OPINION:
President Joe Biden appropriately imposed an array of sanctions against Russia recently, chiefly striking back at a sweeping Russian cyberattack that created significant data breaches for Fortune 500 companies, multiple agencies of the United States federal government and thousands of American nongovernmental organizations.
Russia’s continued meddling in U.S. affairs has led to these actions. As Mr. Biden stated, the sanctions are intended to “defend our national interests and impose costs for Russian Government actions that seek to harm us.”
Included in these sanctions is action by Treasury that blocks U.S. financial institutions from participating in the Russian bond market or lending to Russia and affiliated financial entities, a move that will raise the cost of publicly financing Vladimir Putin’s state.
Treasury further sanctioned 32 individuals and entities for carrying out attempts to influence the 2020 U.S. presidential election, attempts that were directed by Russian state officials. Additionally, Treasury designated six Russian technology companies that work with Russian intelligence and expelled 10 Russian diplomats from Washington. A sweeping and powerful statement by the Biden administration.
President Biden has called the response “proportionate,” while others have noted these are limited measures. They point specifically to the absence of sanctions regarding the highly prized Russian Nord Stream 2 gas pipeline to Germany. Due to this, many view these sanctions as only a prelude to additional sanctions later, a first volley in case Russia’s aggressive actions continue, like their recent troop build-up in Ukraine.
I am hopeful these current sanctions will deter Mr. Putin’s behavior. I truly do. That being said, I know from my service as America’s Ambassador to Latvia, the best way to positively impact our relationship with Russia is to encourage investment and trade.
As U.S. officials ponder next steps, they should design any future sanctions in a way that protects American companies or businesses with commercial activity in Russia and that avoids discouraging foreign investment in the U.S. This was a point underscored early last year by the Small Business and Entrepreneurship Council, which warned American officials that poorly designed sanctions “would largely punish U.S. companies instead of Putin.” As the group explained, nearly 3,000 U.S. companies do business in Russia and a vast number of small and medium-sized businesses supply those firms.
Guy Caruso, the former head of the U.S. Energy Information Administration, provided the example of Boeing which “has invested billions in Russia, sourcing almost all of the titanium for its aircraft production from the Russians,” supporting around 20,000 American small businesses. That is just one example of how broad, sweeping sanctions on Russia could directly damage American businesses throughout the country. In some cases, sanctions could prevent U.S. companies from being able to pay for goods or services or even compensating their employees in Russia.
Deterring Mr. Putin’s aggressive and bad faith foreign policy should be a U.S. priority, but if past is prologue, sanctions can be a poor instrument for doing that. Further, the bipartisan “Countering America’s Adversaries Through Sanctions Act,” already imposes secondary sanctions on countries that do business with Russia in the defense and energy sectors. That law has proven immensely powerful in narrowly targeting Russian oligarchs and other allies of the Russian government in a tailored approach that does not harm American businesses in the process.
If there is to be a next shoe to drop on Russia, American officials would do well to think strategically about sanctions, tailor their approach, and avoid overly broad measures that could catch U.S. businesses in the crossfire.
American companies operating in Russia provide political leverage to America’s leaders, create thousands of jobs in American communities, and share U.S. values of transparency, accountability and good governance. Our best diplomats have and have always been our business community, they have bridged divides and fostered prosperity, and we need to ensure they are able to continue to do their work.
• Charles Larson Jr. is the former U.S. ambassador to Latvia.
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