The Russia Sanctions That Could Actually Stop Putin

“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.”

“There are two main categories of sanctions that stand a chance of actually changing Putin’s mind — and each comes with downsides that the U.S. needs to consider seriously. First, the United States could threaten to cut off major Russian banks from the U.S. financial system. Blacklisting a major Russian bank, such as Sberbank, VTB or Gazprombank, would make it difficult — if not impossible — for anyone in the world to transact with it.

The Treasury Department has deep experience imposing sanctions on foreign banks, having done so repeatedly against Iran. The largest Russian banks are much bigger than their Iranian peers, which has given U.S. officials pause about sanctioning them in the past. Indeed, this would cause substantial financial distress in Russia. Full-blocking sanctions on Sberbank would be particularly impactful, since most Russians have an account there. Russia’s government would have to step in to bail out the bank and would struggle to prevent a domestic financial crisis. Companies would slash investment. The ruble would fall sharply against the dollar, but it would become riskier to hold dollars in Russian banks. Russian inflation would spike higher and real incomes would fall.

The impact would also be felt internationally. Many Western investment funds own Sberbank stocks and bonds, the value of which would slump.”

“Second, the U.S. could substantially reduce Russia’s export revenues. Russia’s biggest export is oil (around 45 percent of exports), and other exports the U.S. could sanction include gas, coal and various iron and steel products. With Iran, the United States drastically cut the country’s oil exports by allowing Iran’s customers to gradually wind down purchases over time. A similar campaign is possible against Russia, though since Russia exports more oil than Iran, global oil prices would take a bigger hit. (Other countries would eventually increase production to make up for the shortage, but there would be a time lag during which oil prices would remain high.)

The United States could also sanction Russia’s natural gas exports, though this carries even greater tradeoffs. The world — especially Europe — already faces natural gas shortages this year. Energy-intensive European industries, notably in Germany, could face shutdowns if Russian gas supplies were halted. Given the Biden administration’s struggle with spiking energy prices and worsening inflation, it’s not hard to see why Washington may be reticent to impose such sanctions.”

“Russia may have the advantage on the battlefield in Ukraine, but the West has vast power over Russia’s economy. It should be prepared to use it — and also be prepared for the costs.”

Can Russia back down in Ukraine?

“Russia presented the United States with its demands last month. It requested “legally binding security guarantees,” including a stop to eastward NATO expansion, which would exclude Ukraine from ever joining, and that NATO would not deploy troops or conduct military activities in countries that joined the alliance after 1997, which includes Poland and former Soviet states in the Baltics.

Kyiv and NATO have grown closer over the last decade-plus, and actively cooperate. But Ukraine is nowhere close to officially joining NATO, something the US openly admits, and something Russia also knows. Still, NATO says Ukrainian future membership is a possibility because of its open-door policy, which says each country can freely choose its own security arrangements. To bar Ukrainian ascension would effectively give Russia a veto on NATO membership and cooperation. Removing NATO’s military presence on the alliance’s eastern flank would restore Russia’s influence over European security, remaking it into something a bit more Cold War-esque.

Russia almost certainly knew that the US and NATO would never go for this. The question is what Putin thought he had to gain by making an impossible opening bid. Some see it as a way to justify invasion, blaming the United States for the implosion of any talks. “This is a tried-and-true Russian tactic of using diplomacy to say that they’re the good guys, in spite of their maximalist demands, that [they’re] able to go to their people and say, ‘look, we tried everything. The West is a security threat, and so this is why we’re taking these actions,’” said David Salvo, deputy director of the Alliance for Securing Democracy and a senior fellow at the German Marshall Fund.”

“Russia might not like the responses on NATO, but there are spaces where the US and NATO could offer concessions, such as greater transparency about military maneuvers and exercises, or more discussions on arms control, including reviving a version of the Intermediate-Range Nuclear Forces Treaty, or even scaling back some US naval exercises in places like the Black Sea, which Russia sees as a provocation. “There is still potentially room on those fronts,” said Alyssa Demus, senior policy analyst at the Rand Corporation. “That’s entirely possible that the US and Russia or NATO and Russia could negotiate on those — and then maybe table the other issues for a later date.”

