The Morning Dispatch: The West Responds to Russia’s Ukraine Invasion

Happy Wednesday! We have thoroughly enjoyed learning of—and kind of cheering for—Hank the Tank, a 500-pound black bear in Lake Tahoe who has broken into at least 28 houses and just can’t stop rummaging for food, despite California Department of Fish and Wildlife officials “hazing” him with paintballs, bean bags, sirens, and Tasers. 

“This is a bear that has lost all fear of people,” a CDFW spokesman said.

Quick Hits: Today’s Top Stories

• President Joe Biden announced Tuesday his administration was imposing its “first tranche” of sanctions on Russia in response to President Vladimir Putin’s decision to recognize pro-Russian separatists’ claims to the entire Donbass region in Ukraine. According to Biden, the United States will impose full blocking sanctions on five Russian oligarchs and two Russian banks—Vnesheconombank and Promsvyazbank—and restrict the Russian government’s ability to raise money from the West. “Russia will pay an even steeper price if it continues its aggression, including additional sanctions,” Biden said.

• After formally classifying Russia’s moves in the Donbass region as an “invasion,” Secretary of State Antony Blinken told reporters yesterday he had called off his meeting with Russian Foreign Minister Sergey Lavrov scheduled for Thursday. White House Press Secretary Jen Psaki added that a floated summit between Putin and Biden is “certainly not in the plans” unless Russia “changes course.”

• Russia’s Foreign Ministry will “evacuate” its diplomats and embassy employees from Ukraine to “protect their life and safety,” officials announced Tuesday.

• U.S. home prices grew at a record rate in 2021, with the S&P CoreLogic Case-Shiller National Home Price Index increasing 18.8 percent year-over-year in December.

• Senate Minority Leader Mitch McConnell and House Minority Leader Kevin McCarthy announced Tuesday that Iowa Gov. Kim Reynolds will deliver the Republican response to President Biden’s State of the Union speech next week. 

• State TV in Burkina Faso reported that approximately 60 people were killed and more than 100 injured in an explosion at a mining site on Monday caused by chemicals being used to treat the gold being collected.

• Sen. Rick Scott, who chairs the National Republican Senatorial Committee, broke with Minority Leader Mitch McConnell on Tuesday by releasing an 11-point governing plan outlining what he believes Republicans should do if they regain majorities in Washington. McConnell has thus far declined to put forth an agenda, attempting to frame the election as a referendum on the Biden administration. 

The West Tiptoes into Russia Sanctions Over Ukraine

For Russian President Vladimir Putin, one of the benefits of a methodical and deliberate military buildup as opposed to a blitzkrieg invasion is the former allows him to better assess how far he can realistically push. There’s a reason, for example, that tanks didn’t immediately begin to roll into Kyiv immediately after Monday’s recognition of the Donetsk and Luhansk People’s Republics (D/LPR). “He’ll want to see what the Western reaction is,” former National Security Council official Thomas Graham told The Dispatch earlier this week. “Will there be sanctions? What type of sanctions?”

Putin had a clearer picture of the West’s resolve by Tuesday afternoon—and it’s unlikely that what he saw significantly changed his thinking. 

The harshest response by far came early in the morning, when Chancellor Olaf Scholz—quieting the skeptics—announced Germany would indefinitely halt the certification process of Russia’s Nord Stream 2 natural gas pipeline. “We must now reassess the dramatically changed situation,” he said, prompting Ukrainian Foreign Affairs Minister Dmytro Kuleba to praise his “true leadership” for taking such a difficult stand. White House Deputy National Security Adviser Daleep Singh said Germany’s move—which came after overnight “consultations” with the United States—would render Putin’s $11 billion project a “waste” and lessen Russia’s “geostrategic chokehold” over Europe. It’s unclear, however, whether the stoppage is best described as a termination or a conditions-based pause.

Elsewhere in Europe, Prime Minister Boris Johnson announced the United Kingdom was sanctioning five Russian banks—Rossiya, IS Bank, General Bank, Promsvyazbank, and the Black Sea Bank—and three Russian oligarchs, freezing their UK assets and banning them from traveling to the country. The European Union agreed to sanction all 351 members of the Russian State Duma who voted to recognize the DPR and LPR, 27 others accused of “destabilizing” Ukraine, and banks that “finance the Russian military apparatus.” The bloc will also limit Russia’s ability to tap into European financial markets, and ban trade between the D/LPR and the EU.

