Can the West stop Putin from invading Ukraine? Yes, it’s possible if we understand why he’s doing it in the first place.
Putin has been a dictator for over 20 years, and over that time Russia has faced a lot of problems—a stagnant economy, the most extreme wealth disparity of any major country, and endemic hopelessness that infects millions of ordinary citizens. These problems have only been exacerbated by COVID-19 over the past two years. As a result, Putin’s approval ratings are as low as they’ve ever been, hovering in the low 60s. In the early years of his presidency, he was able to blame these types of issues on his predecessor or other factors, but now it’s all on him.
In a situation like this, the standard playbook for a dictator is to distract his people by stoking nationalism and starting a war. That’s why Putin’s threatening to invade Ukraine. In addition to getting Russians to rally around their leader, his designs on Ukraine satisfy some nostalgic notions of rebuilding the glory of the Soviet empire.
Despite appearances, Putin is an entirely rational man. He views everything through the lens of risk-reward. The rewards of his Ukrainian adventurism include higher approval ratings, and a lower probability of being overthrown by a rival.
At the moment, he doesn’t see much risk. The leaders who could stand up to him have their own domestic problems. In the U.S., Biden’s approval ratings are the lowest they’ve been; in the U.K., Boris Johnson is fighting for his political life; in France, Emmanuel Macron is facing a tough presidential election; and Germany is so compromised that their new chancellor, Olaf Scholz, is doing everything he can to just keep Russian gas flowing so that the heat stays on.
Putin also knows that the West has never really held him accountable for his past actions. Since 2008, he has invaded Georgia, taken Crimea, occupied Eastern Ukraine, bombed hospitals in Syria, shot down a passenger plane, and hacked governments and businesses around the world. The West’s response? A few sanctions, removal from the G-8, and the expulsion of a handful of diplomats.
The West’s weakness has given Putin the feeling that he can do whatever he wants with hardly any meaningful consequences. The West now appears stuck between further appeasement or a possible military confrontation, for which there is absolutely no appetite.
However, there is a way to stop Putin’s Ukrainian adventure that has nothing to do with military intervention. That is to go after his money.
Since taking power, Putin has stolen an enormous amount from the Russian state, from businesses, from private Russian citizens, and even from foreigners like me. I estimate that he is the richest man in the world and since 2000 has stolen at least $200 billion just for himself, and possibly much more.
Putin doesn’t hold any of this money in his own name. If he did, the documents showing it could be used to blackmail him and undercut his power. As a former KGB officer, he has used information like this many times to blackmail others. Instead, Putin holds his money using cutouts, so-called “oligarch trustees.” When you look at Forbes’s list of billionaires and see certain Russian oligarchs being worth $10, $15, or $20 billion dollars, not all of that is theirs. I believe that half of it belongs to Vladimir Putin—and possibly much more.
These oligarchs don’t keep this money in Russia. Instead, they keep it in the West. They use accounts in places like London, New York, and Zurich to buy villas in the South of France, football teams in the U.K., ski chalets in the Swiss Alps, and yachts and private planes to crisscross the world.
This is Putin’s Achilles’ heel.
As we look at the menu of policy options being discussed by the Biden Administration in response to Putin’s manufactured Ukraine crisis, many are either too indirect or too harsh. Some, such as broad sanctions, would result in a lot of unnecessary hardships for ordinary Russians, who are victimized by Putin as much anyone else.
There has also been some discussion of cutting Russia out of SWIFT, the system banks use to facilitate the transfer of money around the world. This is precisely what the U.S. did to Iran, and it knocked them back to the stone age economically. This would be a devastating blow to Russia, but it could also have a significant financial blowback on the West. I believe this should be held in reserve for a worst-case scenario.
Most recently, the U.S. announced sanctions that would curtail Russia’s ability to further develop their oil and gas industry. These may be the type of thing that a long-term thinker would care about, but Putin is too preoccupied with his own short-term survival to give them much weight. Moreover, these sanctions don’t touch him personally.
All of this brings us back to Putin’s wealth. A tool called the Magnitsky Act (named after my murdered Russian lawyer, Sergei Magnitsky) already exists, and it can be used to stop Putin in his tracks.
The Magnitsky Act allows the U.S. government to freeze the assets and ban the travel of anyone involved in grand corruption or human rights abuse. These have devastating effects. Anyone who gets put on the U.S. Treasury’s Magnitsky List becomes a financial pariah who can effectively no longer do business with anyone, anywhere in the world. This is the power of the U.S. government.
It might be symbolic to sanction Putin, but it would be very material to sanction his oligarch trustees. It’s no mystery who they are, and it’s straightforward to demonstrate that they’ve been involved in high-level corruption.
So how to proceed? First, President Biden should make a list of Putin’s top 50 oligarch trustees and immediately sanction five of them. This would show Putin that the U.S. is not bluffing. Second, President Biden should give Putin a deadline of 10 days to retreat from the Ukrainian border or another five oligarchs will be sanctioned. In the event that Putin does invade Ukraine, the U.S. will make it be known that they will sanction the full list of these 50 oligarchs, and then draw up a new list of 50 more.
If you ask any Russian dissident or opposition politician what would stop Putin, they would all point toward this strategy. The Magnitsky Act is a like a modern-day cancer drug. Instead of nearly killing the patient to target the cancer, it targets the cancer directly.
When I describe this strategy, most people ask why the U.S. isn’t already doing this? I don’t know for sure, but I suspect that President Biden doesn’t want to do this unilaterally. Unfortunately, in Europe, Putin’s network has spread money far and wide among politicians and opinion leaders, making it almost impossible for Europe to agree to take a tough stance against Russia. I think Biden’s commitment to multilateralism is laudable, but I think this is a situation where the U.S. can accomplish 80 percent of its goals by acting alone, potentially stopping a war before a single shot is fired.
Will this work? I believe it will, and I don’t see a lot of downside to trying. Putin won’t like it, but that’s the point. Moreover, it’s infinitely better than any spilled blood.
The Magnitsky Act should be used now to stop Putin in his tracks.
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