Sanctions Don’t Threaten Only the Enemy
The world is reminded every day that the United States will do everything appropriate -- short of firing a single shot, that is -- to scare Vladimir Putin out of invading Ukraine (which, at this writing, may have already begun). While the Biden-Harris regime has already made it clear that the United States will not use military action to support Ukraine, the United States will definitely wield sanctions as a weapon.
Vladimir Putin must be shaking in his best felt boots.
Sanctions are an important element of foreign policy. Viewed as one tool among many, along with the military, and that most formidable of all weapons, our nuclear arsenal, economic sanctions must be a part of the toolkit. But they are meaningless alone, especially if they hurt others more than they hurt the target.
To begin with, politicians have a tendency to act as if there are no sanctions currently in place… but there are, so all we’re talking about is adding more. And the more sanctions there already are, the less sting additional ones will have.
The United States Export Controls constitute a body of usually sensible, ongoing sanctions, generally divided into three groups: countries, parties, and products.
- There are several countries that the USA simply will not do business with. We will not allow U.S. persons (U.S. citizens, green card holders, U.S. businesses and their foreign subsidiaries) to either import or export from them, at all, directly or indirectly. Think of Iran, Syria, North Korea, and Cuba. These countries have been under almost absolute sanctions for decades.
- There are thousands of entities all over the world -- both individuals and groups, private companies and government departments -- that are similarly banned. This includes such parties as terror networks, international criminals, drug cartels, mafiosi, human traffickers, military insurgencies, and front companies associated with identified corrupt governments or enemy armies.
- There are thousands of physical products and technologies, many of them perfectly normal but possessing a military intent or an important dual-use, which are controlled primarily by export license: any business needs the government’s permission to share them, often even with a vendor or customer in an allied country.
These U.S. Export Controls are critical elements of our national defense. You stop the enemy from using our own fighter jets against us (as in the case of Iran), by stopping them from getting the parts they need. You stop the enemy from making nuclear or biological weapons by denying them the ability to obtain the materials and technology to make them.
But these Export Controls, as sensible as they are, require an educated, conscientious business community to succeed. The existing rules are difficult, already placing a burden on every company. And while major defense contractors are equipped to manage these rules well, most other companies struggle to understand them as it is. The more complicated these rules become, the greater the chance that the business community will be unable to keep up.
Now, some history.
In 2014, Vladimir Putin heard the cries of the Crimeans and Russia moved in to seize Crimea and Sevastopol from Ukraine. The U.S. and many in Western Europe were horrified by this shocking disruption of European maps, which had been stable for a full twenty years, so they chose to act. They didn’t think this horror worthy of a shooting war, so they agreed on sanctions.
We already had the U.S. Export Controls in place -- and Europe has similar ones, by the way, known as the Wassenaar Arrangement -- restricting the kind of trade that might be reasonably associated with national security. So, if they were going to use sanctions here, they had to think of something different.
The great thinkers of the West decided that Putin couldn’t possibly have the support of the Russian people on this. So they added new sanctions to products that we would not normally regulate -- peaceful products such as drilling machinery, pipeline components, and other energy-related goods. They added new banned parties as well: forbid transactions involving certain major Russian or Russian-owned companies, particularly in the energy sector, especially if they had close ties with Putin or his deputies. Surely, they thought, putting the screws to these businesses will cause them to pressure Putin to relent.
Eight years into this experiment, we can see that it was a mistake. These Russia-focused sanctions are complex, and western companies have struggled to comply. Many European companies care much more about receiving energy from Russia to heat their homes than they care whose flag flies above Crimea and Sevastopol ...or, in the current dispute, above Donetsk and Luhansk.
Remember, many European countries refused to enforce sanctions against Iran when Iran was funding terrorists attacking their own interests. Compliance, particularly from Europe, has been poor at best, and policy results have been nonexistent.
Perhaps worse still, the American business community already suffers far more than the intended target. Mining and drilling equipment, energy production, and transportation materials -- these are a huge export market for American manufacturing, and until 2014, Russian customers were significant for us. With the Obama administration signing on to take sales to Russia off the table for these big American employers, our exports have dropped, and rivals such as the Chinese have prospered. Honestly, now, how does it help Ukraine to weaken the American economy and prop up the CCP?
If you go to war, banning commerce with the enemy is sensible, even imperative. The Coastwise Boycott of the late 1760s was a necessary first step in the development of our War of Independence, but we must never forget that it took a greater economic toll on us than it took on England. Similarly, once we entered WWI and WWII, we had to cut off imports and exports with the other side each time.
What products and customers do the Biden-Harris regime plan to ban, anyway? Which American businesses need to start downgrading their forecasts and laying off assembly lines now? And which Chinese manufacturers should prepare to throw a party?
There is still too much we don’t know about the Ukraine-Russia situation. Too many in the Biden-Harris regime and its orbit have received questionable windfalls from both Russia and Ukraine over the years, making their judgment more than suspect on matters involving disputes between those two countries.
The U.S. Export Controls are a critical element of our national security program, but they are cumbersome, costly, and complex. We should think long and hard before expanding them further, particularly in a direction that has already been proven to be ineffective, and particularly when there are legitimate concerns about the reasons and alliances involved.
John F. Di Leo is a Chicagoland-based international transportation professional. A onetime Milwaukee County Republican Party chairman, he has been writing a regular column in Illinois Review since 2009. His book on vote fraud (The Tales of Little Pavel) and his brand-new political satires on the current administration (Evening Soup with Basement Joe, Volumes I and II) are available on Amazon.