The Western sanctions response to Russia’s invasion of Ukraine is already wobbling.
In an uncertain press conference performance, President Joe Biden refused to announce sanctions on Vladimir Putin’s person and failed to answer repeated questions as to why he was not doing so.
Concerned about U.S. energy prices, Biden also pledged that new sanctions would not target the Russian energy industry. Yet, considering that the Russian energy industry is the overwhelming centerpiece of its economy, Biden’s decision to shield that industry from sanctions represents a huge win for Putin. The undeniable link between Biden’s heavy regulation of domestic energy production and foreign policy weakness is on full display. Biden’s publicly emphasized desire to shield Russian energy interests will also encourage Putin to unleash his semi-deniable cyberoffensive actors against the U.S. energy industry.
That wasn’t the only problem with Biden’s statement.
Biden also noted that removing Russia from the SWIFT financial network is not currently on the table. Reports suggest that Germany, Italy, Hungary, and Cyprus are opposing efforts by the U.S., Britain, and other European Union nations to expel Russia from SWIFT, which enables speedy and secure transactions across international borders. Russia’s loss of access to the system would drive up its transaction costs and deter economic engagement with its financial interests. Biden insisted that his sanctions targeting Russian bank assets would be stronger than possible SWIFT restrictions, but this is not true. The U.S. sanctioning of Russian banks is important and will be bolstered by the United Kingdom’s announced support for similar action. However, if those banks can retain easy access to international clearinghouses, they will be able to shield themselves from devastating losses.
Why are some European nations opposing Russia’s expulsion? The opposition of Hungary and Cyprus is unsurprising. Cyprus is basically one big money-laundering site. Hungary has little regard for democratic solidarity and often sides with Putin. The opposition from Germany and Italy is, however, more pathetic. After all, Germany and Italy are the respective largest and third-largest economies in Europe. Their influence within the EU is significant. Unfortunately, it is clear that Berlin and Rome continue to care more about their narrow economic interests than the supposedly sacrosanct value of European democratic sovereignty. Putin will revel in this hypocrisy, seeing it as a vindication of his belief that Russia is resolute and the West is in retreat.
It gets worse. Beyond Europe, other nations are also taking a tentative stance. Israeli Prime Minister Naftali Bennett undermined his nation’s reputation as a beacon of Middle East democracy when he failed to condemn Russia directly on Thursday. And the silence of Brazil’s Jair Bolsonaro, the leader of the Americas’ second-most populous democracy, screams out.
The risk is thus clear: Putin will be encouraged to believe his aggression comes without cost. He will have added reason to expand that aggression in the future. There is one positive note — the sentiment of the U.S. Senate is in favor of far heavier sanctions than those announced Thursday.