That latter prohibition was similar to the sole move made by the Biden administration on Monday, but the White House rolled out what President Biden labeled its “first tranche” of sanctions specifically targeting Russia on Tuesday afternoon. In addition to full blocking sanctions on five Russian oligarchs and two Russian banks—Vnesheconombank and Promsvyazbank—that hold a combined $80 billion in assets, Biden told reporters the U.S. would impose restrictions on Russian sovereign debt, making it more difficult for Moscow to raise money.

All in all, the packages were on the underwhelming side, particularly when held up against the crippling bundles of potential sanctions outlined in media reports over the past few months. But a recurring theme on Tuesday was that yesterday’s announcements were only the beginning—if they needed to be.

“​​This is the first tranche, the first barrage, of what we are prepared to do,” Johnson said. “We will hold further sanctions at readiness, to be deployed alongside the United States and the European Union if the situation escalates still further.”

Josep Borrell, the EU’s top foreign affairs official, admitted the bloc “could’ve gone further” in its response had all 27 of its member states been in agreement, but also argued against “show[ing] off all our cards” too early in the crisis. “If Russia continues to escalate this crisis that it has created, we are ready to take further action in response,” European Commission President Ursula von der Leyen added. “The European Union is united and acting fast.”

“This is only the sharp edge of the pain we can inflict,” Singh told reporters at the White House yesterday, claiming the administration is ready to “press a button” and sanction two more Russian banks that hold a combined $750 billion in assets. “This was the beginning of an invasion, and this is the beginning of our response.”

Biden administration officials repeatedly bragged that their response thus far has been both faster and more expansive than the Obama administration’s answer to Putin’s annexation of Crimea eight years ago. That’s true, but it’s also an exceedingly low bar. “In the scope of what the U.S. can do to interfere with the functioning of the Russian economy, this is very light,” said George Pearkes, a global macroeconomic analyst at Bespoke Investment Group, noting the Russian ruble strengthened against the U.S. dollar after Biden unveiled his administration’s initial sanctions package. “What appears to be the decision from Biden and the other Western leaders, is that they’re going to leave a lot waiting in the hopper in case things escalate further.”

There’s an obvious case to be made for that strategy: If you go from zero to 100 too quickly, Putin may determine (correctly) that, because the worst repercussions are already behind him, there’s little reason not to plow ahead with a full-scale invasion. But a more gradual approach is not without risk, as it relies on Putin believing you have the fortitude to eventually pull out all the stops as needed.

“I think you should use the overwhelming amount of [sanctions] now,” Democratic Sen. Bob Menendez—chair of the Foreign Relations Committee—told CNN yesterday. “You may reserve something like what I call the ‘mother of all sanctions,’ unplugging Russia from the SWIFT financial system. But at the end of the day, when is it that we’re going to be clear to Putin that there are severe consequences for what he’s doing? When he takes another bite after this bite?”

“You need to be overwhelming in the response,” Menendez concluded, “so [Putin] understands there’s real consequences. Otherwise, he’ll continue to calibrate in a way he thinks he can get away with.”

One such overwhelming response, reported in Foreign Policy yesterday, is a potential agreement between the United States, Singapore, Japan, and Taiwan on a sanctions and export control package that would block Russia from importing many of the semiconductors and computer chips on which its manufacturing and defense industries rely. The Biden administration is also reportedly weighing cutting Russia out of SWIFT, the technology that underpins much of the international financial system.

Even if the United States does successfully push forward with such stringent measures—varying degrees of unlikely right now—it’s no guarantee they would have the intended effect. Putin has not demonstrated himself to be the most rational actor in recent days—he demonstrated yet again on Monday he prioritizes Russia’s expansion over the wellbeing of its people—and Moscow has spent years reshaping the Russian economy (which is roughly half the size of California’s) to limit the damage Western sanctions can inflict.

In the eight or so years since we were last in a Russia/Ukraine crisis situation, Putin has overseen a gradual buildup of his country’s currency reserves and an effort to shift supply chains and trading relationships away from the West. “He’s obviously built reserves up, he’s reduced leverage in the economy, reduced debt levels, built up fiscal services,” said Timothy Ash, a London-based economist who focuses on emerging European markets. “It’s all been about building for this moment, to have maximum resources to defend against likely sanctions to come down.”

The moves prepared Russia fairly well for the types of penalties Western nations announced yesterday. But sanctions targeting the supply side—like the semiconductor export controls outlined above—could still very much leave a mark. “Russia is going to be able to pay for imports in terms of having the cash on hand, both because they have this large current account surplus and also because they have very large foreign exchange reserves of over $600 billion equivalent,” Pearkes noted. “[But] as far as sanctions go, what’s going to bite them is access to stuff that they need to buy. It’s not a question of being able to pay for it—they’ll be able to pay for it. It’s a question of finding people [who] are willing to sell to them.”

