Will Biden Sanction Half the World to Isolate Russia?

(Ryan McMaken, Mises Institute) 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 nationIn 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. 

Needless to say, this rubs many foreigners and their regimes the wrong way. Imagine, for example, how Americans react any time they’re told foreigners are somehow meddling in American affairs.

Moreover, Washington has ratcheted up its use of sanctions in this way in recent decades, whether to sanction China, Iran, Russia, or other countries. This has led to growing pushback from many third-party states that find themselves targeted by these secondary sanctions.

As one observer remarked back in 2021

This unchecked power to levy sanctions inevitably has met with strong opposition from across the globe, not only from governments and businesses targeted by US sanctions but also by those in third countries whose foreign policy and business interests are curtailed by US secondary sanctions. The EU and Canada and other nations traditionally aligned with the US have led the pushback up to this point, and now China has entered the fray, increasing the risk of geopolitical confrontation as well as increasing the compliance risks for multinational companies.

Now, by extending very harsh sanctions to Russia, the US is greatly expanding the scope of its sanction regime, and to a country that is far more globally connected than Iran or Cuba or North Korea. It’s one thing to demand other countries sanction a handful of small countries with a small global economic footprint. It’s quite something else to demand that the world go along with US sanctions of a large country like Russia.

For example, Africa depends heavily on Russian wheat, and even more heavily on Ukrainian and Russian wheat combined. With Ukrainian wheat production greatly reduced thanks to the Russian invasion, Egypt, South Africa, and numerous other African states will be even more reliant on Russian wheat. Essentially, the US is forcing up the price of food in Africa just as Africa is still reeling from a hunger crisis in the wake of covid lockdowns and trade disruptions.

It is likely not a coincidence that nearly one-third of African states refused to vote in favor of the UN resolution condemning the Russian invasion.

Meanwhile, India, like many other countries, deals frequently with Russia as a source of weapons. Russia is also a key source of numerous important raw materials like aluminum, palladium, oil, and fertilizer for countries across Asia, Africa, and South America. 

A turn toward enthusiastic enforcement of secondary sanctions will put the US in direct conflict with these regimes that have no interest in opposing the US’s policies toward Russia specifically but are unprepared to totally cut off their trade relations with Russia. 

Ultimately, should the US go down this path, it may be able to use its clout to force many smaller, geopolitically weak countries to go along. This will, however, reduce the US’s so-called soft power—the real source of US global power—by humiliating smaller regimes and driving up the cost of living for the developing world’s economically beleaguered households. 

But the real question is China. It may not even be possible for the US to force compliance in the short term if China refuses to embrace US efforts to isolate Russia.

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