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Residents try to clear a broken window after returning to a damaged apartment in a residential block hit by an early morning missile strike on February 25, 2022 in Kyiv, Ukraine. (Chris McGrath/Getty Images)

The United States and other democratic governments are imposing economic sanctions on Putin and his oligarchs as the Kremlin's assault on Ukraine intensifies. But will sanctions be enough? In National Review, anti-kleptocracy expert Nate Sibley [[link removed]] examines what sanctions can—and can't—accomplish. Catch up on the latest analysis from H.R. McMaster [[link removed]] on CBS News [[link removed]] and Marshall Billingslea [[link removed]] on Fox Business [[link removed]] on the impact of sanctions on Russia, and sign up for our special edition Re: Ukraine newsletter series here. [[link removed]]

Read Nate's Op-Ed [[link removed]]

Targeting Putin's Henchmen

1. Putin's Inner Circle is Mostly Insulated from Sanctions

Putin has not only decimated Russia’s democratic opposition but gradually shifted his own power base to reduce his vulnerability to palace coups. The so-called ‘siloviki’ and others who emerged from Russia’s security apparatus alongside Putin have embraced his Soviet nostalgia, nationalist rhetoric, aspirations to autarky, and revanchist foreign policy.

They are just as corrupt as the oligarchs of yesteryear, but their survival is tied to Putin personally, and their wealth is not as internationally exposed. In short, the strongmen who now prop up Putin and project his twisted will from within the Kremlin are not only less vulnerable to Western sanctions and law enforcement, but they jeeringly welcome them as a mark of loyalty.

2. Russia's Foreign Currency Reserves Reduce the Impact of Sanctions

Putin has transformed Russia into a war economy since first invading Ukraine in 2014, building up some $630 billion in foreign reserves to weather the potential effect of sanctions. Living constantly during that time under the threat of U.S. sanctions, Russia’s elite would have been foolish not to similarly try to safeguard their personal wealth, meaning that much (but by no means all) that was once flaunted in London or Miami may now be hidden in Dubai or other offshore havens beyond the immediate reach of U.S. law enforcement.

In terms of pursuing the oligarchs, [the West should begin] with an expansive approach targeting Putin’s “wallets” [his inner circle who holds their stolen wealth outside of Russia] and the broader constellation of business elites aligned with his rule. The more these sanctions and designations can be aligned with allies, the better, but as overseer of the global reserve currency, the U.S. is in a unique position to make unilateral impact and should not hold back for the sake of appearances of solidarity.

3. America Must Treat Putin's Regime as a Criminal Enterprise

Sanctions are only half the picture. Putin’s rule is a transnational criminal enterprise and should be treated much in the same way that the U.S. has approached Venezuela’s kleptocracy. This means using the unique jurisdictional reach afforded by the U.S. dollar to launch major cross-border intelligence and law-enforcement investigations. The prospect of being extradited to the U.S. to face justice terrifies the Chavistas and will have the same effect on Putin’s henchmen.

The U.S. and its allies must accelerate reforms that help make sanctions enforceable, such as requiring shell-company transparency and extending anti–money laundering responsibilities beyond traditional banks to include lawyers, fund managers, real-estate professionals, and others routinely implicated in Russian schemes. Democracies must also provide more protection for journalists and researchers working to uncover Russian corruption within our societies, especially by ending oligarchs’ prolific use of vexatious lawsuits to deter and impoverish opponents.

Quotes may be edited for clarity and length. From Nate Sibley's National Review article, "What Sanctions Against Russia Can Do—and What They Can't"

Read Nate's Op-Ed [[link removed]] Go Deeper

West Has Let Russian Oligarchs Hide Their Wealth Here For Far Too Long [[link removed]]

The Biden administration and its European allies missed the window for effective sanctions deterrence against Vladimir Putin, argues Nate Sibley [[link removed]] in the New York Post. But in the longer term, imposing tougher sanctions on Russia’s most powerful people outside the Kremlin will chip away at the foundations of Putin’s kleptocratic regime.

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Making a Killing | Ep. 36: Hitting Putin’s Wallets [[link removed]]

Should financial warfare become a new operational domain for NATO? On Making a Killing, Nate Sibley [[link removed]], Casey Michel [[link removed]], and Paul Massaro [[link removed]] discuss targeted sanctions as a low-cost and effective method to weaken Putin's kleptocracy.

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Making a Killing | Ep. 34: Deterring Putin with Marshall Billingslea [[link removed]]

Former U.S. Treasury Assistant Secretary Marshall Billingslea [[link removed]] joins Nate Sibley [[link removed]] to explore how sectoral sanctions on Russia's metal, chemical, machinery, and timber industries would result in a significant blow to Putin's economy.

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