Based on the title of this post, you might assume that I am about to propose cutting Russia out of the SWIFT system for facilitating money transfers through the banking system. Not so. Based on what I’ve read, it seems unlikely that Western powers have the stomach for sanctions severe enough to have big impact on Russia, as our voters would be upset.
So here’s another idea. How about punishing Russia by removing sanctions? Specifically, why not allow Iran back into the SWIFT network, and allow Iran to dramatically boost its oil exports. The goal would be to punish Russia by depressing global oil prices. It is bizarre that we ban Iran from the SWIFT network while allowing Russia to continue using the network. Iran’s government is certainly bad, but Russia’s is far worse.
Here’s a second proposal—restart the German nuclear power industry. Then sharply reduce German imports of Russian gas.
Neither of my proposals will be adopted. The sad truth is that the US and Europe simply don’t care very much about Ukraine. We should care, but we don’t. We’d like to help Ukraine. We wish them well. But . . .
PS. National Review has another good idea.
READER COMMENTS
Phil H
Feb 24 2022 at 7:47pm
“Based on what I’ve read, it seems unlikely that Western powers have the stomach for sanctions severe enough to have big impact on Russia, as our voters would be upset.”
I’m not sure if it’s is right, but if it is, then it’s something to celebrate, right? One of the themes of this blog has been how trade restrictions actually harm home nation consumers. If US consumers have understood that fact (at least in relation to Russia) then the electorate is getting economically smarter, surely?
Scott Sumner
Feb 24 2022 at 10:24pm
I suppose it depends on whether one puts more weight on a bit higher living standards for Americans or deterring war in Europe. I’m generally skeptical of sanctions, but there may be an argument for them in a few cases.
In any case, it’s a moot point. Which is why I suggested a more efficient alternative that helps both Americans and Ukrainians.
Mark Z
Feb 24 2022 at 9:02pm
Germany going nuclear would indeed be terrible for Russia (and great for Germany) but if you know Germans you know it’ll never happen. Opposition to nuclear power is almost a religious tenet for many Germans and is more than environmental but also related to their political history. I think they distrust themselves (and others probably) to be that close to having the capacity to produce nuclear weapons.
Matthias
Feb 25 2022 at 9:37am
Huh? Germany used to run quite a few nuclear power plants. They handled them well. But you are right that there’s substantial opposition to them in the country.
That’s different from their opposition to nuclear weapons though.
Mark Z
Feb 25 2022 at 12:42pm
I had always the impression fears that the capacity to use nuclear power was too close to the ability to make nuclear weapons had played a role in German opposition to nuclear, but maybe I was wrong.
Michael Thomas
Feb 24 2022 at 10:58pm
I do like NR’s idea. And this idea.
Maybe I’m naive and optimistic. But I think there could be a natural sanctions regime from people, private citizens, not wanting to have the stink of dealing with Russia on them. I suspect it will last for a long time.
And there certainly a lot of creative things we could do to destroy Russia’s economy. And we *should* do those things.
I’m cautiously optimistic that Putin may find he’s overplayed his hand.
tpeach
Feb 25 2022 at 3:15am
I read that if Russia was kicked out of SWIFT, then they could join China’s alternative, CIPS, or use crypto for cross border payments, so it wouldn’t do that much harm to them.
But by bolstering CIPS and crypto alternatives, it would also harm the dollar’s position as the world’s reserve currency, which might be bad for the US strategically.
Joseph
Feb 25 2022 at 4:47am
Right. So to maybe hurt one murderous dictator a bit let’s give another murderous dictator who openly stated their hatred for another country more money. Hmm, what can possibly go wrong here.
Obviously, almost anything that the rest of the world can do to lower the dependency on Russian – and Iranian) oil and gas is good. The first thing : anybody opening their mouth to talk about climate change should be sent straight to hell. People like Larry Fink should be called out. BS about net zero by 2050 should be called out. Pressure to stop financing fossil fuel industry should be called exactly what it is – stupidity at best, working for the enemy in reality.
