President Biden faced a barrage of tough questions from reporters at the White House on Thursday as he announced several harsh new sanctions that the U.S. and its allies plan to impose against Russia in response to the invasion of Ukraine.
For weeks, Biden has waived the threat of crippling economic sanctions, as part of a public and, ultimately, unsuccessful effort by the U.S. and NATO allies to deter Russian President Vladimir Putin from launching a full-scale military attack on the former Soviet nation. Earlier this week, after Putin recognized and then sent troops into two Kremlin-backed separatist regions in the east of Ukraine, Biden announced that what he promised was just the beginning of the severe financial penalties the West was prepared to levy.
But less than 24 hours after Russian forces began firing missiles at targets throughout Ukraine from both land and sea, many wondered if the unprecedented sanctions announced Thursday would be too little, too late.
Biden insisted that was not the case.
“No one expected the sanctions to prevent anything from happening,” he said. “This is going to take time, and we have to show resolve, so [Putin] knows what’s coming, and so the people of Russia know what he’s brought on them. That’s what this is all about.”
The latest round of sanctions target Russia’s largest state-owned banks, as well as a number of wealthy elites and members of Putin’s inner circle. Biden also said the U.S. and its allies in Europe and Asia would move to cut off Russia’s access to high-end technology imports.
“Some of the most powerful impacts of our actions will come over time, as we squeeze Russia’s access to finance and technology for strategic sectors of its economy and degrade its industrial capacity for years to come,” Biden said. “We’ll strike a blow to their ability to continue to modernize their military, it’ll degrade their space industry, including their space program. It’ll hurt their ability to build ships, reducing their ability to compete economically. And it will be a major hit to Putin’s long-term strategic ambitions.”
However, some experts are skeptical about how much of an impact this latest wave of sanctions will actually have on Russia.
“The only tool the West has are sanctions. The sanctions will be severe, they will certainly hurt Russia, but Russia has become much better able to weather sanctions since 2014,” said Rajan Menon, director of the Grand Strategy program at Defense Priorities, a national security think tank.
Putin has taken a number of steps to beef up his country’s economic defenses after it was hit hard by Western sanctions over the annexation of Crimea in 2014. Since then, Russia has drastically reduced its use of the dollar, and diverted oil and gas revenue to build up more than $630 billion in hard currency reserves, making it the fourth-largest in the world.
Bruce Jentleson, a former State Department official and professor of public policy at Duke University, said Russia’s massive currency reserves are likely to help insulate the country – “at least for some period of time” — against new sanctions aimed at major banks, “particularly banks that provide the financing for the Russian defense sector.”
Jentleson, who is the author of an upcoming book “Sanctions: What Everyone Needs to Know,” also cast doubt, for similar reasons, on the potential impact of sanctions targeting Russian elites. “The issue here is they’ve had time to plan for this,” he said. “There’s been a lot of moving of assets out of reach of those sanctions, out of London, out of American-affiliated banks and the like.”
While Biden said Thursday that the possibility of sanctioning Putin personally remains “on the table,” Jentleson said any direct sanctions against the Russian president or his family “would be largely a symbolic action” and could even be used to undermine U.S. credibility if they are ineffective.
Biden emphasized Thursday that the U.S. was acting in conjunction with a coalition of international partners, including 27 members of the European Union, as well as the United Kingdom, Canada, Japan and Australia, among others. He said the sanctions announced this week were designed “to maximize the long-term impact on Russia and to minimize the impact on the United States and our Allies.”
Russia’s currency reserves and other economic defenses won’t last forever. But while Biden emphasized that many of the sanctions imposed this week are intended to hurt Russia’s economy in the long term, some experts questioned how long some of the other countries in the U.S.-led coalition would be able to withstand the fallout of these sanctions on their own economies.
“Europe has nine times as much trade with Russia as we do,” said Jentleson. “In the moment, because of what Russia has done, the alliance is holding together, but how long that holds is hard to see.”
On Thursday, Biden indicated that concerns about economic blowback for Europe had already influenced the Western coalition’s decision to hold off, at least for now, on implementing at least one key sanction: kicking Russia off of the global financial transaction system known as SWIFT. While Ukraine has advocated that Russia be blocked from SWIFT, some European leaders have reportedly been hesitant to take that step, because it could make international trade more difficult for them as well.
“Right now, that’s not the position that the rest of Europe wishes to take,” Biden said when asked why Russia’s removal from SWIFT, which stands for Society for Worldwide Interbank Financial Telecommunications, wasn’t among the latest tranche of sanctions. While Biden said that blocking Russia from SWIFT “is always an option,” he also argued that the newest sanctions being imposed against the country’s banks were just as potent, if not more so.
Menon raised similar concerns on a call with reporters ahead of Biden’s remarks Thursday. “And so there will be, as time goes by, perhaps cracks in the coalition on just how far and deep to make the sanctions,” he said.
But, Menon added, “while it is true that sanctions may not have an effect, it is politically impossible for the EU and the U.S. not to impose them, no matter what anyone thinks about their secondary consequences.”
Menon’s colleague, Benjamin Friedman, policy director of Defense Priorities, offered a different take. “Maybe sanctions aren’t the magic bullet here,” he said.
“We’re having a funny debate about sanctions, where there seems to be broad agreement that they’re not going to work, but we should deploy them in a heavy-handed way,” Friedman observed. He questioned the assumption that sanctions are “politically inevitable,” saying, “I think that, too, could be a mistake.”
“We should try very hard to not have a result here where we get into tit-for-tat sanctions, where Russians shut down some major exports to the United States [and] cause economic trouble,” he said. “That would be accomplishing nothing I can see, other than increasing enmity.”
Jentleson warned that sanctions “should not be oversold.”
While all of the tools Biden has outlined seem “very formidable,” Jentleson said, “you’ve got to think about offense and defense and what are counterstrategies the other side has? And Russia has a number of counterstrategies.”
Ultimately, Jentleson said, while financial sanctions “are an important tool,” the idea that they alone could force Putin to “cry uncle” and end the conflict with Ukraine is unrealistic.
“That’s never happened in a sanctions case anywhere in the history of the world,” he said.
