The United States and its European allies have hit Russia with the strongest sanctions ever put in place against a major economic power and I have explained what’s going on for Vox.
The piece is far longer and more detailed that I will be here – and you should read the entire thing because it’s not actually that long and you’ll be smarter for it – but I wanted to pull out two important points that aren’t necessarily related to the details of the specific sanctions.
The first is the speed and relative unanimity with which these very tough sanctions were approved. Obviously, there was a bit of diplomatic jostling around things like Italian luxury goods but it was relatively minor, perhaps because the biggest carveout was always going to be the one that Europe needs to keep the lights on. So pipelines have kept oil and gas flowing from Russian to Europe and money has flowed back from Europe to Russia, even as the rest of the Russian financial system is cut off from the global banking system.
The second theme I want to draw your attention to is how very American sanctions are. Other countries, of course, also employ them as a law enforcement and foreign policy tool, but U.S. sanctions simply hit harder, because so much of the world economy runs on the U.S. dollar-based financial system, and they have only grown more powerful in recent years: .
In Washington, DC, sanctions are sometimes wryly referred to as the “first resort of US foreign policy,” sanctions researcher Edoardo Saravalle said in an interview. “The rules of the US financial system are, to only slightly exaggerate, the rules of the global financial system,” he said. “And Washington [can] kind of weaponize this.”
That uniquely American power to regulate global commerce through the US dollar system has grown stronger as the world’s economy has become more intertwined.
Globalization has meant that more and more economic activity flows through an extremely small number of chokepoints, controlled by the United States and its close European allies. Over many years, the US has also built out a significant regulatory apparatus, controlled by the executive branch, to police those chokepoints very effectively. So any sanctions policy the US puts in place can be carried out quickly and with great effect.
Right now, Russia is now feeling the full power of those chokepoints being turned off by the US and its allies, but sanctions’ power is so uniquely American that the US can even go against its putative allies’ wishes, as the Trump administration did with Iran after it pulled out of the nuclear deal, without leaving the rest of the world much recourse.
The lines about the U.S.’s ability to effectively implement sanctions is very important. Perhaps you have witnessed the U.S.’s meek rule of law response to the financial crisis, its weak public health response to the Covid-19 pandemic, or its weak rule of law and public health response to the opioid crisis, among so many other similar failures of inaction, and concluded that the U.S. simply has a low level of what Tooze-pilled bro’s like to call “state capacity,” well fear not: the U.S. state capacity to implement sanctions is very high. It’s a well-conditioned muscle in what otherwise can be a sarcopenic government body.
Oh, and if you want a pithy explanation of why Russia can’t use crypto to get around sanctions, that’s in the full Vox piece too.