Opinion | How to tighten sanctions enough to restrain Putin in Ukraine – The Washington Post – The Washington Post

Benjamin Harris is vice president and director of the economic studies program at the Brookings Institution. David Wessel is director of the Hutchins Center on Fiscal and Monetary Policy at Brookings.

Ukraines allies, including the United States, met Russias invasion two years ago with an unprecedented outpouring of sanctions. They put a price cap on Russian oil exports, froze $300 billion worth of Russian foreign exchange reserves, and severed many of the links between Russias financial institutions and the rest of the world.

In congressional testimony on the first anniversary of the invasion, Daleep Singh, a former White House deputy national security adviser, said the restrictions were designed to maximize the costs imposed on Russian President Vladimir Putin, degrade his ability to project power on the world stage and show other autocracies (China, perhaps) that redrawing borders by force would be punished.

The sanctions remain a work in progress. They clearly have reduced Russias oil and gas revenue, weakened its ability to produce nondefense goods, made importing high-tech components harder and shaken the countrys banking system. But the Russian economy has yet to implode (as the chart from our Ukraine Index illustrates).

And although the sanctions have multiplied over the course of the war, they have yet to weaken Putins determination to keep fighting. It is increasingly obvious that the United States and its allies need a better strategy to restrain Russias imperialist behavior.

We asked several experts how the United States might tighten the sanctions noose around Putins neck. The advice they offered boils down to these five strategies. (The Brookings Institution has published fuller versions of the proposals.)

Limit Russias earnings from natural gas. As the West has blocked some trade with Russia and Europe has sharply reduced its imports of Russian natural gas, Russia has turned to China. Now, says German sanctions scholar Janis Kluge, it is important to prevent Russia from exploiting the natural gas in West Siberia, including by sanctioning companies that help Gazprom build the proposed Power of Siberia 2 pipeline to China via Mongolia. Also, now that world food markets have adjusted to the Ukraine wars disruptions, the United States and the E.U. should stop importing Russian fertilizer (for which gas is a key input).

Allow Russians to send money out of the country. The White House has said that one goal of sanctions is to weaken the rubles foreign exchange value, making Russian imports more costly, pushing up inflation and leading the Russian central bank to raise interest rates. To this same end, the United States, the E.U. and Switzerland should also remove the obstacles they have placed against Russians moving money out of their country in an apparent effort to put pressure on Russian oligarchs. Sergey Aleksashenko, a former deputy chairman of the Central Bank of Russia, estimates that if 100,000 Russian households and small businesses each transferred $10,000 out of the country every month, the annual costs to the economy would be roughly equivalent to a $7 per barrel drop in the price of crude.

Monitor the shadow oil fleet. To avoid the worlds oil-price cap which blocks ships carrying Russian crude from buying essential insurance if the price of the oil exceeds $60 a barrel Russia has assembled a fleet of aging tankers insured by shadowy companies that might not make sure the ships are sound and are unlikely to have the resources to cover the cost of spills. (This risk was underscored a year ago, when an 18-year-old tanker flying the Cook Islands flag lost power in the narrow Danish straits in the Baltic Sea and nearly crashed.) To prevent Russia from using this workaround, Craig Kennedy, a Russia expert at Harvard Universitys Davis Center, proposes that coastal states ask tankers passing by their shores to voluntarily verify the quality of their spill insurance and that the United States penalize any ship that refuses.

Confiscate assets. Last month, Congress passed the Rebuilding Economic Prosperity and Opportunity for Ukrainians Act (REPO), which authorizes President Biden to confiscate Russian sovereign assets held in the United States and use the money to help rebuild Ukraine and stave off the Russian invasion. Economists Joseph Stiglitz of Columbia University and Andrew Kosenko of Marist College argue that Biden should use this power to shrink the Russian central banks balance sheet, potentially devalue the ruble and prompt bank runs within Russia, and weaken the banks ability to extend credit which might ultimately undermine Putins military production capacity.

End all business with Russia. An alternative to expanding the complex set of sanctions and exceptions would be for the United States and Europe to stop doing business with Russia altogether with limited exceptions for humanitarian considerations. In short, treat Russia as the United States treats North Korea. The Russian economy needs to be squeezed from all ends to limit the resources available to wage the war in Ukraine, economists Torbjrn Becker of the Stockholm School of Economics and Yuriy Gorodnichenko of the University of California at Berkeley have written. Even dictators must respect budget constraints, and we should ensure that these constraints are as tight as possible.

Ideally, Russia will soon be forced to retreat from Ukraine and these actions will prove unnecessary. Sadly, its far more likely that sanctions on Russian will need to be intensified.

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Opinion | How to tighten sanctions enough to restrain Putin in Ukraine - The Washington Post - The Washington Post