Edward Fishman On the Age of Economic Warfare
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by American Express. Hi, I'm Morgan Sung, host of Close All Tabs from KQED, where every week we reveal how the online world collides with everyday life. You don't know what's true or not because you don't know if AI was involved in it. So my first reaction was, ha ha, this is so funny. And my next reaction was, wait a minute, I'm a journalist. Is this real? And I think we will see a Twitch streamer president maybe within our lifetimes. You can find Close All Tabs wherever you listen to podcasts.

From KQED.

From KQED in San Francisco, I'm Mina Kim. Coming up on Forum, we talk with Edward Fishman, a former top State Department official under Obama, about President Trump's Tuesday phone call with Vladimir Putin. Fishman played a key role in designing sanctions against Russia and the strategy behind the Iran nuclear deal in 2015. The world has become a battlefield, Fishman writes in his new book, Choke Points, with sanctions, tariffs, and embargoes the U.S.'s primary tools of engagement. But they

They have their limits and will talk to fishermen about whether they will remain potent weapons in service of national interests under President Trump. Join us. Welcome to Forum. I'm Mina Kim. After President Trump and Russian President Vladimir Putin spoke at length on the phone Tuesday about Ukraine, the White House readout of the call described few clear concessions from the Russian leader and that the two men spoke of, quote, enormous economic deals when peace has been achieved.

It's no secret that Putin wants relief from U.S. sanctions, which more often than not, Trump has appeared inclined to give. My guest, Edward Fishman, a top sanctions official under President Obama, was a key player in crafting sanctions against Russia in 2014 and the strategy that led to the Iran nuclear deal. His new book, Choke Points, looks at how the U.S. has waged economic warfare to contain authoritarian adversaries. Edward, welcome to Forum. Thank you, Mina. Great to be here today.

So first, I'd love to get your assessment of Tuesday's call. I mean, there's a lot we could talk about. But given your area of expertise, why would Putin want to steer a conversation about a ceasefire with Ukraine toward enormous economic deals?

Look, I think President Putin and President Zelensky, for that matter, have sized up Trump quite well. Trump does not care about the outcome in Ukraine. I don't think he really cares what territory winds up in Russian hands, what territory winds up in Ukrainian hands. The language that appeals to Donald Trump is the language of business deals. I think that's why we've seen Volodymyr Zelensky try to couch U.S. support for Ukraine in terms of access to critical minerals.

And as for Putin, he's done exactly the same thing, basically trying to persuade Trump that it's worth normalizing U.S.-Russian relations, irrespective of what happens in Ukraine, because ostensibly there's massive economic opportunity for U.S. companies in Russia. And do you think Trump would do this, give up, say, U.S. sanctions in exchange for potentially enormous economic deals with Russia? Yeah.

Well, the whole thing is a bit odd, right, Mina, because the reason that U.S. companies are not investing in Russia isn't really having anything to do with Putin's restrictions. It's really about sanctions. So what Putin is trying to do is basically pull a fast one on Trump. He's trying to persuade Trump that if he can only lift sanctions on Russia, it will actually be good for the United States.

I understand why Putin's trying to do it. He's basically trying to have his cake and eat it too. He's trying to get the economic relief that he desperately needs while also having a free hand in Ukraine. Do I think Trump will go for it? I'm a little skeptical because when you actually just...

scratch beneath the surface one level. If you were actually to lift sanctions on Russia, first of all, you'd be giving up all of our leverage that we have to potentially get a peace deal. Second, you would be rupturing the US-European relationship in a way that is even more significant than we've already seen in the first month or two of the Trump administration. And third, and probably most critical from just the perspective of someone like Trump, it would be very bad for the American oil and gas sector.

The types of oil and gas companies on the Gulf Coast that have been selling products like liquefied natural gas to Europe and making a lot of money over recent years have been doing so because Russian gas has come off of global markets. I think if these restrictions were lifted, ironically, the types of oil and gas producers that Trump wants to help in the United States would actually be hurt quite a bit.

