What Sanctions Accomplish
I hope it was a nice and easy shorter week for you.
I’ve got no big plans this weekend, but doing nothing suits me just fine.
Let’s get in one more quick Rude before you get “demob-happy.”
Why We Prefer Sanctions to War
Usually, when mass murderers die, their murder stops. Not so with Woodrow Wilson.
Wilson is one of the chief architects of the modern sanctions regime. That sanctions cause immeasurable harm to civilian populations is loathsome in and of itself. That they never accomplish the ends towards which they’re aimed makes them stupid, as well.
From a government’s point of view, you can understand their appeal. First, there are only two ways to pay for war: increasing taxes and printing money.
In democracies such as the United States, how many wars do you think Americans would vote to engage in if they had to pay for it directly? That’s right: zero. So printing money it is.
In the nearly 5,000 days since 9/11, here’s how the money-printing helped our defense industry:
The little black line at the bottom is the S&P 500, a 300% return. Above it are Boeing, Lockheed Martin, General Dynamics, Northrop Grumman, and Raytheon Technologies. Their returns range from the obnoxious 574% to the obscene 1,354%.
Incidentally, this was one of the unsung great attributes of the gold standard. Once you ran out of gold, the war was over: win, lose, or draw. You couldn’t print your way to more supplies, munitions, and victory.
Then, there are the horrible images of fallen soldiers coming home in flag-draped coffins. The women and children don’t like that much, do they? So the USG had first instituted a ban on covering the return of those soldiers during the First Gulf War that the Dubya administration was thrilled to uphold during the second one.
Dubya and his boys went to great lengths to hide the dead during the Iraq War. At the time, Senator Patrick Leahy of Vermont told the Senate: “The wounded are brought back after midnight, making sure the press does not see the planes coming in with the wounded.”
Sanctions: Awful on Paper, Worse in Practice
Back to Wilson. This man ran on an antiwar ticket only to enter the US into World War I a mere five months after his re-election. And you thought only modern politicians lie like rugs!
Like a White Castle-induced fart, Wilson described his sanctions as “peaceful, silent, and deadly.”
Wilson packaged sanctions as a peaceful alternative to spilling blood over a grievance as with his sleight-of-hand with the war. Except sanctions are entirely civilian affairs.
War didn’t use to be like that. Civilians were largely left out of it. And trading with the enemy was not only standard; it was seen as a way to compensate civilians who were wrongly harmed.
The late antiwar activist Justin Raimondo wrote in a post in 1998:
The concept of economic sanctions as a weapon also assumes international economic regulations and enforcement agencies, setting up a cadre of bureaucrats who sit in judgment of “outlaw nations”: in effect, the apparatus of world economic planners. And contrary to Wilson’s predictions, real war has often followed the use of sanctions.
Over 500,000 Iraqi children died as a result of sanctions after the First Gulf War. That was the price old Maddie Albright was happy to pay, despite another authentic and costly war following soon after.
The price for what prize? After another nearly two decades in Iraq, that prize, whatever it was, clearly eluded us.
Those Countries That Can Will Fight Back
Sure, the US can push around Iraq, Iran, and a bunch of South American countries. But Russia is another kettle of fish altogether.
After 30 years of suffering at the hands of US sanctions, or worse, US academics, Russia has had enough.
Russia’s National Wealth Fund is its sovereign wealth fund. A sovereign wealth fund is a state-owned investment fund that invests in tangible and financial assets such as stocks, bonds, real estate, precious metals, or in alternative investments such as private equity funds or hedge funds.
The National Wealth Fund will cut the share of dollar assets it holds to zero from 35%. The $186 billion fund will then keep most of its assets in euros, yuan, and gold.
To be perfectly frank, this will not crash the dollar. The fund is one of the smaller sovereign wealth funds on the planet.
Depending on if you count the funds or the countries, Russia has the 10th largest stash of national wealth in an SWF. For instance, Norway’s SWF, the Government Pension Fund, has over $1.1 trillion in its coffers. That’s about 10x what Russia has.
But it’s still a blow struck in the name of freedom. You read that right; Russia is fighting US dollar oppression.
Watching this video in which Putin bragged about how sanctions made the Russians use their brains is insightful.
And if you doubt Putin’s word – I don’t blame you for that – that sanctions helped Russia become the world’s number one wheat exporter, have a look at this chart from Progressive Farmer:
Russia never built helicopter and marine engines before. It does now. And while it doesn’t dominate the world stage, watch this video (with the captions on) to see Putin brag about how the ruble is now more stable because they’re not just an oil and gas country anymore.
These sanctions aren’t fit for purpose. No sanctions are.
Though Donald Trump loved tariffs – especially against China – the European situation was ridiculous to him, with good reason. The US was and is funding NATO to protect Europe from Russia. And all the while, Europe was buying Russian oil.
The sanctions against Russia hurt Europe more than Russia because Europe prohibited themselves from selling their wares to Russia. How the EU Council got away with extending the sanctions until July 2021 is beyond me.
Donald Trump realized the absurdity of it all concerning Nordstream 2. Nordstream 2 is a pipeline Russia built that runs under the Baltic Sea to Germany.
I think it’s very sad when Germany makes a massive oil and gas deal with Russia, where you’re supposed to be guarding against Russia, and Germany goes out and pays billions and billions of dollars a year to Russia,” Trump told Stoltenberg. “So we’re protecting Germany, we’re protecting France, we’re protecting all of these countries. And then numerous of the countries go out and make a pipeline deal with Russia where they’re paying billions of dollars into the coffers of Russia. And I think that’s very inappropriate.
We need a complete rethinking of Western sanction policy and the types of relationships we want to have with other sovereign nations.
Not only are sanctions needlessly aggressive, they often accomplish the exact opposite of their aims.
Have a wonderful weekend! You deserve it.
All the best,