In violation of international law, Russia has invaded Ukraine and the world is rightly outraged. Countermeasures to stop the fighting and punish Russia’s aggression do not include sending NATO armies against Russia for the very good reasons that it would significantly increase the risk of a devastating nuclear war and because our experiences with such wars in the last half century are not encouraging. What countermeasures might we (and are we) use(ing)?
Our primary tools are to economically and culturally isolate Russia in order to damage their economic ability to continue waging their war and to hurt their pride. What might that include within the limits of our commitment to the rule of law?
Each of us as individuals, companies, and governments have the right to decide who we trade and deal with. Refusing to sell to or buy from Russia can have a powerful impact on the Russian economy. Examples of companies that have ended or restricted their sales to and/or operations in Russia include Ford, GM, Toyota, VW, Volvo, Nissan, Honda, Subaru, Harley Davidson, Apple, BP, Equinor, Shell, ExxonMobil, Visa, Mastercard, Google, and Netflix. And the list continues to grow by the hour.
“Ikea, the world’s largest furniture company, is closing its 17 stores in Russia. The company said the conflict is having a “huge human impact” and “resulting in serious disruptions to supply chain and trading conditions.” In addition to pausing its retail and manufacturing operations in Russia, it will suspend all trade with the country and its ally, Belarus.” “CNN: Companies pulling back from Russia”
Sports and entertainment organizations certainly have the right to determine their members and kicking Russian teams or performers out of competitions, etc. can usefully demonstrate disapproval of Russia’s behavior.
More problematic are the announcements by Boeing and Airbus that they have suspended support services to Russian airlines flying their planes. Airbus stated that “it has ‘suspended support services to Russian airlines, as well as the supply of spare parts to the country.’” These are problematic because they might be breaking provisions in contracts these companies have with Russian airlines. However, such contracts often provide for suspension in the event of war or other unusual circumstances. Moreover, if Russia withdraws from Ukraine in the next few weeks and the more severe sanctions are withdrawn, these reservations may become mute.
While social media platforms and entertainment companies (Disney, DirectTV, and WarnerMedia) also have the right to cut off Russian users, I am not convinced that it is always wise to do so. In my view we should all be able to view the propaganda disseminated by, for example, RT. While I am sure that WarnerMedia’s decision to “pause the release of ‘The Batman’ in Russia,” will be devastating for many Russians, they do have more challenging issues to worry about at the moment.
A rather different category of sanctions are those taken by and/or imposed on others by governments. For example, all Russian airline flights are now banned from EU, U.S., and Canadian airspace. As a result, or perhaps for other reasons, the Russian delegation to the World Telecommunication Standardization Assembly (WTSA-20) of the International Telecommunications Union now underway in Geneva didn’t come. This important meeting is held every four years to allocate spectrum and set other global telecom standards. By its absence Russia has lost all opportunities to nominate and elect chairmanships of any study groups and task forces for the next four years.
Most payments in dollars, Euros and most other currencies have been forbidden by the issuers of those currencies with specific exception. Russia has been blocked from using S.W.I.F.T. for sending payment instructions. The most important economic exception is that Russia may continue to sell oil and gas to Europe and to receive payment for them. Another is that Russia may continue to make debt service payments on Russian debt securities held abroad. The assets of all Russian banks outside of Russia, including its central bank, have been frozen. I am not sure how these two are reconciled. “BBC News”
The approach of blocking economic activity by blocking payments for them is a bit similar in spirit to Anti Money Laundering (AML/CFT) restrictions, which attempt to stop illegal activities by stopping the use of the proceeds of “crimes” that haven’t been proven, rather than stopping the illegal activities themselves. The effectiveness of blocking payments in key currencies depends on how widely they are supported. A UN resolution condemning Russia’s invasion of Ukraine was supported by 141 members. Only 5 countries voted against (Russia, Belarus, Eritrea, North Korea, and Syria). China and India and 33 other members (including, surprisingly, Cuba) abstained. Germany completely reversed earlier policies and is sending serious weapons to Ukraine and is increasing its military expenditures above NATO recommended minimums. While the extent of support is impressive, the abstainers open sufficient holes to undermine the impact of financial sanctions. None the less, the dramatic shrinkage of trade and real economic interactions will be devastating. Russia will be flattened and isolated.
More recently some countries have seized the assets of private Russian citizens.
The Russian Oligarch Igor Sechin’s yacht was seized Thursday by French Authorities while docked for repairs in La Ciotat, near Marseille. On the same day “Germany seized the Russian billionaire Alisher Usmanov’s 512-foot mega yacht Dilbar, which is valued at $600m, which was moored in Hamburg.” “Russia sanctions superyacht seizures”. To my knowledge, neither of these Russians committed any crimes in France or Germany or anywhere else outside of Russia. The legal basis for these seizures, unless they are being held temporarily pending a court determination of whether crimes have been committee, is very questionable.
Imposing harm on Russia and Russians of the types discussed above, will have costs to us as well. This by no means suggests that we should not use them. Properties and businesses abandoned in Russia and goods and services no longer sold there or purchased from there will impose costs on the western companies involved. Western owners of Russian securities are likely to incur losses. Some Russian debt will default. But Russia’s aggression must be stopped, and future aggression strongly discouraged. Watching the Soviet tanks crush Hungarian and Czech demonstrators in 1968 without our military intervention to help them was very painful but was the right thing to do, just as our nonmilitary approach now is the right approach, as long as we apply sanctions lawfully.
Putin’s reckless war in Ukraine is destroying Russia. Let’s hope that the good and long-suffering people of Russia will not allow him to also destroy the whole world.