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Institutionalizing the Russia sanctions

We are in the sustainable containment phase now

People walk in front of the McDonald’s flagship restaurant at Pushkinskaya Square in central Moscow on Sunday, the company's last day in Russia. (AFP/Getty Images)

There are plenty of excellent reasons for the United States, European Union, Japan and other countries to be sanctioning the Russian Federation after its invasion of Ukraine. Alas, as previously noted in Spoiler Alerts, these reasons have not been articulated terribly well. The primary theme behind the accumulation of sanctions has been punishment.

In a recent announcement of additional sanctions by G-7 members, for example, the statement read that the sanctions represent a “commitment to ensure that Putin’s war of choice is a strategic failure. Russia has now become a global economic and financial pariah.” By that standard, mission accomplished on the sanctions! The Russian economy is in shambles, Russian finances are seized up, and the Russian people cannot travel to many places.

So … um … er … now what? Is this new status quo sustainable?

This is far from an academic question. Assessments vary on how long Russia can keep up the current military campaign. It seems increasingly unlikely, however, that sanctions alone will lead to either President Vladimir Putin’s downfall or his acquiescence. Russia’s oligarchs rely on Putin more than he relies on them. Perhaps military leaders get sick of the meat grinder and try to oust Putin, but that seems unlikely as well and super dangerous in a country possessing nuclear weapons. The invasion polls relatively well among Russians, so a revolution seems unlikely. Indeed, the sanctions are just as likely to trigger a rally around the flag effect as antipathy toward Putin.

If these sanctions are designed to be a new form of containment, more thought needs to be given about their long-term sustainability. Ad hoc sanctions coalitions are the ones most likely to fall apart over time, particularly if the target state incentivizes sanctions-busting. With its energy reserves, Russia has the capacity to offer such sweeteners.

If the Biden administration wants to keep the economic pressure on, it needs to consider the following interim goals:

  1. Institutionalize the coalition. Creating a treaty-based organization is out of the question, but something like the old CoCom (Coordinating Committee for Multilateral Export Controls) regime from the Cold War might now be appropriate. The Financial Action Task Force would be another reference point. The idea would be to create a structure that allows for participating actors to stay on the same page as the sanctions regime evolves — and to signal to Putin that he can’t wait out his opponents.
  2. Clarify the conditions under which some sanctions can be lifted. For sanctions to have any coercive impact, the target needs to believe concessions will translate into sanctions being removed. Articulating the steps Russia needs to take for sanctions to be lifted is also a useful exercise in preventing what Chatham House’s Hans Kundnani characterizes as “overcompensation.” He warns, “At this fraught moment, the biggest danger is recklessness.” Laying out terms for sanctions removal will remind everyone of the point of this project.
  3. Keep private-sector actors on board. The official sanctions have obviously had an effect, but the private sector has massively amplified the effect. Close to 400 companies ranging from Boeing to Ikea to Maersk to McDonald’s to Starbucks to Western Union have ceased operating in Russia. Most of these actions have been “suspensions,” however. Just as contagion effects led to mass corporate withdrawal at the outset of the invasion, a reverse contagion could take place ahead of government wishes. This is where ongoing consultations between G-7 governments and firms would be useful.
  4. Minimize the global collateral damage. The war and the sanctions combined will have significant and deleterious effects on the global economy. Food prices are likely to soar in some places as Ukrainian wheat goes off the market. Other commodity prices will spike as well. U.N. Secretary General António Guterres noted on Monday: “All of this is hitting the poorest the hardest and planting the seeds for political instability and unrest around the globe.” As Russia attempts to construct a narrative of blame for those imposing sanctions, the governments responsible for the sanctions need to take actions to minimize suffering and thwart adverse narratives. Working closely with the U.N. Global Crisis Response Group on Food, Energy and Finance would help in this area.
  5. Keep Congress from passing any more sanctions measures. Congress loves imposing sanctions but loathes removing them. In other words, any new congressional measures are going to be extremely difficult to remove. Maybe there will come a time when that step is necessary. Now is not that time.
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