But if the US and NATO extend those olive branches or others, that might not be enough for Putin. Neither of these will resolve Putin’s fundamental sticking point. He has repeatedly framed the US and NATO as a major security threat to Russia for his domestic audience, including spreading disinformation about the West being behind the real chaos in Ukraine. “Having built up this formidable force, and issued all manner of ominous warnings, he’s got to come back with something tangible,” said Rajan Menon, director of the grand strategy program at Defense Priorities.”

“really, Ukraine is already at war. In 2014, Russia illegally annexed Crimea, and exploited protests in the Donbas region, in eastern Ukraine, backing and arming pro-Russian separatists. Russia denied its direct involvement, but military units of “little green men” — soldiers in uniform but without insignia — moved into the region with equipment. More than 14,000 people have died in the conflict, which ebbs and flows, though Moscow has fueled the unrest since. Russia has also continued to destabilize and undermine Ukraine, including by launching cyberattacks on critical infrastructure and conducting disinformation campaigns.

It is possible that Moscow takes aggressive steps — escalating its proxy war, launching sweeping disinformation campaigns and cyberattacks, and applying pressure in all sorts of ways that don’t involve moving Russian troops across the border and won’t invite the most crushing consequences.

But this route looks a lot like what Russia has already been doing, and it hasn’t gotten Moscow closer to its objectives. “How much more can you destabilize? It doesn’t seem to have had a massive damaging impact on Ukraine’s pursuit of democracy, or even its tilt toward the west,” said Margarita Konaev, associate director of analysis and research fellow at Georgetown’s Center for Security and Emerging Technology (CSET).

And that might prompt Moscow to see force as the solution.”

The false premise making war with Russia more likely

“NATO has repeatedly expanded eastward since the end of the Cold War, right into Russia’s backyard, and the alliance has demonstrated numerous times (in the Balkans in the late 1990s, in Afghanistan beginning in 2001, and in Libya in 2011) that it’s quite capable of projecting military power offensively, far beyond its constituents’ borders. That’s more than enough to justify Russian obstinance and bellicosity.

This doesn’t mean the West should capitulate to all of Russia’s demands. But we should recognize those demands aren’t entirely rooted in bad faith. That awareness just might make it a little more possible to resolve the current standoff without bloodshed or an even larger Russian occupation of Ukraine.”

Biden talks tough on Putin, but European allies are less ready for a fight

“President Joe Biden has warned Russian dictator Vladimir Putin that his country will face severe sanctions if it once again attacks Ukraine. A key question looms, however: Will European countries really go along with serious penalties on Moscow?

On the surface, Europe appears willing. European Union officials and national leaders from across the continent have promised huge economic penalties against Moscow for any new military incursion into Ukraine, in lockstep with their American partners.”

“While much of Eastern Europe — especially Poland and the Baltic states — is on high alert, the issue is nowhere near the top of the political agenda across most of the rest of the continent, where battling the pandemic and its economic fallout remains the priority. In Brussels, EU officials are more focused on why they don’t have a seat at the table for the Jan. 10 talks between U.S. and Russian officials in Geneva than what’s happening along the Russia-Ukraine border. Some countries are reluctant to undermine their business links with Russia; that includes Germany, which relies on Russian natural gas and has backed the construction of the controversial Nord Stream 2 pipeline.”

“Putin has amassed tens of thousands of troops along Russia’s border with Ukraine. If he orders his military forces to stage another land invasion, it will make it hard for most European countries to go easy on him. But if he takes steps that undermine Ukraine short of an invasion — cyber attacks, for instance, or incursions by mercenaries — that could complicate talks between Europe and the United States about how to react.”