But what did you glean from the way Trump handled sanctions on Russia in his first term? And do you think that that could tell us how he might handle things moving forward? Sure. So during his first term, when Trump came into office in 2017, he did explore lifting sanctions on Russia unilaterally, basically without sanctions.

having anything to do with a deal in Ukraine, without consulting with the Europeans who have always been the key partner for the United States in the sanctions against Russia. He came close to doing it. But ultimately, in the summer of 2017, the U.S. Congress passed a law called the Countering America's Adversaries Through Sanctions Act, which made it so that if Trump were to lift sanctions on Russia, Congress would have 30 days to veto him.

That law in the summer of 2017 passed 98 to 2 in the Senate and in the House it passed with a similar overwhelming veto-proof majority. So basically Congress acted in 2017 to put a check on Trump's ability to lift the sanctions on Russia.

So, what we really saw during the first Trump term was there wasn't really any meaningful increase in sanctions on Russia, but at the same time, he didn't really pull down the sanctions at all. Still, I think the way sanctions work, the target of sanctions always adapts over time, right? They build workarounds. They find ways to skirt the sanctions. And so, by virtue of not increasing the sanctions during his entire first four years in office,

the actual pressure on Russia did abate during that period of time. So you were talking about just how important it is to Putin that we lift these sanctions and lift these sanctions while at the same time being able to have his way with Ukraine. Talk about why sanctions or and how sanctions came to be such a potent weapon. And maybe for this, it would be useful to tell the story of how and why they worked against Iran. Sure.

So, look, the reason that sanctions have become such a potent weapon is because in the wake of hyperglobalization in the 1990s, there was the development of these choke points in the global economy. This is why my book is called Choke Points. And these areas are ones where one country has a dominant position and there are very few, if any, substitutes.

The key choke point in the global economy is the U.S. dollar, where essentially it's impossible to do business as a multinational enterprise without access to the dollar and the U.S. financial system. This gives the United States significant power just by signing documents in the Treasury Department to impose significant economic pain on a foreign country. And so when you compare that with, for instance, bombing another country or using military force,

You know, it's been very attractive to presidents of both sides of the aisle to do this type of thing.

This, you know, sanctions are impactful and not nearly as costly as military force. I think the reason they were able to bring Iran to the table, and I think it's a good, it's worthwhile looking back, I mean, the strategy really starts in 2006 under the leadership of a gentleman named Stuart Levy, who was the first Treasury Department Undersecretary for Terrorism and Financial Intelligence. He was appointed by George W. Bush, and he pioneers this strategy to isolate Iran from the international financial system.

But importantly, Mina, this strategy lasts for seven years. Levy is actually reappointed by Barack Obama. He's one of the most senior Republicans who's actually retained in the Obama administration. And it's not until 2013 that we actually see significant economic pain in Iran that leads to the election of Hassan Rouhani and an opening to negotiate a nuclear deal. That's a seven-year process. Sanctions take time to work.

I think there's been a lot of impatience with the Russia sanctions. But if you think about it, it's been only three years since the start of the war. And right now, Russia's economy is completely stagnating with massive inflation. And I think that's why you see Putin so desperate for a deal with Trump right now. Yeah. So talk about Levy's strategy and how he was able to pressure banks, sort of like secondary sanctions, and how they were so effective.

Yeah, so sanctions and economic warfare have existed forever, right? I mean, you go back to ancient Greece and there is a classic example of the ancient Athenians imposing an embargo on a neighboring state. So it's not that economic warfare is new. What's new is basically how impactful it is and how low of a cost it is.

If you look even in the 1990s, when the United Nations imposed an embargo on Saddam Hussein's Iraq, this is sort of an infamous element of sanctions that occurred from 1990 to 2003. In order to stop Iraq from selling oil on global markets, you needed a multinational naval force with U.S. sailors

patrolling the Persian Gulf 24/7 for 13 straight years, inspecting every single tanker going in and out of Iraq's ports. So basically as recently as the 1990s, you know, economic warfare was just an offshoot of military force. The Pentagon was really the one who was in charge.