And some should just admit on record they were very wrong about Trump’s attempts to
1. Get Germany to think twice about their reliance on Russian gas and
2. Get NATO countries to actually finance their part of the deal.
BC
Feb 25 2022 at 5:08am
I like the NR idea. It’s straight out of the Cold War playbook, and probably even more effective now for two reasons. First, it is probably easier now for top Russian minds to defect. Right of Exit was one of the fundamental rights that the Soviets denied their citizens. Second, the incremental risk of spies seems smaller now. We already have much more movement between between the US and Russia now than during the Cold War, so Russia probably already has many ways to insert spies into the US.
Speaking of the Cold War playbook, don’t we already know many non-violent ways to oppose and/or isolate Russia? Was the Soviet Union part of the SWIFT system (or equivalents) during the Cold War? At least some Cold War measures must have “worked” because we won, right? Even though we won the Cold War through non-violent means — that’s the “Cold” part — people seem reluctant today to repeat what worked.
Matthias
Feb 25 2022 at 9:39am
Well, the most powerful cold war tactic was having your enemy run socialism. That made them implode by themselves after a few decades..
MarkW
Feb 25 2022 at 7:32am
Any measures taken must be considered with the long-term in mind (at least as long as Putin remains in power, which could be 10-20 more years). I don’t see any prospect that sanctions will induce Putin to give up Ukraine. We have to be thinking — about how to treat Russia as a pariah nation going forward, not about short-term measures that cannot be sustained. Still, severe long-term consequences in cutting off Russia from normal economic relations are important–China will be watching and deciding whether or not it’s worth it to invade Taiwan.
I expect the outcome of all of this will be that Sweden and Finland will join NATO, and we’ll end up with a new Iron Curtain and cold war. The lines will be further east, at least with fewer people on the wrong side and life on the wrong side not as grim as before ’89. But NATO will be reinvigorated, not weakened.
The National Review idea is OK, but I’m not sure it’s really needed. Russians (and Ukrainians) don’t need to come all the way to the U.S. to emigrate and do tech work (even if it’s for U.S. tech companies). And H1B visas already exist. BTW, what are going to happen to all these companies? Will they still be able to do business with western partners? Or will that all go away?
A critical problem is European dependence on Russian natural gas. Europeans should recognize that this a much more serious, immediate problem than climate change, stop decommissioning nuclear power plants, and lift fracking bans. The U.S. should also do what it can to increase natural gas production and expand LNG exports. But, unfortunately, I don’t expect much of this change in climate/energy policy to happen, and I think Putin is probably right in betting that it won’t.
Matthias
Feb 25 2022 at 9:40am
H1B visas are severely restricted in number.
Roger Sparks
Feb 25 2022 at 9:04am
The Ukraine question is about ownership. Do the people of Ukraine own the land within Ukrainian borders or does Russia?
Once Russian troops control Ukraine, will Russia allow Ukrainians to vote in Russian elections?
Matthias
Feb 25 2022 at 9:42am
Well, the outcome of Russian elections are rather predictable years in advance as long as Putin and his kind are around.
Peter
Feb 25 2022 at 11:18am
Because he’s like by the electorate as opposed to what you are implying. All studies, even ones ran by the West and intelligence agencies, show Putin is legitimately elected each time even if you throw out all the irregularities, i.e. he’s cheating for the ego having a higher margin that he would otherwise have, not to win.
Don’t confuse the Russian woke upper middle class pro-West kids who hate Putin and are the darling of the Western media with the median Russian voter. It’s the same reason that BLM in the US resulted in zero meaningful positive police reforms.
MarkW
Feb 25 2022 at 11:34am
His rock-solid popularity and lack of any concern with losing elections, no doubt, is why he shuts down opposition media, throws opponents and journalists in jail or has them killed — sometimes even murders them on foreign soil.
