Opinion from a Libertarian ViewPoint

Will Biden Sanction Half the World to Isolate Russia? | Mises Wire

Posted by M. C. on March 24, 2022

Moreover, the US’s recent seizure of Russia’s central bank reserves should make any regime think twice about holding large amounts of dollars. If Washington can do it to Russia, Washington can do it to anyone, and other regimes are likely to see this and slowly flee the dollar.

Ryan McMaken

It is becoming increasingly apparent that isolating Russia and totally cutting it off from the global economy is not going to be easy. 

As I discussed last week, from Mexico to Brazil to China to India and much of Africa, the world is resisting Washington’s call to treat Russia as a pariah nation. In the words of James Pindell, “Most of three huge continents—Asia, Africa, and South America—are either still working with Russia or trying to project the image of neutrality.”

Yes, the US will certainly inflict a lot of damage on the Russian economy with its sanctions, but it’s unlikely to be enough damage to incapacitate the Moscow regime. This is because much of the world has shown it plans to continue having relations with the Russians, albeit while taking some efforts to avoid any direct policy confrontation with Washington. 

But this all also means that if Washington wants to press the issue of global cooperation and assistance with US sanctions, the US is going to have to threaten many other regimes with secondary sanctions—sanctions designed to force compliance with the initial sanctions on Russia. This will be diplomatically and economically costly for the US. After all, if the US is trying to build up alliances and economic partnerships against a potential Russia-China bloc, trying to impoverish dozens of countries as punishment for noncompliance with Russia sanctions will only encourage other regimes to insulate themselves from both the US economy and the US dollar. Whether or not this happens will largely depend on how hard the US is willing to bully third-party countries in order to win compliance with its Russia sanctions. 

What Are Secondary Sanctions?

Before we proceed, let’s look at what exactly secondary sanctions—and the closely related “extraterritorial” sanctions—are. 

At their most basic, secondary sanctions are sanctions imposed on a third party that is not the target of the initial, primary sanctions. For example, if the United States wants to force a change of policy in Iran, the US will impose sanctions directly on Iran but might also decide that this isn’t enough. The US might also seek to prevent other countries from doing business with Iran as well. In order to do this, the US will then impose secondary sanctions on firms and entities in other countries that do business with Iran. 

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