But what Levy realized was he could go directly to the CEOs of foreign banks. He could go to a bank in London or in Singapore and Dubai, bring with him declassified intelligence showing them how their banks were being used to funnel money to Iran's nuclear program or their proxies like Hamas and Hezbollah. And most of the time, nine times out of ten, these bankers would just stop doing business with Iran of their own volition. They didn't want the reputational hazard.

But then those stragglers, the one out of ten who said, "You know what? We're going to keep doing business with Iran," Levy could wield this threat of secondary sanctions, what you just mentioned, Mina, where he could say, "If you keep doing business with Iran, you will lose access to the dollar," this incredible choke point in the global financial system. And that really worked to completely isolate Iran from the global economy. And then connect that to how it was able to be so effective in 2013.

So, the thing that's remarkable is even going up to 2012, the one area that the Obama administration was hesitant to really attack directly was Iran's oil sales. There's a parallel with Russia today. And that's because oil is traded on global markets, and so if you take significant supply off of the market, in this case, Iran was selling about 2.5 million barrels of oil a day.

and demand stays constant, you lead to a price spike, which then can raise inflation or raise gasoline prices in the United States.

What happened in 2012 and 2013 was the Obama administration figured out how to keep Iran's oil flowing on the market, but to basically lock up its money in foreign bank accounts, to threaten banks in countries like China and India and say, "If you allow Iran to use this money without any restrictions, we will sanction you."

That was what resulted in about 50 to 100 billion dollars of Iran's oil revenues locked up in these overseas accounts. And so after Rouhani comes in, in 2013, the Obama administration has this incredible bargaining chip to play. We can basically unfreeze assets for Iran, give them back some of their own money, 5 billion, 10 billion, in exchange for steps on the nuclear program. And so that's really what led

to first the Joint Plan of Action, which froze Iran's nuclear program in November of 2013, and then ultimately the JCPOA, the final Iran nuclear deal, which is signed in the summer of 2015. And you played a big role in terms of the strategy behind that nuclear deal, right? The economic strategy, Edward?

I did, and what I really was working on was I was one of the diplomats who would go talk to refineries or port operators in countries like Singapore or Malaysia or Vietnam, bringing with me declassified intelligence, trying to explain to them how oftentimes unwittingly they were being duped by the Iranians to help Iran sell oil.

And those conversations, Mina, they can be really awkward and really difficult, right? Because you're an American diplomat coming in to a foreign capital, you know, trying to pressure them not to do business with Iran. And those conversations, I think, were aided back then by the fact that we did have international law on our side. And that's a big contrast, I think, with today when Trump really is wielding these tools just completely unilaterally.

We're talking about sanctions and other economic weapons and how the U.S. has used them against Russia and Iran with Edward Fishman, senior research scholar at the Center on Global Energy Policy and adjunct professor of international and public affairs at Columbia University. His new book is Choke Points, American Power in the Age of Economic Warfare. Listeners, what questions do you have about how sanctions work and how the U.S. wages economic warfare today?

You can tell us by emailing forum at kqed.org, posting on our social channels, or calling 866-733-6786. Stay with us.

Hi, I'm Morgan Sung, host of Close All Tabs from KQED, where every week we reveal how the online world collides with everyday life. You don't know what's true or not because you don't know if AI was involved in it. So my first reaction was, ha ha, this is so funny. And my next reaction was, wait a minute, I'm a journalist. Is this real? And I think we will see a Twitch streamer president, maybe within our lifetimes. You can find Close All Tabs wherever you listen to podcasts.

You're listening to Forum. I'm Mina Kim. Listeners, what questions do you have about how sanctions work and how the U.S. wages economic warfare? We're talking about this today with Edward Fishman, who held positions in the state defense and treasury departments under President Obama, a top state department sanctions official there. He's written a new book called Choke Points, American Power in the Age of Economic Warfare, and is currently an adjunct professor at Columbia University and senior research scholar at the Center on Global Energy and

You, our listeners, can tell us, have you been personally affected by U.S. sanctions against Iran or Russia or somewhere else? And what questions do you have about how Trump is using the U.S.'s economic weapons now, this term? You can email forum at kqed.org. Find us on Blue Sky, Facebook, Instagram, and threads at KQED Forum. And call us at 866-733-6786, 866-733-6786.

