As Congress contemplates, White House issues sanctions threat to Russia

Foreign Relations chairman sees 'no lack of resolve' among senators to pass sanctions bill

Senate Foreign Relations Chairman Bob Menendez, D-N.J., is pushing a bill to slap new sanctions on Russia if it invades Ukraine. (Caroline Brehman/CQ Roll Call)
Senate Foreign Relations Chairman Bob Menendez, D-N.J., is pushing a bill to slap new sanctions on Russia if it invades Ukraine. (Caroline Brehman/CQ Roll Call)
Posted January 26, 2022 at 6:30am

Lawmakers are expected to resume negotiations when they return to Washington next week around a sanctions bill they hope will help convince Russian President Vladimir Putin not to order another invasion of Ukraine. But the White House may act first.

And while the focus on Capitol Hill has been on a Democratic-backed sanctions measure from Senate Foreign Relations Chairman Bob Menendez, D-N.J., the White House is making clear it does not need to wait for lawmakers to act in order to inflict “massive” economic costs on Moscow. Administration officials are poised to use extensive sanctions and trade authorities previously provided to the executive branch by Congress.

“We are prepared to implement sanctions with massive consequences” and that go much further than economic penalties imposed by the United States in 2014 as punishment for Russia’s military annexation of Ukraine’s Crimean Peninsula, a senior administration official told reporters during a Tuesday call. “The gradualism of the past is out and this time we will [start] at the top of the escalation ladder and we’ll stay there.”

As a matter of diplomatic strategy, the White House says it will not publicly detail what sanctions are being contemplated — both unilaterally and in tandem with the European Union. But the Biden official, granted anonymity to be candid, said the Kremlin “very clearly” knows what economic punishments are at stake over its actions toward Ukraine, where it has amassed over 100,000 troops along the former Soviet republic’s borders.

The Biden administration’s reticence to lay out in public detail its sanctions plan is unfortunate, argues Adam M. Smith, a sanctions lawyer with the firm Gibson, Dunn & Crutcher.

“I think the only thing that is important is that we make it very, very clear almost down to the target what it is we are planning to do,” said Smith, who was a senior sanctions official during the Obama administration at the Treasury Department and on the National Security Council staff. “The idea behind these sanctions is to change Putin’s behavior. And so the question is where is the leverage over Putin and the reality is there is limited leverage.”

President Joe Biden on Tuesday confirmed to reporters Putin would personally be sanctioned by the United States if he orders an attack on Ukraine.

"I don't think even his people know for certain what he's going to do," the president said, adding: "There will be enormous consequences if he were to go on in and invade, as he could, the entire country, or a lot less ... for Russia — not only in terms of economic consequences and political consequences, but there will be enormous consequences worldwide."

While lawmakers and U.S. and European officials debate the merits and consequences of options such as sanctioning the Russian-German Nord Stream 2 natural gas pipeline or cutting off Russia’s access to the SWIFT international financial payments system, Washington is opting against attempting to increase pressure on Putin from within his own camp.

Right now, all of the most important information about threatened sanctions is concentrated in the hands of Putin and a small circle of his closest advisers and senior ministry officials. But if Russia’s broader circle of wealthy elites were to be warned how much of their own financial and economic interests would suffer if Putin invades, it is possible the Russian autocrat might feel enough pressure from his oligarch allies — his most important source of domestic support — to look for an off-ramp, Smith said.

With the exception of the U.S.-led multilateral campaign to sanction Iran over its nuclear program during the second Obama administration, sanctions have a pretty unsuccessful track record as a tool of economic coercion and deterrence, said Cynthia Roberts, a political science professor at Hunter College at the City University of New York.

Since it came under EU and U.S. sanctions in 2014, Russia has taken multiple steps to insulate its economy against further Western sanctions. Those actions include vastly building up its international financial reserves to the tune of $620 billion, buying back some of its sovereign debt and developing a simplified domestic alternative to the SWIFT financial payments system.

“The Russians have engaged in sanctions-proofing, though they can’t completely sanction-proof their economy,” Roberts said.

So while the sanctions being contemplated by Congress and the White House are much stronger than those imposed on Russia in 2014, Moscow has also hardened itself against new economic blows. But just how protected Russia is now from Western sanctions will not be truly understood unless Putin trips the sanctions wire.  

New export controls

In part because of concerns about Russia's attempts to bolster its resilience against Western sanctions, the Biden administration is readying a separate plank in its economic deterrence strategy.

The United States and its European partners will impose “incredibly potent” new forms of export controls on “sophisticated technologies” produced domestically or by U.S. allies, the administration official said, listing artificial intelligence, quantum computing, aerospace, lasers, sensors, robotics, and defense as just some of the areas for which the threatened trade restrictions against Russia could go into effect.

Because the United States and Europe still largely dominate these next-generation technology areas, the White House feels fairly confident that imposing trade bans on the purchase of such technologies and services would cause significant harm to Moscow’s longer-term economic ambitions. That is because Russia cannot domestically produce many of those products, and imports from China and other sources would be of lower quality.

“Putin himself has championed them as the way forward for Russia to diversify its economy beyond oil and gas,” the official said. “If Russia wants to develop these sectors, it needs to import technologies and products that only we and our allies produce.”

Meanwhile, talks are continuing between lawmakers about the contents of a final bipartisan Russia sanctions bill, which would also likely include new authorizations for substantial security assistance to Ukraine if Putin invades.

In an interview with MSNBC late last week, Menendez said he was in the middle of talks with “various Republican colleagues” about trying to combine their ideas into his sanctions bill.

The Menendez measure would establish a multilayered sanctions approach against individuals like Putin and his top cabinet officials, as well as major Russian banks and the country’s oil and gas sector. Those sanctions would snap into place should Russia attack Ukraine.

“[Putin] should understand that there is overwhelming bipartisan support for Ukraine in Congress,” the senior New Jersey senator said, adding the legislative debate is now centered around whether to impose even harsher sanctions than the ones in his bill. “It’s a question of whether or not you make it even stronger, whether or not you make sanctions even quicker. But at the end of the day, there is no lack of resolve.”

Republicans are generally pushing for the inclusion of a measure that would immediately sanction the Nord Stream 2 pipeline, regardless of whether Russia attacks Ukraine. What's more, some GOP lawmakers also want to see a mandate, rather than just an authorization as included in the Menendez bill, for sanctions designed to kick Russian banks out of the SWIFT financial payments system.

House Foreign Affairs Chairman Gregory W. Meeks, D-N.Y., last week introduced in that chamber a sister version of the Menendez bill.