Sanctions can't stop the tanks, but they have had a dramatic impact on the Russian economy and could pressure President Vladimir Putin to change his behavior, says a former Treasury official.



In the 35 days since the Russian invasion began, the U.S. and its allies have unleashed a barrage of economic penalties on Moscow. At ceasefire talks in Turkey yesterday, Russian diplomats promised to scale back military operations around Ukraine's capital of Kyiv and one other city. But Ukrainian officials were skeptical, and some speculated that Russia would regroup and intensify its offensive elsewhere. So how much are sanctions actually helping push Russia to end its incursion? Juan Zarate is a former assistant secretary of the Treasury, now global co-managing partner at K2 Integrity and author of "Treasury's War."

Juan, when you spoke to my colleague, Steve Inskeep, about a month ago, you called the sanctions against Russia unprecedented, but we've seen since then that cities have been just bombarded and a fourth of the population displaced. Have any of those sanctions had any impact?

JUAN ZARATE: Well, the sanctions have had a dramatic impact on the Russian economy, the devaluation of the ruble, the sell-off of Russian bonds and assets. But sanctions, unfortunately, aren't a silver bullet, and they can't turn back tanks when you have a committed actor like Putin, with a design on invading a country and potentially destroying its cities. Sanctions alone can't do it. And certainly, when they're applied after the fact, sanctions have a tail to them. They take time to take effect. The effects on the economy in Russia are still just being felt. And so I think it's asking sanctions to do too much to actually stop the war, but it certainly can be part of a tableau of pressure that's put on Putin to try to change his behavior, change his calculus, and, in combination with Ukrainian resistance, diplomatic isolation, companies pulling out, shutting down their doors - all of that hopefully affects the calculus. But, certainly, sanctions alone can't stop the war machine that Putin's unleashed.

MARTINEZ: Yeah. So if they're at a point where maybe they're just barely being felt right now - I know Ukraine and Russia are back at the negotiating table - would these sanctions be playing a role in those talks at all?

ZARATE: Well, I think so. I think the sanctions play two roles. One, they play a role in shaping how Russia feels the costs of its actions, right? So you want sanctions to actually play into the calculus of the negotiators at the table, understanding that this is not going to get better for Russia - it's going to get worse, and the economy is going to continue to feel the effects. You also use sanctions as a bit of carrot. So every sanction that is used as a stick can also be used as a carrot, and so things can be lifted. Provisions, in terms of restrictions on trade or investment, can be dangled as a carrot as part of the negotiations. We haven't seen that yet because they're still at the, you know, starting line of negotiations in real terms, but sanctions can prove important in diplomacy, and we've seen that in the Iranian context and in other contexts, where the targets really want to get out from under the pressure of sanctions and the effects on their economy.

MARTINEZ: How much of a difference is there between the Russian people feeling the sanctions and Vladimir Putin feeling the sanctions?

ZARATE: Well, A, you've put your finger on one of the classic dilemmas and problems with the application of sanctions - and maximalist sanctions in particular - because if you're putting maximum pressure on an economy, you're ultimately harming the population, the - you know, the people on the street and their ability to operate commercially. Whether or not the regime leadership feels it directly, or whether or not they even care about the effects on their population is a different question. That was the issue with Saddam Hussein. It's been the issue with, you know, the Castros in Cuba. It's been the case with any of the regimes that have been affected by a lot of pressure economically and financially. Putin doesn't seem to be affected. He certainly can eat well and survive well. I think the sanctions on the oligarchs, in particular, have been a way of trying to get at Putin's assets, and the hunt for Putin's assets, I think, are an attempt to at least psychologically impact Putin's level of comfort and a sign that the international community is not going to let Putin rest comfortably, even if the Russian people are bearing the cost of the sanctions.

MARTINEZ: How much can China fill the gap for Russia if they were to turn to them?

ZARATE: China is an important outlet for Russia. And China, you have seen, has played both sides of this. They haven't wanted to get their hands dirty with the invasion and Russia, but they haven't - certainly haven't wanted to deploy sanctions or go in with the West in terms of the isolation of Russia. And so China can trade - can certainly buy Russian oil and gas, can buy their timber and minerals. They can serve as a financial outlet. They can create mechanisms to circumvent sanctions if that's necessary. So China and even other countries become an important outlet for Russia as they're isolated further and further from Europe and North America.

MARTINEZ: And if it can be proven that those countries are helping Russia, why not sanction those countries?

ZARATE: Well, that's possible. I think there are two dimensions to your question. One is you can certainly go after sanctions evaders - so those individuals, entities, even countries that are evading the sanctions that are on the books. And I anticipate that we'll see a lot of enforcement in the coming weeks and months related to that - shipping companies, suppliers, others that are helping Russia evade sanctions. The other part of your question is an important one because we have yet to see the application of secondary sanctions.


ZARATE: That is, the ability to go after those who continue to trade with Russia, even if they, themselves, are not subject to sanctions. And so that's another arena where we might see action in the future, and it would allow the U.S., Europe and others to go after Indian, Turkish, Chinese and other companies that are still doing business with Russia.

MARTINEZ: Juan, quickly, one thing - one last thing. Secretary Treasury - Deputy Treasury Secretary Wally Adeyemo said the next wave will involve sanctions to disrupt Russia's military supply chains. What do you think that means?

ZARATE: Well, I think the Treasury is looking at all the sectors that they can hit and the supply chains that are allowing Russia to continue those activities, and so they're going to be looking at suppliers, shippers and others that are supporting Russia's military. Obviously, that's critical as Russia continues its offensive in the Ukraine.

MARTINEZ: That's Juan Zarate, former assistant secretary of the Treasury, now at K2 Integrity. Juan, thanks.

ZARATE: Thank you, A. Transcript provided by NPR, Copyright NPR.