About Those Allied Sanctions

The current sanctions package delivers a body blow to the Russian economy but it isn't the knockout punch that many people were hoping for (and which may not exist anyway). On the bright side the alliance is strengthening and positioning itself well for an extended effort counter to Putin.

About Those Allied Sanctions

If you were hoping this round of sanctions would be severe enough to make Putin realize the error of his ways and go home then you're probably pretty disappointed with this package from the alliance. I have a somewhat more favorable view though. Any disappointment that I might feel is tempered by my belief that Putin went into this war anticipating this outcome (and more) and that the limited non-kinetic options available to us are not likely to deter him in the short term. He knew this was coming. That pact with China exists for a reason. The allies also have a lot of history and inertia to overcome. These are massive economic, social, and political shifts that will not reach completion in a few days. Like it or not, this will have to proceed in phases while maintaining unity or it could all fall apart. We can't have that.

Of course that all feels inadequate when you or your loved ones are watching Russian tanks roll through town. I get, and share, the frustration. But there is just a limit to how quickly these competing pressures can be resolved and a limit to how impactful they will be.

Anyway, dig into the details and draw your own conclusions. Here are some easy to parse resources covering the good, the suspect, and the bad as well as a round up of expert opinions from Twitter.

FACT SHEET: Joined by Allies and Partners, the United States Imposes Devastating Costs on Russia | The White House
Russia to Face Massive Costs from its Isolation from the Global Financial and Trade System and Cutting-Edge Technology Today, the United States,

These official statements from the Treasury Department are relatively short reads that lay out the impact that this round of sanctions will have on the Russian economy in a bit more detail.

U.S. Treasury Announces Unprecedented & Expansive Sanctions Against Russia, Imposing Swift and Severe Economic Costs
United States Acts in Tandem with Partners and Allies to Maximize Consequences for Russia, and in Show of Unity Against Invasion of a Sovereign State Top Ten Russian Financial Institutions Now Under U.S Restrictions; U.S. Ready to Impose Additional Major Costs WASHINGTON – The United States took s…
U.S. Treasury Targets Belarusian Support for Russian Invasion of Ukraine
As part of the United States’ serious and expansive response to Russia’s further invasion of Ukraine, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is sanctioning 24 Belarusian individuals and entities due to Belarus’s support for, and facilitation of, th…

While the overall package is quite damaging any way you cut it, the carve-outs raise a lot of questions for this non-expert.

This seems less than ideal, but frankly unsurprising, given the challenges faced by Germany, Italy, and others. Yes, it's infuriating that they put themselves in these positions but that's another blog post. Bottom line - several of our European allies are going to acutely feel the impact of any sanctions imposed on Russia and keeping them on the same page is going to take work.

Europe faces sanctions nightmare of paying for Putin’s war
Energy sales are the Kremlin’s cash cow but the EU is not keen to sever oil and gas flows from Russia in case of a deeper conflict in Ukraine.

Things are easier at home at least. The American and Russian economies aren't quite as connected so the pain will be less acute.

Europe’s banks brace for Russia fallout while U.S. banks see limited pain
European banks on Tuesday were bracing for the fallout from fresh global sanctions as the Ukraine crisis escalated, although U.S. bank executives said they expected the industry to be insulated from major disruption after pulling back from Russia in recent years.

It's a bit clearer on the tech side though. Russia's tech sector (a sector connected to virtually everything) is going to suffer and many important industries (including defense) will suffer with it.

How Biden plans to squeeze Putin’s global access to high tech
Export controls announced Thursday are designed to undermine Russia’s defense, maritime and aerospace industries, the president said.

In the end this is a bit of a mixed bag. It's a better package than it looked like we could have hoped for a month ago but it seems unlikely that it will change Putin's direction.  Maximum pain would have been ideal but projecting unity is critical as well. So far the alliance has made great strides on that front but additional phases may be challenging to negotiate given the deep dependence some have on Russian resources.

There's reason to think the unity can hold however. The risk is so grave, and extends so far beyond Ukraine itself, that members of the alliance have few options. They will either make the difficult choices now or face a far graver threat in the future.

Zelensky says the “future of European security” is being decided now in Ukraine
Russian President Vladimir Putin announced a military operation in Ukraine early Thursday, and Ukraine’s Interior Ministry has said Russia’s “invasion has begun” with missile strikes on Kyiv. Follow here for the latest updates.

It seems likely that we'll soon know how deep this unified front runs. There are only so many financial levers that can be pulled and Putin, at least for now, seems determined to make us pull all of them.

Here are a few reactions (mostly from actual experts) from Twitter:

And last but not least: