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For more on the impact of the new sanctions on Russia and the wider U.S. and European Union reaction to Russia's invasion of Ukraine we get two views. Stephen Hadley, a former national security adviser during the George W. Bush administration, and Andrew Weiss, who served as director for Russian, Ukrainian, and Eurasian affairs on the National Security Council, join Nick Schifrin to discuss.
And for more on the potential impact of these new sanctions, as well as the broader U.S. and European response to Russia's moves, Nick Schifrin is back with two views.
Judy, thank you.
For additional perspective, we turned to Stephen Hadley, national security adviser during the George W. Bush administration, and Andrew Weiss, who served in the George H.W. Bush and Clinton administrations on the National Security Council staff and the State Department's Policy Planning Staff.
Welcome, both of you, back to the "NewsHour."
So, we just heard from the deputy Treasury secretary.
Andrew Weiss, let me start with you. Do these Russian banks have exposure to the U.S. financial system? And does targeting Russian oligarchs and sovereign debt have any impact?
Andrew Weiss, Carnegie Endowment for International Peace: Well, let's talk about what Vladimir Putin uses to fund his economy.
He sells raw materials on global markets for dollars. So, every day, Russia sells four million barrels of oil. Oil right now is fluctuating around $100 a barrel. That is a remarkable cash flow that Putin is able to harness for whatever purpose. And money is always fungible.
Since the crisis in 2014, the Russian economy, broadly speaking, has taken the reliance it once had on foreign capital markets and basically tossed it aside. So, the Russian economy today is increasingly cut off from the global economy, and far less dependent on Western capital markets to fund itself.
It is clear that putting sanctions on well-connected people in the Russian (AUDIO GAP) is annoying and frustrating to them. But, remember, there are very hawkish figures around Vladimir Putin who actually benefit. The less Russia is globalized, the less it's connected, that gives them more control.
And so, if you think about who's sitting in the war room right now with Vladimir Putin, it's not people who are thinking about their 401(k) accounts.
Steve Hadley, let me get you to respond to not only the U.S. announcements of sanctions today, but the German, the British and the German announcements largely coming at the same time.
Stephen Hadley, Former U.S. National Security Adviser:
Well, I think it's a good step.
I'm afraid my own view is that it's not going to be enough to deter Vladimir Putin. He didn't bring 100,000 — over 150,000 troops to the border of Ukraine to settle for putting peacekeepers in these two breakaway provinces, if you will.
And I think how it's going to unfold is something like this. He has said he's recognized an area that is broader than just the territory occupied by his proxy forces, but it includes territory occupied by Ukrainian forces. And I think it could go in two ways.
Russia either tells the Ukrainians to get out of that territory who are protected by Russian peacekeepers. Russian proxies move on Ukrainian forces. And, at that point, Ukraine will have to either back down or choose to fight. And if it chooses to fight, that would be an excuse that Putin could use to move these 150,000-plus forces into Ukraine.
That's the scenario I worry about. And I don't think the sanctions today, regrettably, will deter him from doing so.
So, Andrew Weiss, let me ask you about those scenarios in a minute.
But let me just ask you first about Germany. How significant is it that Germany pulled, frankly, one of the most significant cards it has, which is to essentially cancel the Nord Stream 2 pipeline, the German-Russian pipeline that was suspended, but still could have gone forward had they not made that announcement today?
I think the Western world really owes German Chancellor Schroeder (sic) a debt for taking this move today.
And it's really the most important move of all the sanctions that were announced. It's good to see Western governments, including the White House, moving swiftly and responding to the outrageous things that Vladimir Putin said and did yesterday. So all of that's welcome. They show that they can move quickly. And, clearly, we're only seeing a down payment on a sanctions package that, as the crisis gets worse, is going to get broader and more far-reaching.
So the administration is looking to the Germans to basically make sure that the European Union comes in alongside the United States. The United States' sanctions, I think, will be more far-reaching and more significant than what European partners are prepared to do.
But particularly when it comes to Vladimir Putin's sense that the Germans are the soft spot, I think that that's been dispelled today by what the Germans have done by basically putting this pipeline project on indefinite suspension.
Steve Hadley, let ask you about that idea of further U.S. sanctions.
The U.S. is withholding some sanctions, most notably, the idea of export controls that would cut off U.S. technology that Russia needs. Is that the right thing to do in order to try and deter Putin?