Peter
Feb 25 2022 at 11:44am
That’s just the ego of winning via larger margins as opposed to IDK, the US top two parties post-Perot actually conspiring to crush all opposition, Lincoln’s fraudulent southern elections and votes, or Wilson’s arrest of Debs.
Scott Sumner
Feb 25 2022 at 12:23pm
Peter, Public opinion is a completely meaningless concept in a country like Russia.
Peter
Feb 25 2022 at 1:09pm
Well except it does. Public opinion toppled Tzars, ended the Soviet Union, and prevented the 90’s coup from succeeding.
Mactoul
Feb 25 2022 at 10:10pm
National territories are not analogous to private properties and ownership doesn’t apply.
National territories are secured with and justified by national might.
Thomas Lee Hutcheson
Feb 25 2022 at 10:20am
A tax on net CO2 emissions would harm both Russian and Iran, plus increase US GDP per capita in the long run.
BC
Feb 25 2022 at 11:18am
Re: Iranian oil. Before lifting sanctions on Iran, why not first lift restrictions and stop creating a hostile climate for US (and European) fracking? Up until very recently, I thought the conventional wisdom was that, in pure economic and technical terms, the US had become the world’s swing producer of oil. When oil prices rose, then US fracking wells could be brought online fairly quickly (about 6 months), putting a cap on oil prices. Indeed, oil prices seemed to become very stable at about $40-60 per barrel, right around US breakeven prices. Even Saudi attempts to drive US producers out of business by driving prices below that proved unsustainable. Unlike conventional wells, fracking wells don’t require 20+ yr long term investments. Also, there was so much “oversupply” of natural gas that producers were just burning it off. (I don’t know how easily such oversupply can be exported to Europe.)
Am I correct that US energy independence is basically a political choice rather than economically or technology limited? How about European independence? Could they choose to achieve independence through fracking and nuclear or do they face actual non-political limits?
BC
Feb 25 2022 at 11:23am
If one believes that, in the long term, we must move away from fossil fuels to deal with climate change, then that creates all the more imperative to pump US oil now before it becomes obsolete. Why leave US oil in the ground instead of Russian and Iranian oil? Better to go full speed with US fracking since there’s not much reason to “save” the oil for the future when we will be using alternatives anyways. The more pressing we think climate change is, the more we should be racing to use our oil assets sooner rather than later.
Scott Sumner
Feb 25 2022 at 12:24pm
Removing Iranian sanctions will have a far greater immediate effect.
Michael Sandifer
Feb 25 2022 at 4:13pm
It’s so nice to see a rational take on this situation. We don’t take the situation nearly seriously enough, and I’m very sad to see such a big rebound in the Russian stock market today, along with rebounds in many others around the world. It’s sad, because it has become clear that sanctions won’t even be as harsh as originally expected. The hit to Russian petroleum exports is much, much smaller than expected so far, for example.
This makes it even more critical to try to reach a deal with Iran to allow them to freely sell their oil again. While Iran certainly is a focus of concern in the middle east, they are not the danger to the world order that Russia is, and I’m not convinced a nuclear-armed Iran is a net negative anyway, if it leads to a MAD equilibrium in the region,
We should also make this invasion as costly to the Russian military as possible, even if it means using American air power, and possibly even ground forces in Ukraine. We cannot fear war with Russia if we want to stare them down. I think MAD will keep any war within rational limits, but the risk of nuclear engagement can obviously increase in the process. Accidents happen, and not all sides are always necessarily rational. Whatever we do, it must be with great care and deliberation, but we can’t be afraid.
We should have had the Airforce, Marines, airborne, and special forces in Ukraine to prevent the invasion in the first place, regardless of what Germany wanted. This would have required, at the very least, cooperation from Poland, which I think we would have had. Afterall, Ukraine was a buffer state for Poland.
