10 May 2023
Three Lessons from the
Front:
Economic Warfare
in Russia
/
Ukraine
James R. Sullivan, CFA
It’s the Economy…
A country’s economy is core to its ability to provide a better life for its people, develop and fund social
services, and ultimately create the means for war. Presidents Xi Jinping and Donald Trump both used
speeches in 2017 to directly link economic might to the pursuit of national interests. It should therefore
come as no surprise that economic warfare tactics are getting a much-needed refresh as we re-enter a
multi-polar world with specic challenges to both the United States’ economic hegemony, as well as the
international rules-based system.
Sanctions remain the most widely implemented economic warfare tactics. Modern day best practices for
sanctions construction and implementation have been outlined by organizations such as the Atlantic
Council and the Wilson Center. Summarized, these argue that goals for sanctions must be well identied
and explained in advance, that implementing coalitions must be as large and as complete as possible, and
that private sector coordination is a critical component to sanctions ecacy. While the guidance is solid,
there remain several gaps between these best practices and real-world implementation, as the Russian-
Ukrainian conict illustrates, especially in the nance, energy, and cyber realms.
The Gap Between Theory and Practice
Academics and current and former government ocials from Nicholas Mulder to Agathe Demarais
represent a rising chorus of voices arguing that while sanctions “ll the void between
empty diplomatic declarations and deadly military interventions,” their overuse
means that “the golden days of U.S. sanctions may soon be over.” Others including
Council on Foreign Relations President Richard Haass have suggested that despite
the rising sophistication of economic tools inclusive of a shi from “smart” trade
restrictions to targeted nancial sanctions, “all too oen sanctions turn out to be
little more than expressions of US preference that hurt American interests without
changing the target’s behavior for the better.” e lack of an immediate collapse of the
Russian economy in 2022 aer western powers levied sanctions on Russia’s banking,
technology, metals, mining, and energy sectors in response to Russia’s aggression in
Ukraine is taken by many as a sign that the sanctions regime deployed most recently
is having little impact.
But these conclusions are based on awed (or at least incomplete) analysis. e case
studies below will illustrate gaps between best practice and implementation in the
current conict that led to these awed conclusions.
