Former NSC official: Is the West ready for the consequences of its 'full-on financial warfare' against Russia?

Before Russia troops invaded Ukraine on February 24, U.S. President Joe Biden warned Russian President Vladimir Putin and the Kremlin that any military aggression against Ukraine would be met with stiff economic sanctions — and Biden has made good on that promise with the help of the United States’ European NATO allies. Julia Friedlander, a former National Security Council (NSC) official who is now a senior fellow at The Atlantic Council, describes these measures as “financial war” against Russia in an op-ed published by Politico on March 8. And she poses the question: is the West prepared for the fallout it may experience as a result of “driving” Russia’s economy “into the ground?”

Friedlander explains, “Last weekend, the G-7 countries froze Russian foreign exchange reserves held in their jurisdiction, severing Russia’s access to nearly $400 billion, or over 60% of reserves, overnight. The action showed unparalleled resolve among allies to escalate to the most damaging option. On Tuesday, the U.S. announced it would ban imports of Russian oil, a largely symbolic but politically escalatory measure. Western leaders have chosen to match the severity of Russia’s war of choice with severe financial pressure, dwarfing the ‘maximum pressure’ campaigns of the Trump era.”

The Biden Administration and its European allies, according to Friedlander, have gone way beyond putting “pressure” on Russia —they have declared “full-on financial warfare” against Russia’s economy.

Friedlander adds, however, that economic sanctions against a country don’t necessarily yield quick political results. And she warns that the western countries that are inflicting economic pain on Russia may feel some of that pain themselves.

Friedlander writes, “Imposing sudden economic isolation may have huge consequences for the global economy…. Economists are only able to speculate what the rapid collapse of a G-20 country means for the rest of us. Energy prices may rise to unaffordable levels despite the release of strategic reserves. Soaring commodity prices could send developing countries reliant on Russian and Ukrainian grain into even deeper debt after COVID. Financial and debt contagion could pop up in unforeseen places, revealing new corners of interconnectedness and dependencies in a globalized economy…. Locking up Russia’s reserves is not financial pressure, it is financial war — and the stakes are high.”