This week, Secretary of State Antony Blinken traveled to Kyiv in what seemed to be a last-ditch diplomatic effort to avert a Russian attack on Ukraine. Days of failed talks have made clear that the Kremlin-manufactured crisis is unlikely to be resolved by a diplomatic grand bargain. So the U.S. will have to rely, once again, on the threat of economic sanctions to convince President Vladimir Putin to back down.
The Biden administration has warned Moscow of “severe economic costs” if Russia invades. But skepticism is growing about whether sanctions can really deter the Kremlin. The U.S. and Europe have maintained sanctions against Russia since its initial invasion of Crimea in 2014, yet these have always been modest, far from the sweeping penalties enforced on Iran, North Korea or Venezuela. Arguably, sanctions helped rein in Moscow’s ambitions in Ukraine early on, but since then, they have failed to stop Russian adventurism. Sanctions are the go-to tool when leaders want to “do something” about Russia, but most of the penalties over the past decade have been economically minor and ineffective at changing Russian policy.
Why is it so difficult to convert America’s economic heft into geopolitical power? When it comes to sanctioning Russia, the U.S. faces three recurring challenges: The sanctions tend to be imposed gradually; they are negotiated with reluctant allies; and the most impactful ones would also be economically costly to the West. As a result, the Russia sanctions in place today are a watered-down compromise, designed to placate allies and minimize domestic costs.
Bending Russia’s macroeconomic fortunes — and Putin’s calculus — will require targeting the country’s financial system as well as key exports such as oil. Such sanctions would have significant effects on Russia’s economy and perhaps on the global financial system, which is why U.S. officials have been hesitant to go this far. But averting a war is a tall order and, unfortunately, won’t be cost-free. “Smart” or “targeted” sanctions won’t work. To really impose pain on Russia, the U.S. and Europe will have to bear some burden, too — although, fortunately, there are ways to minimize the fallout for Western economies.
The Biden administration needs to face these tradeoffs head on — and soon, because once Russian tanks are rolling, it will be too late for sanctions to deter the Kremlin. At this moment of maximum leverage, the U.S. should signal clearly that if Putin orders an invasion, it will quickly impose massive, immediate costs on the Russian economy as a whole, not just a few limited targets. It’s up to the Biden administration to show it’s prepared to absorb some economic and political damage to prevent Putin from choosing war.
The first barrier to effective sanctions is that policymakers tend to ratchet them up incrementally. Instead of imposing quick and devastating costs, the U.S. tightens the screws slowly, waiting to see what the adversary does next. Policymakers are justifiably cautious about not wanting to escalate; for instance, Russian officials have threatened to respond to sanctions with cyberattacks.
But to stop Putin from invading, he needs to fear the first salvo of sanctions, not the ones that might come after an invasion has already started. In 2014, the U.S. and Europe started with targeted sanctions against individuals and small firms and didn’t impose major penalties until July — five months after Russia’s “little green men” swarmed Crimea. The delay was understandable, as Moscow’s military operation took the West by surprise and there was not yet a playbook for sanctions against Russia. This time, however, the U.S. and Europe have almost a decade of experience with Russia sanctions and ample warning of an invasion. They can reach for the heavy penalties straight away.
The second challenge is managing the European Union, which is highly dependent on Russian natural gas and requires the unanimous assent of 27 states to impose sanctions. A united alliance is an important deterrent against Russian aggression. But the EU will invariably have a lower appetite for high-impact sanctions than the United States, and will also move more slowly.
Need the harshest possible sanctions. If the oligarchs are hurting, Putin will go back home.
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This week, Secretary of State Antony Blinken traveled to Kyiv in what seemed to be a last-ditch diplomatic effort to avert a Russian attack on Ukraine. Days of failed talks have made clear that the Kremlin-manufactured crisis is unlikely to be resolved by a diplomatic grand bargain. So the U.S. will have to rely, once again, on the threat of economic sanctions to convince President Vladimir Putin to back down.
The Biden administration has warned Moscow of “severe economic costs” if Russia invades. But skepticism is growing about whether sanctions can really deter the Kremlin. The U.S. and Europe have maintained sanctions against Russia since its initial invasion of Crimea in 2014, yet these have always been modest, far from the sweeping penalties enforced on Iran, North Korea or Venezuela. Arguably, sanctions helped rein in Moscow’s ambitions in Ukraine early on, but since then, they have failed to stop Russian adventurism. Sanctions are the go-to tool when leaders want to “do something” about Russia, but most of the penalties over the past decade have been economically minor and ineffective at changing Russian policy.
Why is it so difficult to convert America’s economic heft into geopolitical power? When it comes to sanctioning Russia, the U.S. faces three recurring challenges: The sanctions tend to be imposed gradually; they are negotiated with reluctant allies; and the most impactful ones would also be economically costly to the West. As a result, the Russia sanctions in place today are a watered-down compromise, designed to placate allies and minimize domestic costs.
Bending Russia’s macroeconomic fortunes — and Putin’s calculus — will require targeting the country’s financial system as well as key exports such as oil. Such sanctions would have significant effects on Russia’s economy and perhaps on the global financial system, which is why U.S. officials have been hesitant to go this far. But averting a war is a tall order and, unfortunately, won’t be cost-free. “Smart” or “targeted” sanctions won’t work. To really impose pain on Russia, the U.S. and Europe will have to bear some burden, too — although, fortunately, there are ways to minimize the fallout for Western economies.
The Biden administration needs to face these tradeoffs head on — and soon, because once Russian tanks are rolling, it will be too late for sanctions to deter the Kremlin. At this moment of maximum leverage, the U.S. should signal clearly that if Putin orders an invasion, it will quickly impose massive, immediate costs on the Russian economy as a whole, not just a few limited targets. It’s up to the Biden administration to show it’s prepared to absorb some economic and political damage to prevent Putin from choosing war.
The first barrier to effective sanctions is that policymakers tend to ratchet them up incrementally. Instead of imposing quick and devastating costs, the U.S. tightens the screws slowly, waiting to see what the adversary does next. Policymakers are justifiably cautious about not wanting to escalate; for instance, Russian officials have threatened to respond to sanctions with cyberattacks.
But to stop Putin from invading, he needs to fear the first salvo of sanctions, not the ones that might come after an invasion has already started. In 2014, the U.S. and Europe started with targeted sanctions against individuals and small firms and didn’t impose major penalties until July — five months after Russia’s “little green men” swarmed Crimea. The delay was understandable, as Moscow’s military operation took the West by surprise and there was not yet a playbook for sanctions against Russia. This time, however, the U.S. and Europe have almost a decade of experience with Russia sanctions and ample warning of an invasion. They can reach for the heavy penalties straight away.
The second challenge is managing the European Union, which is highly dependent on Russian natural gas and requires the unanimous assent of 27 states to impose sanctions. A united alliance is an important deterrent against Russian aggression. But the EU will invariably have a lower appetite for high-impact sanctions than the United States, and will also move more slowly.
Need the harshest possible sanctions. If the oligarchs are hurting, Putin will go back home.