“Another complicating factor for the Europeans is uncertainty about how long the tough U.S. stance on Russia will last, especially if Donald Trump returns to the White House after 2024. Although Trump’s administration imposed plenty of sanctions on Russia, Trump himself regularly sought better relations with Putin. Many European officials even question whether Trump would come to Europe’s aid if Russia were to attack a NATO ally, such as one of the Baltic states.

“If Trump wins the next election, we’re on our own,” one European official said. “And then what?”

Such concerns aside, some European leaders have at times given Putin the benefit of the doubt. In the wake of Russia’s aggression toward Ukraine in 2014, European powers, led by Germany, refused for months to bow to U.S. pressure to endorse sanctions against Moscow. Former German Chancellor Angela Merkel was particularly worried about the effect such a move would have on Germany’s substantial trade relationship with Russia.

Merkel insisted for months on fruitless dialogue with Putin in the wake of the Kremlin’s annexation of Crimea even as Moscow-supported separatists escalated the war in eastern Ukraine. President Barack Obama tried to win Merkel over when she visited the White House in May of 2014 — to no avail. It took the downing, several weeks later, of Malaysia Airlines flight MH17 with 298 people on board for Berlin to agree with U.S. demands to impose sanctions.”

“The U.S. could impose new or additional sanctions on Russian banks and energy firms. There also are potential targets in Russia’s mining, metals and shipping sectors, according to former officials who deal with sanctions. Another option is cutting Russia off from the Society for Worldwide Interbank Financial Telecommunication, a critical global network for exchanging financial information. That would be a particularly tough move against Russia’s finance sector, though Russian analysts and others have downplayed the seriousness and note the country is developing an alternative.

The trick is to calibrate the sanctions in a way that doesn’t rebound in too harsh a way on the European economy or, in the longer run, the U.S. economy.

European leaders for now appear intent on deescalating the crisis with Russia, even if it means mollifying Putin with concessions. Just before Christmas, for instance, Austrian Chancellor Karl Nehammer said it would be “false to link Russia’s behavior in the conflict with Ukraine with the operation” of the Nord Stream 2 energy pipeline. That was taken as a signal that Austria would not support any punitive action toward Russia beyond the cosmetic.”

“Biden and his aides have stressed that they are keeping European allies and Ukraine in the loop as the U.S. talks to Russia. Biden’s top aides, including Secretary of State Antony Blinken and national security adviser Jake Sullivan, have been in touch with a range of foreign officials to discuss the Ukraine crisis, and U.S. officials will be in Brussels during the next week for a series of meetings at NATO HQ, including a meeting of the NATO-Russia Council on Jan. 12.

At this stage, however, the administration, like its European allies, is avoiding mentioning details about sanctions possibilities or new weapons shipments it says amount to negotiating in the open.

“We won’t telegraph the specifics publicly, but there is broad consensus between Washington and key allies and partners in Europe on the need for a high impact, quick action response” to Russian aggression, the U.S. official said.”

With Russian guns pointed at Ukraine, West and Moscow dive into talks

“Putin will not discuss his invasion and annexation of Crimea in 2014, which the West still views as a violation of international law that must be reversed. Putin also has never admitted, and won’t concede now, that active-duty Russian military personnel are operating in the Donbass region of eastern Ukraine, despite ample evidence to the contrary, including a recent Russian court ruling that discussed contracts for supplying food to Russian forces.

The U.S. and its NATO allies, meanwhile, have already said they will not accede to Russia’s demands that the U.S. remove troops and weapons from Eastern European countries that joined the alliance after 1997. They have already rejected a demand for the removal of all U.S. nuclear weapons stationed in Europe, and also flatly ruled out Moscow’s demand for a guarantee that Ukraine and Georgia will never join NATO.”

“U.S. officials have identified just two areas in which they see the potential for fruitful discussions: on curtailing missile deployments and on scaling back military exercises.

