cost of sanctions on the target (Bimbetove et al, 2019;Dong & Li, 2018;Gharibnavaz & Waschik, 2018;Salman, Shin, & Shin, 2019) • the internal dynamics of both countries and the role of the opposition party (Onder, 2020) The intensity of sanctions imposed on controversial policies of target states has been also discussed within public choice framework (Kaempfer & Lowenberg, 1988).…”

“…With this in mind, they have concluded that there is a possibility that EU and US accept the status quo and Russia does not retreat from Ukraine which is consistent with our conclusion. (Veebel & Markus, 2018a) Saparalieyev et al have recognized the role of countermeasures in the case of Russian sanctions in 2014. They enumerate those countermeasures taken by Russia but do not discuss what would happen if Russia were unable to take such measures.…”