Smart Sanctions Against Russia Will Require Smarter Intel In Washington

Russia is threatening to invade Ukraine, and the United States is considering economic sanctions. For sanctions to work, experts say they will need to effectively target the individuals and entities that are aiding and abetting the invasion. These so-called “smart sanctions” can be more effective than broad, sweeping measures, but they require intelligence on the cross-border flows of supplies, capital and even cryptocurrency. As the ways of gathering information are changing, it’s not yet clear that Washington’s powerful sanctions tool will be hitting the Kremlin where it really hurts.

Sanctions have a spotty history, at best. Many will remember Jimmy Carter’s 1980 grain embargo against the Soviet Union over the Soviet invasion of Afghanistan. It was not very effective—the Soviets found alternate grain suppliers and remained in Afghanistan. Meanwhile, the move was grossly unpopular with American farmers.

What does it even mean for sanctions to work, when the political objectives are often fluid, vague, or just unrealistic? Sharon Brown-Hruska, a former chief economist at the State Department, told me, “If sanctions don’t result in regime change, but result in cutting off funds to terrorists, then is it a failure or a success? I would argue it was a success, but many want a slam dunk, and that is hard to get.”

Which factories are producing weaponry or other supplies for Russia’s invasion efforts? Which financial flows are funding them? Who is moving the money? As the Biden administration works to design smart sanctions, they will need precise answers to these questions.

In a rigorous empirical piece, Georgetown economics professor Rodney Ludema and then-State Department economist Daniel Ahn found that the 2014 US-EU sanctions deployed over Russia’s annexation of Crimea were effective, but only because they were so well targeted.

Intelligence gathering, at least in the old-fashioned sense, seems to be getting harder these days. In October, the New York Times reported on an unusual top-secret cable from the CIA to its stations and bases around the world. A concerning number of foreign informants have been captured, killed or compromised, Langley said.

The UK has gone further—and publicly—on the urgent need to change gears. In November, Richard Moore, the head of Britain’s foreign intelligence agency, said that reliance on deep-rooted secrecy is fading, and there is a need to shift to new technological-based intel gathering methods. MI6, formally known as the Secret Intelligence Service, must “become more open to stay secret,” he said.

My colleague Weifeng Zhong recently wrote about how the US intelligence model is dangerously behind the times. He says that while China is moving to the data age of intelligence, Washington has been going in the opposite direction, and doubling down on old ways of espionage tradecraft.

To the extent there has been a sharp drop in foreign informants, Washington will need to lean more on other sources, like allies and the technological arena.

US-UK intel cooperation runs deep and over the years has encompassed other allies. For instance, the Five Eyes, an intelligence alliance that involves Australia, Canada, New Zealand, the United States, and the United Kingdom, will be useful. (The Five Eyes has its roots in the cooperation between the US and UK codebreakers during World War II.)

How cooperative the European Union will be is hard to tell. The lack of unity across European countries is on full display as they debate whether to respond on a country-by-country basis or with a united EU front. Some are calling for a more nuanced approach that involves a trans-Atlantic response. Neither Germany nor France was willing to call out Putin in October when Russian-backed fighters violated the Minsk II agreement (instead, they said that “both sides were at fault”).

How the Nord Stream 2 pipeline will come into play is another question mark. The 745-mile gas pipeline from Russia to Germany through the Baltic Sea is set to pump 55 billion cubic meters of gas each year—doubling Russia’s lucrative gas exports to Europe. On one hand, the pipeline could tie Europe’s hands because it is set to bring much needed supplies. Recent remarks by the State Department though indicate that if Russia invades Ukraine, Washington will work with Berlin to ensure the project does not move forward. The threat of losing trillions of legitimate dollars a year might be sufficient to deter President Putin. But does he care? That’s an intelligence question for President Biden.