OPINION:
From the election of Donald Trump to the rise of Bernie Sanders, scapegoating Russia for anything Americans don’t like is close to becoming a national pastime. Now, the Senate is working to extend the finger pointing from electoral interference to cybercrime, terrorism and the decline of the American manufacturing sector. New legislation with the catchy title of the Defending American Security from Kremlin Aggression Act (DASKA) has made its way through the Senate Committee on Foreign Relations, edging ever closer to floor vote.
The act is broad in scope, but the section Americans should be most concerned with is Title VI, “Sanctions with Respect to the Russian Federation.” This portion of the bill seeks to impose economic sanctions on Russia in the naive hope that these will in some way show Vladimir Putin who’s boss while simultaneously making America great again.
Economic sanctions are a favorite tool of the political establishment. They allow lawmakers to claim the moral high ground without actually accomplishing anything. Never mind that half-a-century of sanctions on Cuba did nothing to destabilize the Castro regime, while denying working Cubans the economic opportunity that might have prevented a few of them from starving.
The inconvenient truth is that sanctions don’t work — have never worked — to punish bad actors abroad. Governments, particularly the kinds of governments worth sanctioning, are quite capable of securing their own prosperity while passing along any foreign-imposed hardships to the impoverished citizenry. Sanctions are not altogether harmless, however. To the extent that they do inflict the pain that they are designed for, the recipients of injury are almost invariably the American workers themselves.
Briefly stated, DASKA makes it a crime to do business with anyone who “facilitates illicit or corrupt activities, directly or indirectly” with respect to Russia and its president. Given what we all know about Russia, this pretty much rules out any business activity whatsoever; practically the whole nation is illicit and corrupt, and has been for all of living memory.
The problem with this is that many American businesses not only trade freely with their Russian counterparts, but depend on such trade for their very existence. In 2019, U.S. companies purchased more than $22 billion worth of imports from Russia, and more than 1,000 U.S. companies sold the Russians exports worth more than $5 billion. Criminalizing that level of trade would be devastating to American businesses, as importers are forced to turn to more expensive options and exporters are forced to find new customers elsewhere. It’s incredibly disingenuous to suggest that U.S. retailers that import Russian caviar or vodka should be held liable for any aggression coming from the Russian government.
Sanctions are always passed under the rhetoric that only the big, greedy corporations will suffer, but this is not the case. Business with Russian companies extends across nearly every sector of the U.S. economy, with small businesses far outnumbering large ones. And while large companies may have the capital necessary to shrug off a financial blow resulting from trade restrictions, smaller companies cannot afford to see their margins cut even a little bit.
Of course, these effects would not be limited to companies that do business directly with Russia; supply chains are more complicated than that, and ripple effects are inevitable, albeit hard to foresee. A single firm importing goods from Russia may supply materials to dozens, or even hundreds of American companies that themselves have no dealings overseas. By making those supplies more difficult or expensive to obtain, DASKA would needlessly punish American employers and their workers on a scale that’s impossible to fully predict.
While sanctions don’t punish dictators, they do hurt average workers, and when those workers start to suffer, who do you think they are going to blame? If the Russian government remains adversarial toward us, at least its people are not yet convinced that America is the Great Satan responsible for all their problems, as is the case in other countries where our involvement has caused more harm than good. Economic sanctions on Russia would simply allow President Vladimir Putin to cast the United States as an enemy causing poverty and unemployment among the working class, distracting from his own failures of leadership. Apart from the danger of turning some 144 million Russian citizens against us, we shouldn’t be eager to give a strongman like Mr. Putin an easy out to escape responsibility for mismanaging his country.
The global political fallout doesn’t stop there. As American businesses are forced to exit Russia, their Russian partners will be forced to seek out new allies and collaborators elsewhere. In all probability, this will drive more cooperation between Russia and China, as Chinese firms fill the vacuum left by the sudden cessation of American trade. Anyone who thinks that stronger partnerships between Russia and China are good for American interests should not be in a position to make law.
The unintended consequences of this sort of legislation are always overlooked by lawmakers, but like most things dealing with economics, the devil is in the details. It would be counterproductive to cut of the proverbial nose of the American worker to spite Mr. Putin’s smirking face. At the end of the day, DASKA is little more than virtue signaling by Congress to prove that they can be “tough” with Russia, without regard for the damage done to our own economy in the process.
• Logan Albright is director of fiscal policy for Capital Policy Analytics and head writer for Free the People Foundation.
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