Mark Z
Feb 26 2022 at 2:55am
I don’t think saving Ukraine is remotely worth starting WW3 over, and the risk of nuclear war is enough to take military intervention off the table. These are things we should be afraid of. Putting forces in the Baltic countries so the same thing doesn’t happen there is an idea, but it’s doubtful Russia would invade a country already in NATO anyway.
Michael Sandifer
Feb 26 2022 at 7:59am
Mark Z,
I would agree with you, within a vacuum of history. But, we publicly dangled the prospect of Ukrainian NATO membership circa 2008, and have since implicitly admitted we don’t have vital interests there. The problem now is, having drawn such a red line, now there is much more at stake than just Ukraine or Georgia. We now must demonstrate a willingness to fight a war to negotiate anything like neutrality for even a country like Finland.
This is a risk to NATO and the EU, and by extension, American credibility and hence, the international world order.
Mark Z
Feb 28 2022 at 12:43am
NATO is the red line. We didn’t have a commitment to defend Ukraine, so NATO’s credibility doesn’t depend on going to war for it. A war with Russia would likely cost hundreds of thousands or millions of lives. That’s a lot at stake and it’s far less speculative than what Putin does down the road.
Michael Sandifer
Feb 27 2022 at 11:15am
Hopefully, the new SWIFT sanctions will preclude the need for further war. There are reports of talks between Ukraine and Russia. I was very concerned SWIFT sanctions wouldn’t happen.
Mark Brophy
Feb 26 2022 at 7:41pm
The first Russian we should persuade to emigrate to the United States is Edward Snowden.
steve
Feb 26 2022 at 9:48pm
So I am not the econ0mist but if you bring down the price of oil by pumping a lot of oil, why would oil companies keep doing that? What is their motivation? It comes down a bit but we arent going to beggar Russia since companies arent going to produce so much to hurt themselves. My understanding is that it would take a couple of years to get nuclear running again.
Steve
Monte
Feb 27 2022 at 3:20am
Those who would petition for war with Russia lose all credibility with me short of volunteering themselves or their own sons and daughters for cause. Our involvement should not extend beyond effective sanctions unless and until NATO members are seriously threatened.
As John Quincy Adams wrote of the United States in 1821, “Wherever the standard of freedom and Independence has been or shall be unfurled, there will her heart, her benedictions and her prayers be. But she goes not abroad in search of monsters to destroy. She is the well‐wisher to the freedom and independence of all. She is the champion and vindicator only of her own (HT: CATO Institute).
John Brennan
Mar 3 2022 at 11:17am
Mostly ignored by American Political Development scholars (but not fully ignored) with regard to the political genesis of the American South is the fact that African Americans affiliated with their direct oppressors–the Democrats–because the oppressive power–the Democrats–made them thousands of offers (jobs, power, influence, and finally voting–bit by bit from the 1940’s until today)–that they simply could not refuse. Specifically, African-Americans, beginning with the Republican “Lily-White” movements across southern states starting in the early 1890s, moved away from Republican support toward Democrat acquiescence for practical reasons. But African-Americans have never forgiven Republicans for not fighting–figuratively and literally–the oppressors. The Ukrainians will look at NATO and mostly the U.S. in the same way. If they are ever afforded the opportunity to neutralize in any fashion, China and the One-Belt, One Road initiative could greatly benefit. It is hard to see the Ukrainians every consorting with the Russians going forward, but, of course, one cannot predict the future.
Johnson85
Mar 3 2022 at 3:17pm
I’m a little surprised to see the claim that Russia’s government is worse than Iran’s. Iran seems worse on its on people and worse as far as a hatred of the US and willingness to act on it.
I can understand an argument that Russia is more dangerous just because of capabilities. Even with the invasion of Ukraine though, I’m not sure I’d be ready to concede Russia as worse. Certainly not an expert so maybe I just don’t understand all the ways Russia is terrible or overestimate the ways Iran is terrible.
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