Podcast: Sanctioning Oligarchs

 

This week on my TOL Podcast, I mused about the logic of the economic measures against Russia, particularly the oligarchs. Below the embedded podcast I have a few more tings pinned on the wall.

New Things Pinned to the Wall

ISW reports that 

"The Kremlin is also taking measures to prop up Russian businesses and targeted sectors. Russian President Vladimir Putin signed a decree to accelerate Russia’s domestic IT development on March 2, likely to minimize future Russian reliance on Western technology and imports following the withdrawals of Western tech companies from the Russian market. Mishustin also announced additional government provisions including preferential interest rates and tax and inspection exemptions for Russia’s IT sector. State Duma Chairman Vyacheslav Volodin created the Council for Social Protection and Support of Citizens under Sanctions on March 2."

U.S. launches 'KleptoCapture' task force : Reuters quotes: "To those bolstering the Russian regime through corruption and sanctions evasion: we will deprive you of safe haven and hold you accountable," said Deputy Attorney General Lisa Monaco. "Oligarchs be warned: we will use every tool to freeze and seize your criminal proceeds."

BBC Reports on Liz Truss (Mar 3, 6:13 EST):

Uk Foreign Secretary Truss: "We need to... degrade the Russian economy." "We need to make sure... that the Russian economy is crippled so it is unable to continue to fund Putin and the war machine."

CNN Reports (Mar 4): Putin: “We will just have to move some projects a little to the right, to acquire additional competencies. But we will still solve the problems that we face” he said. “In the end, we will even benefit from this because we will acquire additional competencies.”

CNN Reports (Mar 4): European Union's foreign policy chief Josep Borrell: “We are not on the regime change. The sanctions are not in order to provoke a regime change in Russia,” Borrell said. "On the contrary, the sanctions have been triggered by the war. And the purpose is to weaken the Russian economy, to make the Russian economy feel the weight of the consequences and to increase, strengthen the position of the Ukrainians on the coming negotiations. But nothing about regime change," he said.

The Economic War: Pinning Factoids to the Wall 1

 

Developments in the economic measures being taken against Russia are coming too fast to try to keep up with here. However, I do want to pin some things to the wall (hence the picture above) as they come up. I numbered this post as I expect to do more of this as events occurs and my broader research gets started.

What catches my mind's eye in these news pieces is the characterization of the purpose of the economic measures the west is taking against Russia. 

French minister declares economic 'war' on Russia, and then beats a retreat: The key quote from the French Finance Minister Bruno Le Maire here is "We're waging an all-out economic and financial war on Russia. We will cause the collapse of the Russian economy." So someone  else is also using the word "war" here. While I have said I don't want to get too hung up on using the word, I do have to point out that it is both evocative and ambiguous. It is evocative of a major effort against another nation but there are many different end-goals in wars and various strategies used to achieve them,  hence the ambiguity.

Medvedev Tweet: Dmitry Medvedev tweeted : "Today, some French minister has said that they declared an economic war on Russia. Watch your tongue, gentlemen! And don’t forget that in human history, economic wars quite often turned into real ones"  Looks like an attempt to use threats of forces in response to economic pressure. Also, begs the question of how often economic conflicts have turned into wars. I suppose US embargoes against Japan before WWII would be an example. Not sure how many more there are. 

Canada sanctions Putin, Lavrov in bid to 'suffocate' regime: Trudeau actually talked in terms of making it difficult for Putin to "finance his brutalities." The Canadian Foreign Minister, Mélanie Jol, added the more bellicose “We want to make sure that we’re suffocating the Russian regime — that’s our goal.” 

CNN Business, Feb 28: Their reports contains a couple  statements about the sanctioners strategies

• A Senior US Official:  "Our strategy, to put it simply, is to make sure that the Russian economy goes backward as long as President Putin decides to go forward with his invasion of Ukraine," Note that this is a counter-value strategy meant to inflict pain.
• European Commission President Ursula von der Leyen: "We will ... ban the transactions of Russia's central bank and freeze all its assets, to prevent it from financing Putin's war." Note that this is more of a denial strategy meant to limit capability.

Two of Russia's billionaires call for peace in Ukraine: In other news, Reuters reported that Mikhail Fridman and Oleg Deripaska, two Russian billionaires, have called for an end to the war. It will be interesting to see how this works out for them in terms of retaliation from the regime.

