For years, the United States has sought to use sanctions to achieve several aims related to Russia, including preventing, deterring, and punishing 1) the strategic corruption that President Vladimir Putin uses to advance Russian foreign policy, 2) human rights abuses perpetrated against dissidents, and 3) Russian expansionism along its borders. These sanctions have resulted in mixed success, in some cases imposing real and serious costs on individual bad actors, but rarely contributing to major structural changes or policy revisions. In the weeks leading up to Russia’s February 2022 invasion of Ukraine, many experts considered what sanctions the United States and European Union should impose on Russia if Putin chose to invade and what goals those sanctions should achieve. Now nearly a month into the war, looking back on those recommendations sheds light on the remarkable steps democratic states have taken to isolate Russia and what remains on the table.

Sanctions aimed at deterring future invasions by Russia (or other revanchist powers) must necessarily impose a high cost, since invasions are already risky and expensive propositions, and weak sanctions that impose few costs are unlikely to be a serious consideration in the calculus of war. Such costs should be high enough to force Russian leadership to choose between achieving geopolitical aims through military spending or securing regime stability through ensuring a minimum of domestic prosperity. Lastly, sanctions imposed on Russia over its violent foreign policy, like those designed to curb its efforts at inculcating strategic corruption, should be aimed at reducing U.S. and European dependence on Russia and should force Putin to find new targets for Russian dirty money and energy. Researchers like ASD’s Joshua Rudolph and Max Bergmann have argued in favor of a multi-pronged approach employing military, diplomatic, and economic tools to achieve these aims. Recommendations in the economic sphere include:

  • Targeting oligarchs with sanctions, asset seizures, law enforcement scrutiny, and visa bans, to impose costs on the pro-Kremlin elite, and to reduce their influence and leverage in foreign capitals.
  • Establishing working groups among democracies to counter kleptocracy, especially between the United States and the United Kingdom.
  • Cracking down on Western “enablers” of Russian malign influence, including lawyers, accountants, real estate firms, art dealers, and other professionals involved in money-laundering and influence peddling.
  • Imposing broad blocking sanctions on Russian financial institutions that have served to underwrite Kremlin foreign policy ambitions and removing them from the Society for Worldwide Interbank Financial Telecommunications (SWIFT).
  • Committing to long-term decoupling from the Russian economy, including finding new sources of energy, metals, and other Russian exports.
  • Cancelling the Nord Stream 2 pipeline to prevent Russia from establishing greater leverage over European energy.
  • Sanctioning Russian oil and gas exports gradually, as European partners adapt their energy systems.
  • Implementing the EU’s Carbon Border Adjustment Mechanism (CBAM), which will impose higher costs on Russian industries while supporting green and domestic energy producers.
  • Discourage security partners in the Middle East, such as Israel, Saudi Arabia, Egypt, the United Arabs Emirates, and Qatar, from cooperating with Russian foreign policy goals, including to prop up the prices of oil and gas.

Over the past two weeks, tremendous progress has been made in implementing these recommendations. Examining what has been accomplished already gives a sense of what this invasion will mean for the Russian regime and economy and highlights what remains to be done.

Targeting Oligarchs

The Department of Justice and the Department of the Treasury issued full blocking sanctions on more than two dozen Russians accused of orchestrating disinformation campaigns, as well as on 19 oligarchs and dozens of their family members. These include billionaire metals magnate and close Putin ally Alisher Usmanov, the billionaire Rotenberg brothers, and Yevgeny Prigozhin, also known as “Putin’s chef,” to name just a few.

The EU similarly imposed sanctions on more than two dozen figures close to Putin, including members of his government, broadcasters affiliated with Russian state media, and senior military officials. They also included travel bans and asset freezes on dozens of individuals. The EU’s most headline grabbing move, so far, has been the seizure of oligarchs’ mega-yachts by France, Italy, and Germany. All of these efforts impose real costs on the actors that facilitate and bankroll Putin’s military adventures, while also reducing their ability to wield malign influence in democratic capitals and international institutions.

International Counter-Kleptocracy Working Groups

The Justice Department recently announced  plans to form an interagency taskforce called KleptoCapture that will focus on finding and seizing the illegitimate assets of Russian oligarchs. This is one of many efforts taken by democracies at the national level to strengthen their counter-kleptocracy enforcement and analysis. Secretary of the Treasury Janet Yellen also promised close cooperation with allies in the investigation of Russian money laundering. Some lawmakers, like Senator Sheldon Whitehouse, continue to call also for the deepening of international efforts, like the Helsinki Commission’s Inter-Parliamentary Alliance against Kleptocracy.

Cracking Down on the Enablers of Corruption

Many democracies, including the United States and Australia, have taken steps in recent years to establish greater regulation over the professional service providers that Russian oligarchs use to peddle influence and corruption. These include lobbyists, but also PR firms, lawyers, accountants, real estate companies, and even art and jewelry dealers. Less than a week before Russia’s invasion, the European Parliament’s Special Committee for Foreign Interference in All Democratic Processes in the EU, including Disinformation (INGE) released its final report, which identifies covert money from authoritarian states entering EU politics through legal loopholes as a major threat to European democracy. Since the invasion, many firms—especially in the lobbying, legal, and PR sectors—have dropped their Russian individual and institutional clients, either to comply with newly issued sanctions or to avoid scandal and harm to their other clients. But democracies around the world will need to tighten their regulation of these industries to prevent a return to “business as usual,” no matter how the next few months of this conflict unfold.

