![]() ![]() You cannot stop tanks (or oil tankers) with banks. Because of this framing, financial mechanisms are often assigned to deliver more specific political results than they are able to achieve. government describes those potentially subject to penalties, evokes an image of being at gunpoint - and this may be part of the problem.Ĭouching sanctions in the language of warfare tends to make decision-makers overly optimistic (if only subconsciously) about what sanctions can achieve in lieu of military force. Even referring to sanctions “targets,” which is how the U.S. We’ve heard of an “ arsenal” of sanctions, sanctions “deterrence,” even “kinetic” and “nuclear” sanctions. Practitioners have long referred to sanctions as “economic warfare” and discussed financial measures using military terminology. Policymakers may need to reconsider a tool that has assumed a central role in government decision-making, but could lose its legitimacy if the current gamble fails.Īlthough the raft of Russia sanctions is unprecedented in both its scope and in the speed in which it was implemented, full-on financial warfare has arguably been a long time coming. sanctions cannot direct a political or military outcome. Failure to forestall Russia’s aggressions - or to prevent serious ripple effects in the global economy - will signal that even the strongest of U.S. Ultimately, the Biden administration’s choices may prove to be a make-or-break scenario for the use of financial and economic levers in national security. The moves are all the more surprising given that the Biden administration telegraphed a more restrained approach to sanctions when it first came into office. Never have sanctions played out like they are right now, a high-stakes gamble over European security, in real time, through financial and economic means. and its partners wreak enough havoc on the Russian economy in time to make war unsustainable? No one can answer that. The expressed goal in 2014 was to focus on the Kremlin’s behavior and not hurt the broader Russian economy.Ĭan financial pressure force a leader bent on war to alter battle plans - a decision that would need to play out in days, not months or years? Can the U.S. Each of these moves overturned a sacred cow that had been in place since the invasion of Crimea and the Donbas in 2014: Major Russian banks would not be touched restrictions wouldn’t apply to debt on the secondary market (trading of Russian debt between two non-Russian entities) and Putin would never be sanctioned, typically a political signal that the U.S. and its partners sanctioned Russia’s biggest financial institutions - including removing some from the SWIFT messaging system - ratcheted up debt restrictions, and sanctioned Russian President Vladimir Putin himself. Over the course of two historic weeks, the U.S. Department of the Treasury, and as director for the European Union, Southern Europe and Economic Affairs at the National Security Council.Įvery morning since Russia’s invasion of Ukraine, when markets open, analysts watch two things simultaneously: the advance of Russian troops on one screen and the value of the ruble on the other, two battle fronts in the same confrontation. She previously served as senior policy advisor for Europe in the Office of Terrorism and Financial Intelligence at the U.S. Boyden Gray senior fellow & director of the Economic Statecraft Initiative at the Atlantic Council. ![]()
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