“If things escalate further, there’s a huge range of things the U.S. can do to cut off Russian access to everything from basic foodstuffs, to consumer goods, to industrial supplies that they can’t make themselves,” Pearkes added. “The Russian economy does not have the productive capacity to not have a large dependence on overseas goods, especially some of these very specialized goods like semiconductors.”

Worth Your Time

• In an essay for American Purpose, Kathryn Stoner asks readers to remember what Europe looked like before NATO came along. “It was a region pockmarked by clashes between empires claiming spheres of influence; and when these God-given imperial borders were perforated, there followed decades of war,” she writes. “The post-World War II and post-Cold War orders were systems built in reaction to this horrific history and, therefore, grounded not on the idea of empire but on respect for state sovereignty. … Putin’s view of the world is that of a 19th-century monarch. This kind of thinking produced a Europe fragmented and in a perpetual state of conflict, not the Europe whole and free that we have enjoyed for the last thirty years. That is what is at stake in Ukraine today. Armchair experts take note: This isn’t a mental exercise to be conducted in the comfort of one’s home in Brooklyn or one’s study in the Chicago suburbs. Ukrainian (and Russian) lives are at stake, as are, potentially, those of Lithuanians, Poles, Moldovans, Georgians, and perhaps others.”

• In a piece for the Wall Street Journal, Ed Condon stands athwart the imposition of the designated hitter yelling stop. “Excusing pitchers from batting in the National League might seem like nothing big—the designated hitter has been a feature of the American League for decades. But it’s a third strike at the heart of the game, and it will saw off part of what has made baseball a school of character for generations of American kids,” he writes. “When baseball resumes, most casual fans and viewers will hardly notice the advent of the universal designated hitter. Those of us who mourn what’s been lost will be dismissed as cranks. But that’s the thing about losing your soul: It happens only when you forget why you need it.”

• Josh Barro’s latest Very Serious newsletter argues Sen. Rick Scott’s decision to outline a GOP governing agenda in advance of the midterms is a strategic mistake. “Liberals on Twitter will mostly notice the culture-war content of the document, and they may underestimate the strength of the political ground that Republicans stand on with many of those issues,” he writes. “But the big opportunity for Democrats—and the potential wrench in McConnell’s campaign strategy—lies in a short statement about taxes: ‘All Americans should pay income tax to have skin in the game, even if a small amount.’ In a typical year, nearly half of American tax filers have no federal income tax liability. A promise to make all Americans pay federal income tax is a promise to raise taxes on well over one hundred million people. … A public impression that Republicans are going to mess with old-age entitlement programs or shift the tax burden toward the middle class can be [a] powerful weapon for Democrats.”

Presented Without Comment

Also Presented Without Comment

Toeing the Company Line

• If you weren’t one of the 1,100 people who tuned into Dispatch Live last night but want to watch a replay, you can do so here! (The password is “Crisis”.)Come for the thoughtful and nuanced Ukraine conversation, stay for the awkward moment when David’s internet drops out.

• In yesterday’s Sweep (🔒), Sarah makes the case that former President Donald Trump’s sway over the Republican Party has actually strengthened since he’s been out of office. “It’s hard for me to even fathom how a candidate not aligned with Trump—and by aligned I mean lockstep with his campaign operatives and committees—can get through any GOP primary, let alone a general election,” she writes, citing his fundraising dominance.

• Tuesday’s French Press (🔒) seeks to explain—with maps!—just what Putin means when he says Ukraine was “entirely created” by Russia. “The primary provocation in the Putinist worldview isn’t NATO expansion, but rather the combination of the collapse of the Russian and Soviet empires and the resulting self-determination and independence of Russia’s former imperial vassals,” David argues. “That’s what he wants to reverse.”

• Jonah was traveling yesterday, but Chris Stirewalt filled in admirably on The Remnant, taking stock of the 2022 midterms with Amy Walter of the Cook Political Report. Why do certain states stay purple while others become firmly partisan? Could peace and goodwill soon be restored in Congress?

Let Us Know

As mentioned above, there’s a divide among Senate Republicans as to whether it’s worth laying out a proactive agenda ahead of the midterm elections, as it risks dividing the party and deflecting attention away from the Biden administration’s shortcomings. Where do you come down?

Reporting by Declan Garvey (@declanpgarvey), Andrew Egger (@EggerDC), Charlotte Lawson (@lawsonreports), Audrey Fahlberg (@AudreyFahlberg), Ryan Brown (@RyanP_Brown), Harvest Prude (@HarvestPrude), and Steve Hayes (@stephenfhayes).