Blocking Sanctions on Russian Banks

The United States and EU have imposed major sanctions on a wide range of Russian financial institutions, including removing VTB, Bank Otkritie, Novikombank, Promsvyazbank, Bank Rossiya, Sovcombank, and VEB from the SWIFT network, as well as imposing new sanctions on the Russian Central Bank and the Russian Direct Investment Fund (RDIF). Sberbank and Gazprombank have been so far excluded in order not to devastate European energy markets.

While most Russian public banks were already subject to sanctions since Russia’s illegal 2014 annexation of Crimea, these sanctions are much broader and more comprehensive, affecting a far greater number of institutions and their clients, and have already begun to take a toll on the Russian economy.

Economic Decoupling

Russia supplies one-sixth of the world’s raw commodities, which means that producers in democracies who rely on those goods will need to find new sources of inputs in a more constrained market. Despite the costs associated, many firms have begun this process, including major European and U.S. financial institutions and commodities producers with operations in Russia like BP, HSBC, Societe Generale, Shell, and Equinor. Even the holding companies that own and lease commercial aircraft, most of which are based in the West, have begun winding down their Russian operations, bringing Russian air travel to a shuddering halt. Whether this decoupling can be maintained in the face of a conflict with no clear end remains to be seen, but many firms have already begun to make costly investments aimed at making their loss of access to Russian markets irrelevant.

Abandoning Nord Stream 2

The Nord Stream 2 pipeline, which would have carried Russian gas under the Baltic directly to Germany, bypassing Polish and Ukrainian transit fees and giving Russia even greater direct control over the European energy market, was put on indefinite hold by the German government. Major investors in the pipeline, including European energy giant Uniper, are abandoning the project and even pledging to move away from Russian gas entirely.

Gradual Sanctions on Russian Energy

Russian energy was largely exempted from the first round of sanctions, as the United States prioritized alliance unity in the face of European worries about energy prices. But on Tuesday, March 8, the White House announced that it was banning energy imports from Russia, while the EU announced a plan to reduce imports substantially. This represents a major victory for cooperation among democracies, which have often struggled to put strategic considerations above powerful domestic political concerns, like energy prices, and will make it harder for Russia to fund its invasion and to manipulate European politics in the future. The EU took the additional step on March 15 of banning investment in the Russian energy sector, which will impair Russia’s ability to grow the industry that now constitutes one of its only sources of hard currency.

Implementing the Carbon Border Adjustment Mechanism

Bringing the Carbon Border Adjustment Mechanism (CBAM) into force would impose significant costs on Russia’s economy, increase investment in renewables, and shift Europe away from dependence on Russian energy. While no new progress on implementing it has taken place since Russia’s invasion of Ukraine, the EU’s pledge to decrease purchases of Russian energy and to boycott other industries will help Europe in many of the same ways and will make long-term compliance with the CBAM less painful and disruptive when it comes into force.

Discourage MENA Partners from Cooperating with Russia’s Energy Policy

Initially, U.S. partners in the Middle East were slow to speak out on Russia’s invasion of Ukraine, but ultimately all voted in favor of the UN General Assembly resolution condemning Russia. Still, Saudi Arabia’s Crown Prince Mohammed bin Salman has declined to increase energy production, which would blunt the current spike in energy prices globally and reduce a major remaining source of income for the Kremlin. The autocratic prince has been unwelcome in many democratic capitals owing to the strong evidence that he ordered the murder of journalist Jamal Khashoggi, but as its major security patron, the United States still maintains substantial leverage over the Saudi regime.

Where the Response Falls Short

The depth, breadth, and swiftness of the global response to Russia’s invasion surprised many experts and seemingly surprised the Russian foreign policy establishment as well. To manage authoritarian interference and imperialism in the future, though, democracies will have to institutionalize and harmonize their efforts in meaningful ways. This includes building out the institutional capacity of transnational efforts to combat kleptocracy and interference, including through organizations like the Organization for Security and Cooperation in Europe (OSCE) and the Organization for Economic Cooperation and Development (OECD). Liberal democracies should also unite behind a strong regulatory regime that imposes greater transparency on the professional services providers that have frequently served as the agents of authoritarian influence campaigns and does not permit authoritarian powers to return to “business as usual” whenever the current crisis passes.

Other important outstanding responses that the United States and Europe should implement include bringing the CBAM into force, declaring Nord Stream 2 truly and permanently dead, and pressuring Saudi Arabia to pump more oil. The CBAM would impose tariffs on high-emission imported goods, which would help the EU achieve its climate goals while denying Russia some of the long term resources it has used to prepare for and make war on its neighbors. Abandoning Nord Stream 2 would send a powerful signal about Europe’s commitment to reduce its dependence on Russia. Lastly, encouraging greater oil production from Saudi Arabia in the short term would ease the tight energy market and make isolating Russia more politically and economically sustainable for both the United States and Europe, which will in turn make sanctions more effective.

The already evident impact of sanctions on Russia’s economy, and the cooperation and commitment to shared sacrifice demonstrated by members of NATO and the EU in the face of this crisis, suggest that this could be a watershed moment in the use of broad multilateral sanctions to prevent and deter wars of aggression by rogue powers. President Putin set out to demonstrate the fecklessness of the community of democracies and their inability to make decisive foreign policy; if the United States and Europe can sustain and further the economic isolation that they have imposed on Russia, he may ultimately prove the opposite.

The views expressed in GMF publications and commentary are the views of the author alone.