On March 18, 2022, the Congressional Study Group on Foreign Relations and National Security convened to discuss the broad array of sanctions that the United States and its allies have imposed on Russia (and Belarus) in response to their invasion of Ukraine. Together, the multilateral sanctions being imposed represent the most severe and comprehensive sanctions ever imposed on a major economic power. Yet, imposing such unprecedented sanctions also brings with it real—and, in some cases, not entirely known—risks for both the United States and the broader global economy.
To discuss these issues, the study group was joined by two leading experts: Julia Friedlander of the Atlantic Council, who is also a former National Security Council and Treasury Department official; and Rachel Ziemba of the Center for a New American Security, who is a former official with the Canadian International Development Agency. They recommended the following background readings:
- Norman Eisen et al., “The Russia Sanctions Tracker,” The Brookings Institution (a consolidated list of sanctioned entities across countries);
- Julia Friedlander, “The West Has Declared Financial War on Russia. Is It Prepared for the Consequences?”, Politico (Mar. 8, 2022);
- Julia Friedlander et al., “Global Sanctions Dashboard: Special Russia Edition,” Atlantic Council (Mar. 7, 2022);
- Scott R. Anderson et al., “What Sanctions Has the World Put on Russia?”, Lawfare (Mar. 4, 2022).
In lieu of the study group’s usual format, coordinator Scott R. Anderson engaged in an extended question and answer session with Friedlander and Ziemba. They began by noting the strategic logic behind the imposition of sanctions, which seemed to try and match the tempo of events on the battlefield by rapidly imposing dramatic measures on Russia in hopes that they would deter Russia’s military campaign. As that does not appear to have succeeded, these measures will now impose dramatic economic costs on Russia (and Belarus) in a manner that is designed to seriously impede their economic growth and military capabilities, while avoiding possible negative repercussions for European economies and the broader global economy.
The panelists then walked through the major categories of economic sanctions being imposed. The most significant sanctions are those imposed on Russia’s central bank, as such institutions generally receive the highest level of legal protection; freezing hundreds of billions of Russian central bank assets was in many ways an unprecedented move and one of the more severe measures the United States and its allies could have imposed. Other blocking sanctions targeting Russian officials, separatist regions of Ukraine, and a broad swathe of Russian state-owned companies and industrial entities are primarily expansions of existing conventional blocking sanctions, including those imposed after Russia’s 2014 seizure of Crimea. That said, these blocking sanctions have also been applied in novel ways, including by targeting debt instruments and other specific types of transactions that are intended to hobble Russia’s ability to develop and maintain its infrastructure and other foundational aspects of its economy. The United States and its allies have also applied export controls in novel ways intended to cut Russia and particularly the Russian military off from a wide array of strategic technology, limiting its ability to maintain military parity in years to come. By contrast, sanctions targeting Russian banks’ access to the SWIFT system, while heavily covered by the media, were largely symbolic and are less likely to have a substantial impact given the scope of other sanctions being imposed.
Equally important, however, are exceptions to these sanctions regimes. Sanctions targeting financial institutions and instruments, for example, were often paired with licenses allowing for some ongoing transactions for a limited time period in order to avoid unduly harming European consumers or other third parties with related business relationships. Similarly, a major license was issued permitting transactions relating to Russia’s oil and energy exports in order to avoid cutting off European access and thereby majorly harming allied European economies. These exceptions may shrink over time, but Russia’s integration with the global economy means that sanctions against it are likely to have major ramifications for third parties for some time to come.
Also important are the unintended ripple effects that sanctions can have, as private economic actors and companies respond to the imposition of sanctions by restricting otherwise permissible economic activities—a phenomenon already on display with the widespread withdrawal of Western companies from Russia. These ripple effects can be significant and may have unpredictable ramifications for the broader global economy.
Due to the unprecedented nature of the economic sanctions being imposed on Russia, the full consequences not just for Russia but for the broader global economy are hard to know. While the United States and its allies want to impose real consequences on Russia, the complete collapse of Russia’s economy could do substantial harm to other parts of the global economy. The challenge will be to balance the unpredictable consequences of new sanctions measures to maximize pressure on Russia while limiting the consequences for European allies and other members of the international coalition whose continued cooperation is necessary to make the sanctions maximally effective.
Following these introductory remarks, the study group transitioned to open discussion. Topics discussed include: the role that China and other states not participating in the sanctions on Russia are likely to play moving forward; how sanctions against Russia may be strengthened; and what negative consequences the United States may suffer if it pursues more sanctions too aggressively.
Visit the Congressional Study Group on Foreign Relations and National Security landing page to access notes and information on other sessions.