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How to Make Russia Pay Over Ukraine: Deploy Every Financial Weapon Possible

Russia Tank
Russian T-90 Tank Firing. Image Credit: Creative Commons.
How to Make Russia Pay – When asked, after his speech on Thursday, why the United States and its allies weren’t then kicking Russia completely out of SWIFT, the global banking communications system, over its invasion of Ukraine, President Biden said, “[It] is always an option. But right now, that’s not the position that the rest of Europe wishes to take.”
Removing Russia from SWIFT – the Society for Worldwide Interbank Financial Telecommunication – is considered a “financial nuclear weapon,” the most severe sanction that the West could take. Since SWIFT is the “cans and the strings by which banks communicate to settle trades and transfers,” in the words of Marshall Billingslea, a former assistant Treasury secretary for terrorist financing,” removing Russia would cut off its banks from more than 11,000 banks in more than 200 countries.
By late Saturday, the West had partly triggered the SWIFT option; the United States, European Union, Britain, France, Germany, Italy, and Canada announced that they would remove “selected” Russian banks from the global system.
Before that, the United States, European Union, and individual nations had imposed incremental sanctions that, together, should weaken Russia’s economy, markets, and currency. Washington targeted Russia’s banking, technology, and aerospace sectors and sought to block key military and industrial sectors from accessing critical technology. The European Union imposed travel bans and asset freezes on hundreds of top Russian officials, business leaders, and others and barred Russia from raising money in European capital markets by buying short- or long-term bonds. The United States, European Union, Great Britain, and Canada also plan to freeze the personal assets of Russian President Vladimir Putin, Foreign Minister Sergei Lavrov, and other top officials.
Nevertheless, in their continuing reluctance to impose all possible sanctions on Russia, the United States and its allies were sending a dangerous signal not only to Moscow, but to autocratic leaders in Beijing, Tehran, and elsewhere.
Why the hesitancy? Because in a globalized economy, and one in which Germany and other European nations are dependent on Russia for energy and other exports, sanctions that punish Russia will cause collateral damage to nations that impose them. Top Russian lawmakers, for instance, have threatened to retaliate by refusing to export oil, gas, metals, and other products to Europe.
By delaying and then only partly triggering the SWIFT option, the West demonstrated that it will sanction Russia only to the extent that sanctions don’t impose too much pain on itself. And that’s a message that the West should not want its adversaries to receive.
In a February 12 call, Biden warned Putin that the United States and its allies “will respond decisively and impose swift and severe costs” if Russia invades Ukraine. After speaking with Lavrov, Russia’s foreign minister, that day, Secretary of State Antony Blinken tweeted, “I reiterated that further Russian aggression would be met with a resolute, massive, and united Transatlantic response.”
By limiting its sanctions, the West gave Putin reason to believe he can weather the storm. That’s what happened with Crimea, the southern Ukrainian territory that Russia seized in 2014. President Obama warned that Washington and the “international community” would impose “costs for any military intervention in Ukraine.” Putin invaded, the West imposed limited sanctions, and Putin annexed the territory.
The bigger problem is that Putin isn’t the only autocratic leader who’s watching from afar and learning lessons.
What’s the likely view from Beijing? President Xi Jinping has said he believes the United States and the West are in decline, and China is increasingly flexing its muscles at home and abroad. It imposed its authoritarian system over the once-free, former British colony of Hong Kong, and it’s holding at least a million Muslim Uyghurs in torturous “re-education” camps in its northwest region.
China is also growing impatient with Taiwan and seeks unification with the U.S.-backed island through negotiation or, if necessary, force. Washington has long backed Taiwan’s desire to remain independent, and President Bidenreiterated the U.S. commitment to defend it if it’s attacked. Does the U.S. response to Russia’s invasion make Beijing more or less likely to take that commitment seriously?
What’s the likely view from Tehran? The United States and other global powers are continuing to negotiate over reviving the 2015 global nuclear agreement. Due to Iran’s nuclear progress of recent years, Iran is reportedly just three to six weeks away from making an atomic bomb, if it chooses to do so.
President Biden and other top U.S. officials have said that without an agreement that constrains Iran’s nuclear program, Washington would consider “other options,” presumably including military strikes to cripple the program. Does the U.S. response to Russia’s invasion make Tehran more or less likely to take that threat seriously?
Rather than impose sanctions incrementally, the United States and its allies should deploy every financial weapon at their disposal against Russia. The costs of doing so, in higher energy prices and other economic pain, could be greatly outweighed by the turmoil it may prevent down the road.
Lawrence J. Haas, a former senior White House official and award-winning journalist, is Senior Fellow for U.S. Foreign Policy at the American Foreign Policy Council. Haas writes widely on foreign affairs, is quoted often in newspapers and magazines, and appears frequently on TV and radio. At the White House, he was Communications Director for Vice President Al Gore and, before that, for the Office of Management and Budget. Haas is a frequent public commentator. He writes a column on foreign affairs that appears in a variety of outlets. Over the years, his writings have appeared in the New York Times, Wall Street Journal, USA Today, Los Angeles Times, Baltimore Sun, Philadelphia Inquirer, Miami Herald, Houston Chronicle, Sacramento Bee, and scores of other newspapers, and he has written articles on foreign affairs for The Journal of International Security Affairs, DEMOCRATIYA, inFOCUS, and other magazines. Haas is the author of six books, including The Kennedys in the World: How Jack, Bobby, and Ted Remade America’s Empire, which was released in March of 2021. His most recent previous book, of 2016, was Harry and Arthur: Truman, Vandenberg, and the Partnership That Created the Free World, which the Wall Street Journal named one of its top ten non-fiction books of the year.
Written By

Lawrence J. Haas, a former senior White House official and award-winning journalist, is Senior Fellow for U.S. Foreign Policy at the American Foreign Policy Council. Haas writes widely on foreign affairs, is quoted often in newspapers and magazines, and appears frequently on TV and radio. At the White House, he was Communications Director for Vice President Al Gore and, before that, for the Office of Management and Budget.



  1. Alex

    February 27, 2022 at 2:01 pm

    Russia has taken into account all the risks, not of a short-term, but of a medium-term and long-term nature. All the efforts of the West to destroy Russia will only lead to one thing – the collapse of the West. Russia asked. Russia warned. Not so long ago, Putin spoke about Russia’s determination to nuclear war. You laughed. Russia’s nuclear forces are now on special alert. Are you still funny, madmen? Do you want Britain under water, scorched Europe and the Canadian-Mexico strait? The West has only one step left to see if Russia is joking and who will laugh later. If there is anyone left in the Western world.

  2. Commentar

    February 27, 2022 at 2:15 pm

    Russia may have to endure big pain over the financial squeeze or choke imposed by the west, but Russia can always hit back very hard if it decides it has nothing to lose.

    Trying to impose pain is very much a two-way street – can your children and your children’s children endure a dark uncertain future if Russia decides to pull out all the stops.

    Russia can always sell nuclear secrets and nuclear material or fissile material for real gold (not that it itself has a shortage of gold) just simply to hit back at the west.

    There won’t be any shortage of buyers.

  3. from Russia with love

    February 27, 2022 at 5:30 pm

    Putin set the Russian central bank the task of abandoning settlements in dollars and switching to using its own settlement system. it looks like the EU is following Putin’s instructions. such sanctions will prevent the export of capital from Russia. The Anti-Corruption Committee of Russia also expresses gratitude to European officials 🙂

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