How Western Countries Can Really Hurt Putin

Financial and economic sanctions against Russia could be very effective at ending Vladimir Putin's war against Ukraine "if the West shows the will—and is willing to take on its own corruption," American economist Paul Krugman writes at the New York Times. Sanctions on Russia's oil and natural gas industry are currently off the table as European countries, which are highly dependent on the imports, would see a price hike and shortages, the columnist writes. Even excluding Russia from SWIFT, the payment network that allows money to move between banks and institutions in more than 200 countries, is controversial given the impact on countries that import Russian goods or export their own, per the BBC.

But there's another option, according to Krugman, which involves seizing Russian money abroad. And there's apparently a lot of it. In a 2018 study, economists found "there is as much financial wealth held by rich Russians abroad—in the United Kingdom, Switzerland, Cyprus, and similar offshore centers—than held by the entire Russian population in Russia itself." That hidden wealth amounted to 85% of Russia’s GDP as of 2015, according to the study. Just take a look at some of the price tags on these Russian oligarchs' superyachts. "As far as I can tell, the overseas exposure of Russia's elite has no precedent in history—and it creates a huge vulnerability that the West can exploit," writes Krugman.

The thing is Western countries first need to face up to corruption and money laundering at home, Krugman writes. According to the Wall Street Journal editorial board, many Western capitals, perhaps especially London, "looked the other way as money poured in and financiers, accountants, lawyers and real-estate agents also cashed in." The board adds the only proper course now is to extend sanctions to every Russian connected to the regime, starting with 35 figures named by jailed Russian opposition leader Alexei Navalny's Anti-Corruption Foundation as enabling and benefiting from Russian kleptocracy. If their mansions, sports teams, and other foreign holdings are seized, they will be forced to "choose between the Kremlin and freedom in the West," the board writes. (More Russia stories.)