Markets and Morals: How the West’s Economic Response to Russia’s Aggression is Held Back by Materialism

Edward Zhang, Contributing Writer

History will remember Putin’s invasion of Ukraine as a crime against humanity, and history will also have much to say about the Western response too. We are at a critical inflection point with a decision to make: do we care more about markets or people? Do we truly believe in the inalienability of human rights and the dream of a democratic world, or do we believe that the price of oil and banking profits are more important considerations? On these important questions, we will either be revered by our children for possessing the courage to honor the moral convictions that we say we have or shamed for succumbing yet again to the materialist thinking — a mindset afflicting the West which prioritizes economic growth over acting virtuously. 

So far, the United States and our European allies have raised the cost of war for Russia by hitting the country with economic sanctions — a foreign policy tool which imposes financial restrictions and penalties. By harming the Russian economy and targeting the wealth of Putin’s cronies, sanctions aim to shrink the revenue streams which Putin relies on to finance his military activities — all while fueling discontent within Russia among the people and oligarchs who support him. These sanctions have been applied against important aspects of the Russian economy as well as members of Putin’s inner circle. 

Such deterrent practices have varied in nature. Both the U.S. and the E.U. have enacted import restrictions limiting Russia’s access to critical foreign technology, as first reported by The New York Times. Many individuals and Russian companies who support Putin have been sanctioned too, making it difficult for them to do business internationally. The U.S. and the E.U. even announced in a joint statement from the White House that they would form a transatlantic task force dedicated to seizing the overseas assets of such sanctioned individuals. In the same statement, they also announced that they would be restricting the movement of foreign reserves held by Russia’s central bank, thus devaluing the Russian currency and reducing liquidity in Russia’s financial system. 

Perhaps the two most impactful actions taken so far address Germany’s NORD Stream 2 pipeline and the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network. NORD Stream 2 is a newly constructed natural gas pipeline which can deliver gas directly from Russia to Germany, and it’s significant because the pipeline was supposed to supply up to 70% of Germany’s natural gas needs, according to The Guardian. Now, Germany has frozen NORD Stream 2’s certification process, with the United States planning to sanction the Russian company behind the project for good measure, according to the aforementioned statement by the White House. Further harming Russia’s economic vitality is the West disconnecting several Russian banks from SWIFT, a telecommunication network which facilitates cross-border financial transactions. This move effectively hinders those institutions from efficiently operating in the international financial system. These two actions required a great deal of political will from the West, since both Russia and the West will feel economic pain from any disconnect.

However, stronger action is needed. Putin made the choice to continue his invasion despite all of these measures, leading to immeasurable amounts of misery and suffering among the Ukrainian people. He is making this choice because he knows the West lacks the will to hit Russia with the strongest sanctions in their arsenal. And he knows this because Western foreign policy calculus is colored by materialist thinking.

Some Western analysts could not even imagine Putin pulling the trigger on the Ukrainian invasion because they thought it would be irrational. Harlan Ullman, fellow of the esteemed Atlantic Council, wrote in the New Atlanticist that the economic costs to Putin and Russia would be unaffordable if he were to attack. Five days later, bombs fell on Kyiv as Russian troops closed in on the Ukraine from every direction. Him and other “experts” posited that no rational actor would want to endure the economic pain which comes with an invasion. This failure of imagination is the direct result of us projecting our own values and cost-benefit frame of thinking onto Putin. For someone who cares only about economic growth or preserving their international social capital, yes, the invasion makes no sense. But for someone like Putin who believes that the economy is only a means to an end, then the invasion can be justified as “rational.”

We must abandon the materialist mentality which failed to prevent this war and start engaging Putin on his own terms. Our engagement should acknowledge that we are locked in an ideological struggle — one that pits free sovereignty against hegemonic coercion, democracy against autocracy and the United States against Russia. This engagement requires us to hit them with harder sanctions, ones that we have not deployed due to fear of economic repercussions.

The West should fully cut off Russia from SWIFT by extending the ban to all Russian financial institutions, sending an earthquake through the system by effectively choking Russia out of it. According to Reuters’ analysis, 36% of Russia’s total budget last year came from energy sales. The United States could unilaterally sanction these sales, disrupting world-wide energy markets but showing Russia our resolve in the process. Both of these moves would exact a heavy toll on Western economies, but the price of freedom has always been high. Paying this price now will ensure our security in the future. 

By acting decisively now, we would be sending a strong message to the world that we care more about free people than we do about free markets — that no economic loss will dilute our values. And when Putin realizes that we can and are willing, as a much richer country, to endure more economic pain than him, he will have no choice but to back down.