Russia has long complained about existing U.S. “Aegis Ashore” missile defense capabilities based in southern Romania and has recently voiced concerns that Washington would seek to base missiles in Ukraine.

The U.S. and NATO have previously dismissed the concerns about the missile interceptors in Deveselu, Romania, saying they were installed to protect against threats from Iran or elsewhere outside the Euro-Atlantic area. A second Aegis Ashore installation in the town of Redzikowo, in northern Poland, is nearly complete and projected to be operational by the end of this year.

The Poland site, not far from the Russian exclave of Kaliningrad, is likely of even greater concern to the Kremlin.”

“Given the inevitably high cost to Russia of an invasion of Ukraine — in casualties, which could run to the tens of thousands, and in economic and political sanctions imposed by the West — there is some hope in Western capitals that Putin might be willing to back off his threats in favor of negotiations that keep Russia at the center of the geopolitical stage.”

“Blinken said he saw limited opportunity for major advancements”

“While Moscow clearly prefers to speak directly to Washington, which it views as pulling puppet strings at NATO, in recent days, Blinken and other U.S. officials have stressed repeatedly that they will not allow Russia to use the bilateral talks in Geneva to make decisions that impact European allies or for that matter, Ukraine, which is not a NATO member.”

“If Russia has a gun to Ukraine’s head, the West, in its way, has sought to point its own soft-power weaponry back at Moscow — reiterating repeatedly that there will be high-impact economic sanctions. These likely included measures intended to cut Russia’s access to the global financial system.

A fourth EU diplomat said the West would go further than ever before to target not just wealthy Russian figures closely connected to Putin, but also their families — in an effort to severely limit travel to Europe, where Russians often love to spend holidays and shop. While such sanctions might be difficult to defend in court, the diplomat said EU officials were prepared to make the process of fighting the levies as lengthy and difficult as possible.”

Ukraine Still Hungers for Independence

“In the late 1920s, Soviet leader Josef Stalin sent Communist Party officials and activists out into the countryside with orders to convert private, family-owned farms into collective enterprises.

Ukrainian farmers resisted, and party leaders resorted to torture, threats, and graphic public shaming. In one Ukrainian province, according to Anne Applebaum’s Red Famine (Doubleday), a gang of Communist apparatchiks marched farmers into a room one by one and demanded they submit. Those who refused were shown a revolver. If they still did not comply, they were marched into jail, with the words malicious hoarder of state grain inscribed on their backs.

Stalin’s radical economic program was rooted in the idea that virtually all food supplies, land, and farming equipment were the property of the government. Collectivization was a state-sponsored program of mass theft perpetrated under the premise that Ukraine wasn’t even a real country.

Without private property, personal profit, or local pride there were few incentives to work. The new state-run farms were far less productive than expected, leading to -shortages. At the same time, Stalin increased grain procurement requirements from Soviet localities—Ukraine in particular—so that most of what was produced was seized by the state. By the spring of 1932, Ukraine had begun to starve.”

History Shows That Biden Is Handling Putin the Right Way

“In all three of the previous crises, the U.S. and its allies concluded that the territory in question was not vital. In Georgia and Ukraine, the U.S. did not have the military capability to engage Russia directly and made clear to partners it would not enter the conflict. In Syria, Washington was unwilling to continue supporting the opposition to Bashar Assad in the face of Russian military action, focusing more on de-escalation including a military hotline to Russian forces. These moves assured Putin that the geopolitical outcome he feared was not forthcoming, discouraging him from upping the ante.”

“At the same time, the U.S. took military steps to limit Russian success, hedge against further aggression or signal determination. The riskiest move was President George W. Bush’s order to airlift a whole Georgian brigade from Iraq to Tbilisi in 2008, while sending U.S. naval assets to the Black Sea. In 2014, the U.S. and NATO initially provided Ukraine with non-lethal military aid, but gradually expanded that to include lethal defensive systems, training and small rotational deployments. In Syria after 2015, the U.S.-led anti-ISIS coalition indirectly put military pressure on Assad while avoiding confrontation with Russian troops.

