Sanctions Against Wealthy Russians Are Largely Symbolic and Won’t End the War

Every day that passes in Russia’s war on Ukraine, another mall or theater or maternity hospital is vaporized. Cities are under siege. Each day inches closer to a breaking strain, a point that — once crossed — risks a plunge into global nuclear confrontation.

In the meantime, the U.S. North Atlantic Treaty OrganizationNATO) is using economic sanctions to convince Russian President Vladimir Putin and his followers know it is time for him to return home. Putin and his supporters are the victims of all sanctions against Russia. the ruling oligarchsThey are huge. They are being denied to entire currencies by countries, banks, businesses, and even whole nations. More are possible if this goes on.

The President Joe Biden is widely anticipated to make an announcement today before the NATO emergency summit in Brussels. a new round of sanctionsTogether with tightening current regulations. A bipartisan group of senators works with the Treasury Department in order to secure more than $130 Billion in Russian gold reserves.

There are three main dangers associated with imposing such severe sanctions. Two of these are well-known, and a third is not often discussed. The first is the risk that Putin will decide the economic damage done to his country constitutes an existential threat and then motivates others to threaten the world with their nuclear arsenal to stop it. NATO should move to further stymie Russia’s petroleum industryThis could provoke such a response. That is why the issue has been treated like a grenade, with the pin half-pulled.

The second is the bitter harm done to the Russian people, who are largely innocent of Putin’s crime beyond some being duped into supporting it by his state media. Putin doesn’t seem to care if Russians are starving in the darkness he has brought upon them; yacht-hiding pals on speed-dialWith 12 numbers left of the decimal on their bank account, they are his primary, second and tertiary concern.

These sanctions’ traumatic effects must be our concern. Are they having the desired effect? Are they putting pressure on Putin’s allies, or are they merely damaging broad swaths of the Russian population? “The experience of U.S. sanctions’ impacts around the world is important,” writes Khury Petersen-Smith for Truthout, “especially because Washington and other Western capitals hold up sanctions as an alternative to war. We should see them as a weapon of warfare, however. Their devastating impact results in widespread suffering that may be quieter or less visible to most in the U.S. than an invasion or airstrikes are, but that is no less deadly.”

On paper, at least, Putin’s pals are taking it in the chops. The truth, however, brings us to the third peril: the fiction of economic hardship, which is playing out among Russia’s wealthy elite even now.

“Let us first recall that the freezing of assets held by Putin and his relatives is already part of the arsenal of sanctions that have been tried for several years,” explainsThomas Piketty, economist and author. “The problem is that the freezes applied so far remain largely symbolic. They only concern a few dozen people, and can be circumvented by using nominees, especially as nothing has been done to systematically measure and cross-reference the real estate and financial portfolios held by each of them.”

It always seems to return to real estate, land. Land ownership was once a right that allowed one to vote. Later, real estate was the preferred venue for money laundering. Today, land is a popular way to conceal assets and avoid international sanctions.

These sanctions are supposed to be cramping the style of Putin’s oligarchs to such a degree that they gather the will to drag him back from the abyss … but this tactic will only succeed if the oligarchs — and Putin, himself a billionaire many times over — are the ones who are truly impacted.

This is not the case. Ordinary people are suffering in their place and that suffering only seems to increase. Piketty believes that the solution is to use sanctions that are more targeted than those currently in place. It would be like using a scalpel or a broadsword.

“To bring the Russian state to heel, we must focus sanctions on the thin social layer of multimillionaires upon which the regime relies: a group much larger than a few dozen people, but much narrower than the Russian population in general,” argues Piketty. “To give you an idea, one could target the people who hold over €10m ($11m) in real estate and financial assets, or about 20,000 people, according to the latest available data. This represents 0.02% of the Russian adult population (currently 110 million)…. It would suffice for the west to finally set up an institution to implement this type measure. international financial registry (also known as a ‘global financial registry’ or GFR) that would keep track of who owns what in the various countries.”

Unfortunately, such measures will be exceedingly difficult to impose, and for one reason: Russia’s billionaires are sustained and protected by the same financial system that sustains and protects Western and Chinese billionaires. These self-serving rules of capitalism will not be abandoned by the latter group, even if it means that Putin and his associates will remain largely unaffected amid the suffering of people.

These Western wealthy elites are supporting Putin and his war. They may, but not nearly as much than they support the capitalism that built their fortunes. They will no longer serve the billionaire elite as a whole if those mechanisms are taken down to punish Russia. “So why has no progress still not been made in this direction?” asks Piketty. “For one simple reason: western wealthy people fear that such transparency will ultimately harm them.”

Wealth must be extracted. Wealth must also be protected. These two laws are what really matter to that sub-segment. As Jacob Broom was once noted to say, “Control the coinage and the courts; let the rabble have the rest.”

This is how all of this happens under the cover of war. It is ironic, for capitalism at its most robust and lucrative is what war is. Every war lines the pockets for those who trade in the weapons. And among these peddlers are more than a few of Putin’s friends. Try to imagine convincing George W. Bush to stop his invasion of Iraq by the Carlyle Group. It was impossible for that to happen. The money was too good.

At the very minimum, we need better than the current sanctions. We need to do this now. Piketty provides a blueprint, but there are many other options. We must remove the financial barriers that keep billionaires from justice. More than that, we must end our shameful use mass sanctions and collective punishment. Every day we pass brings us closer to Armageddon. Not even an oligarch could survive a nuclear attack. Ashes to ashes, dust to dust.