I think they have got the right approach, to have a portion of their ultimate sanctions package now, hold something in reserve if, as I fear, Putin does something bigger in Ukraine.
I think the other thing, though, they need to think about and I'm sure are thinking about of whether they should do further reinforcements of our NATO allies that now find themselves on the front line with Russia and, again, the pace and the nature of the kind of supply that they are providing to Ukraine for their military forces to give them and put them in a position to resist a more massive Russian incursion.
I'm sure the administration is thinking about both of those things.
Andrew Weiss, the U.S. has indicated that it's unlikely to sanction Russian oil exports, those exports that you brought up at the beginning, that give Putin such an economic cushion right now. Is that a mistake?
I don't think so.
The challenge here whenever you're coming up with a sanctions regime is to remember that you want to hurt the other guy more than you hurt yourself. And we heard Secretary Adeyemo talk in those terms just now.
The challenge is, is that the Russian economy is built around a system where they bring in their revenues in dollars, and then their domestic liabilities are denominated in rubles. In 2014, Russia did not have a free-floating exchange rate, and they blew through some of their currency reserves trying to defend their currency. They're not going to make that mistake, this time.
They basically have salted away on the order of $630 billion in various hard currencies to deal with rainy day situations. And they're not going to basically use that to defend a currency rate that isn't tenable.
What they will do, though, is, they will tighten their belts. They will use their receipts from selling various commodities on global markets to bolster the regime and to make sure that the people who matter the most, particularly people in the military and the security services, have what they need.
It's the average Russian consumer who's going to be squeezed. And they have done this in previous cycles, where they basically said to Joe Six-Pack in Russia, sorry, you're going to lose out. So Russians are getting used to a crummy economic reality. They have had multiple years of declines in real incomes for average people. And the Russian government basically doesn't care.
So we're seeing that divide between ruler and ruled widen in Russia. It poses a long-term challenge for Putin. But, at the moment, there's nothing on the political landscape that makes him uncomfortable or makes him worried about his hold on power.
Steve Hadley, take us back to those assessments that you were laying at the beginning and zoom out for us a little bit.
You have been in the national security space since the mid-'70s. How dangerous is this moment? How concerned should we all be about some kind of conflict in Ukraine spreading?
I think it's a very dangerous moment. And we should be concerned.
I think, if the Russians do what we fear that they are going to, do in terms of taking a good chunk of Ukraine, recognizing what they want to do is to have a pro-Russian government in Kyiv that will put Ukraine under the Russians' sphere of influence, and maybe except some kind of confederation between Belarus, Russia, and Ukraine, that's really what Putin is about.
It's the restoration of the Russian empire. If he moves in that direction, the question is, what does it mean if you are in the Baltic states, if you're in Romania or you're in Bulgaria? For example, one of the questions that will be on the table is, there is a portion, as you know, of Russia that is disconnected from Russia. It is separated from mother Russia, if you will, by Poland and Lithuania.
And the question is, does Russia bulldoze the corridor, to kayak up Kaliningrad, with the rest of Russia? That — it means taking territory from the Baltic states, from Poland. That invokes Article 5 of NATO. That invokes war.
So we have a serious situation in Europe. And I would say, at the same time we try to manage this deteriorating situation in Europe, we have got the challenge of China, and we also have the challenge of Iran in the Middle East.
This is a huge agenda for America, raising a real risk of overstretch. And we're going to need a lot of friends and allies and help from others if we're going to manage what I think is going to be a very challenging time going forward.
Stephen Hadley, Andrew Weiss, thanks to you both.
Nice to be with you.
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Nick Schifrin is the foreign affairs and defense correspondent for PBS NewsHour, based in Washington, D.C. He leads NewsHour's foreign reporting and has created week-long, in-depth series for NewsHour from China, Russia, Ukraine, Nigeria, Egypt, Kenya, Cuba, Mexico, and the Baltics. The PBS NewsHour series "Inside Putin's Russia" won a 2018 Peabody Award and the National Press Club's Edwin M. Hood Award for Diplomatic Correspondence. In November 2020, Schifrin received the American Academy of Diplomacy’s Arthur Ross Media Award for Distinguished Reporting and Analysis of Foreign Affairs.
As the deputy senior producer for foreign affairs and defense at the PBS NewsHour, Dan plays a key role in helping oversee and produce the program’s foreign affairs and defense stories. His pieces have broken new ground on an array of military issues, exposing debates simmering outside the public eye.
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