In each case, the U.S. signaled that “no military solution” was not an absolute, underlining that although the U.S. did not seek direct conflict with Russia, a robust military response was on the table to defend vital interests, including treaty allies.”

“The U.S. and Europe have used sanctions to respond to Russian aggression by targeting top decision-makers, the Kremlin’s military-industrial complex, and the key sources and intermediaries for Putin’s personal wealth (in the Syria case, Damascus and Tehran were also sanctioned). Though sanctions could not undo actions Russia had already taken, they helped deter Moscow from pursuing more expansive aims.”

“In all three conflicts, the U.S. effectively mobilized allies. The Bush administration blessed French President Nicolas Sarkozy’s lead on the 2008 negotiations that prevented further fighting between Russia and Georgia, and similarly backed France and Germany on the Normandy format talks that brought Russia—not just Russian-backed proxies—to the table with Ukraine. Syria crisis management was a cooperative effort by the U.S., EU states, the Arab League, and eventually Turkey and Israel under pro forma U.N. leadership.”

“Finally, U.S. administrations have used face-to-face meetings and calls between top leaders to convey this message of de-escalation backed by firm resolve.”

“Though critics often decry engagement with the Russians as a reward for bad behavior, the crisis management playbook shows that it is essential. Earlier this year, during the last Russian buildup along the Ukrainian border, Biden defused the situation with direct high-level dialogue, particularly face-to-face meetings with Putin and Ukraine President Volodymyr Zelenskyy. With this week’s Biden-Putin call, and the launch of a follow-up dialogue on European security that will include U.S. allies, Washington is again choosing wisely to engage.”

The US’s refusal to accept reality in Ukraine could get a lot of people killed

“US Secretary of State Antony Blinken recently met with his Ukrainian counterpart Dmytro Kuleba in Washington and declared that the US commitment to Ukraine’s security and territorial integrity is “ironclad.”

The meeting between the two officials came as Moscow stationed 90,000 troops near the Ukrainian border, leading many to fear that a large-scale Russian invasion of Ukraine could be imminent. Ukraine has been mired in a war with Russia and Russian-backed separatists in the eastern Donbas region of the country since 2014.

Blinken’s comments are just the latest example of a top Biden administration official failing to accept the geopolitical reality of Ukraine.”

“Is Biden really prepared to send young American men and women to fight and die over Ukraine? This kind of rhetoric from the Biden administration does not serve US interests and counterproductively increases the risk of the United States being dragged into a war with Russia.

By continuing to provide quasi-security guarantees to Ukraine, Washington is playing a dangerous game of escalation with Moscow. Russia’s deployment of 90,000 troops near the Ukrainian border is likely Moscow calling Washington’s bluff.

The United States has provided $2.5 billion in military aid to Ukraine since hostilities broke out. Despite this significant investment, the war has continued because the underlying geopolitical causes of the conflict have not been addressed — namely Russia’s concern that Ukraine will be granted NATO membership.”

“Russia has proven that it is willing to bear significant monetary and human costs to prevent a western-aligned Ukraine. Years of tough economic sanctions and the estimated loss of several hundred Russian soldiers has done little to change Russia’s objectives in Ukraine.

Unlike Russia, the United States simply does not have a strong enough interest in Ukraine worth risking a potential nuclear war over.

Ending the conflict will require a comprehensive political settlement that takes Russia’s geopolitical anxiety into account. One may not agree with Moscow’s security concerns; however, it is necessary to address them in pursuit of a peaceful resolution. Such a settlement should see Ukraine’s territorial sovereignty restored and position Ukraine as a neutral buffer state, neither aligned with Russia nor the West.”

“Working toward a realistic resolution in the form of a neutral and non-aligned Ukraine could provide an opportunity for the world’s two largest nuclear powers to form a stable and predictable relationship.”