The New Economic War (Already in Progress)

     Though the future path of the war in Ukraine is still uncertain, it is a safe bet that the Russian invasion of Ukraine is going to provoke a long-term economic conflict between the NATO members and Russia. Indeed, such a conflict has been under way since 2014, and the threats of sanctioning preceding the invasion can be properly considered an evolution of the conflict. Now that the shooting war has started, the economic efforts are now shifting from punishing Russia for past actions and deterring future ones to compelling Russia to change policy, weakening Russia's military capability, and undermining Putin's regime.

Though I don't want to get hung up on the term, it is the beginning of an economic war and, given the nature of the global economy, the impact of it are not going to be limited to Ukraine, Russia and NATO. Instead, no nation that is engaged in the global economy will be insulated from the impacts of the conflict. More importantly,  this will be a global economic war in the sense that even if a country has not picked a side and is not actively engaged in the conflict, its economic actions and inactions will have an impact. 

As an old Cold Warrior who did his dissertation on the effectiveness of sanctions, and taught IPE since then, this all seems to be in my wheel house, so I guess a lot of my "Thinking Out Load" is going to be devoted to this in the future.

As a starting point, I want to pin a couple articles to the wall (we'll get the string and Post-It notes out later).

"Sanctions will put Russia's 'fortress' economy to the test" by Chris Riley at CNN Business; Riley uses the fortress term to describe Putin's efforts to insulate Russia's economy from external sanctions. Most of the discussion is focused on financial mechanisms. However, one sentence got my attention. Riley wrote that "Putin's economic planners have sought to boost domestic production of certain goods by blocking equivalent products from abroad." This is interesting because providing protection to an industry is a private benefit to the owners of firms (probably an oligarch or two) in that industry and could be part of a pattern of providing such benefits to supporters. According to Selectorate Theory (see references at bottom) that in itself could strengthen Putin's hold on power regardless of any economic impact of the policy. These are the kind of details in which the Devil resides.

"China lifts restrictions on Russian wheat imports" by Laura He, CNN Business: In related news, Laura He reports that China  has lifted restrictions on wheat imports from Russia. While one would expect China to take an active role in the economic conflict, here they are playing the simpler role of ROW (i.e., rest of the world). Sanctions on exports have no effect, other than diverting trade patterns, if the target can find enough alternate customers in the rest of the world to buy what the sanctioning nations are boycotting. I talk about this and other things in the video below.

Here are some video comments about what I see as the nature and  dimensions of the conflict: 

Selectorate Theory References:

Bueno de Mesquita, Bruce, Alastair Smith, Randolph Siverson, and James D. Morrow. (2003) The Logic of Political Survival. Cambridge, MA: The MIT Press.

Bueno de Mesquita, Bruce, Alastair Smith. (2011) The Dictator’s Handbook: Why bad Behavior Is Almost Always Good Politics. New York, NY: Public Affairs.

The View of Science in "Don't Look Up"

 For my first "official" podcast of the new term, I commented on the way science and expertise were portrayed in Netflix's movie "Don't Look Up".  My thoughts were motivated by a review of the film on   CNN by Holly Thomas as well as Daniel Drezners' book, The Ideas Industry.

BTW- You can see Daniel Drezner talk about his book on YouTube

Informal Comments on The Proliferation of Aircraft Carriers

I posted a podcast while on break that stepped out of my normal academic boundaries to comment on the apparent proliferation of aircraft carriers. The though came to my mind when I saw this article on CNN about South Korea's design competition for a new carrier. This had me looking at other articles including

• Italian Aircraft Carrier ITS Cavour Departs Norfolk, Completing F-35B Certification
• U.K. Aircraft Carrier, Italian Navy Carrier Cross-Deck F-35Bs in Mediterranean
• Japan’s Helicopter Carrier JS Izumo To Start F-35B Tests

Since I was technically on break between terms I decided to indulge myself with a little amateur military analysis.

December Podcast List

 December 5

The Cultural Impacts of Globalization: Rudolf as Menace

December 12

Russia's Threat to Ukraine

November Podcast List

 

November 23

Oil Export Ban?

November 28

Xi Jinping's Tightening Control Over China