Sun Sentinel Palm Beach Edition
How allies united to punish Russia
Ahead of invasion, US pressed EU to ‘do the right thing’
WASHINGTON — Just days before Russia invaded Ukraine on Feb. 24, President Joe Biden quietly dispatched a team to European Union headquarters in Belgium.
These were not spy chiefs or generals, but experts in reading fine print and tracking the flow of money, computer chips and other goods around the world. Their mandate: inflict maximum pain on Russian President Vladimir Putin, making it harder, if not impossible, for him to fund a prolonged war in Ukraine and denying him access to technologies at the core of modern warfare.
There were intense meetings in February in Brussels, Paris, London and Berlin, often running six hours at a time as the allies tried to craft the details of a historic economic blockade, according to Biden administration officials.
Some of the exports the United States wanted to ban were met with reluctance by the Europeans, who would essentially be telling their own companies to forgo several billion dollars in annual revenues from Russia.
When there was a deadlock, U.S. negotiators would put Commerce Secretary Gina Raimondo on the phone.
“You can say ‘no’ now, but when the body bags are coming out of Ukraine, you’re not going to want to be a holdout,” Raimondo said she told allied counterparts. “Do the right thing.”
Everyone signed on — and before the invasion.
Raimondo said what ultimately drove the agreement and the fast timeline was the threat of Putin’s imminent attack on Ukraine.
“We all got religion fast that it was time to band together and stick together,” she said. “If you cause enough pain, isolate Putin, it will bring this war to an end.”
The wealthiest nations in the world — outside of China
— are directly confronting Putin on their preferred terms. They have imposed sanctions in which their strengths intersect with Russia’s vulnerabilities. Russia is reliant on the U.S., the EU, Japan, South Korea and Taiwan for cutting-edge technologies and investment, so the allies decided to cut Moscow off.
It’s a strategic play designed to trap Putin in a downward spiral, as foreign investors pull out their money in response to the atrocities. It’s also a remarkable show of unity that could be tested in the coming weeks by the allies’ own dependence on fossil fuels.
A group of economists estimated Thursday that EU countries have transferred more than $14.7 billion to Russia for oil, natural gas and coal since the war began, essentially funding Putin’s war machine.
While the allied talks in the lead-up to the war were critical, the EU was not just waiting around for U.S. direction to act. Bloc members had been consulting for months.
One EU diplomat, speaking on condition of anonymity to discuss internal talks, outlined in an interview as far back as January potential penalties that included the export ban, noting that the EU had held together its coalition on enforcing sanctions since Russia’s 2014 occupation of parts of the Donbas region in Ukraine.
But this time, the U.S. and EU responded to Putin’s aggression with a novel set of policies to cripple Russia’s ability to fight by denying it access to the semiconductors, computers, telecommunications equipment, lasers and sensors integral to war materiel.
This is a supply chain squeeze that will force Russia to raid existing airplanes, tanks and other gear for spare parts — essentially eroding its military and economic capacity. The same U.S. and EU officials dealing with their own supply chain challenges after the pandemic found a way to amplify the problem for Russia through trade regulations.
In a sign of early success, U.S. officials point to the closing of Lada auto plants in Russia and the more than 300 companies that have stopped doing business with Russia.
The companies are not just Starbucks, but chipmakers such as Germany’s Infineon that said it stopped all direct and indirect deliveries to Russia as well as technical support.
Within days of the Feb. 24 invasion, the allies blocked the foreign assets of Russia’s central bank. Two senior Biden administration officials, who were not authorized to publicly discuss the strategy and spoke on condition of anonymity, said this option was not initially presented to allies out of concern that Russia could move its money ahead of time.
They waited to present the asset freeze until the invasion started and the images of bombings and death compelled the Europeans to almost immediately agree to the course of action.
The freeze rendered half of the more than $600 billion in Putin’s war chest unusable. While the Russian stock market has been closed and the value of the ruble has plunged, the sanctions are designed so that the financial effects tighten over time. As long as Ukraine is able to hold out with military aid against severe casualties, the sanctions are expected to do more to exhaust Putin.