Of course, President Trump withdrew us from the nuclear deal in the first Trump administration. What do you see as the repercussions of that?

It was a catastrophic error. It's very clear that sanctions worked to bring Iran to the table. And even going back to the debate in 2013 to 2015, Democrats credited sanctions with getting Iran to the table and Republicans thought that if only we had sanctioned Iran for longer, then we would have gotten an even better deal. And look, you can quibble with whether potentially Secretary of State John Kerry could have negotiated a slightly better nuclear deal.

I think what is not really debatable is that we're in a much worse position today. After the 2015 nuclear deal, Iran's breakout time, which is this measure of how long it would take Iran to actually obtain the materials they need to build a nuclear weapon, was at least a year. So basically, U.S. intelligence would have a year warning if Iran was going to make a decision to actually race and build a nuclear bomb. That's plenty of time for policymakers to try to develop a response.

After Trump unilaterally pulls us out of the Iran nuclear deal in 2018, Iran restarts its nuclear program. And now Iran is about a week away from building a nuclear weapon if they were to decide to do so. And of course, a week is such a short period of time, you're not even...

guarantee that you'd have any warning at all. And you really run the risk that Iran could become another North Korea, you know, another country that has a significant nuclear program, and there's very little that America can do about it. And it's in this situation that we're in that Axios, of course, reported that Iran

A letter was sent to Ayatollah Ali Khamenei giving Iran two months to make a new nuclear deal or experience consequences. Right. So what did you think about that? Do you think this administration has a real strategy, given what you just described as how long it took to even get to the first deal?

You know, I'm cautiously optimistic is what I'd say. And maybe that's because, you know, I have no other choice but to have some sliver of hope. Trump has seemed to be open to the idea of negotiating a new nuclear deal with Iran. I think two months is a pretty short timeline.

The Iranians, I think, would be well served to get a new nuclear deal. And I think if Trump actually were to put his name on it and negotiate it himself or through his administration, there's a real chance that it actually survives the meat grinder of American domestic politics. Right. I don't think the Democrats would come out and, you know, veto a new Iran nuclear deal.

But the thing I'm worried about is this two-month timeline. I mean, the Israelis may decide to take action themselves, take matters into their own hands and strike Iran's nuclear facilities. You know, Iran's air defenses have been decimated in recent months.

And I think the real risk you run there is, A, you basically give Iran no incentive not to build a nuclear weapon in the future, potentially in secret. But B, you know, you really run the risk of starting a regional conflagration in the Middle East that could even pull the United States in. Hmm.

Well, this is her Noel on discord rights. I really think economic sanctions are the wrong way to protest and other governments policies. I just got back from a tour of Cuba, the number one example of a failure of sanctions to change their government leadership. And now about and how about Venezuela sanctions result is millions of Venezuelans fleeing their country, many ending up here, Iran, how well is that working? And our years long sanctions against Iraq did not help them become a functioning democracy. We need to acknowledge the history of sanctions and

and how they don't work.

Talk about that. And, you know, the examples that she gives, that Noelle gives in terms of especially Venezuela, why didn't Trump's sanctions against Venezuela work when, you know, they don't necessarily have as big a sphere of influence, say, as Russia and so on? Yeah, Noelle, your criticisms are actually well taken. And I think one of the things that I think we need to acknowledge about sanctions, and I don't hear political leaders acknowledge enough, is that there are serious humanitarian consequences and collateral damage caused by sanctions.

And what that tells me as a policymaker, a former policymaker, is that when you use sanctions, you need to really have a critical national security threat that is at stake and you need to have a plausible goal that you're advancing.

When it comes to Cuba or Venezuela, the goals of those sanctions regimes are basically regime change, right? It's, you know, get rid of Castro and, you know, put another government in place in Cuba. That was the goal dating back to the 1960s. With Venezuela, the goal has been to get rid of the Maduro regime.

There's a terrible track record of sanctions leading to regime change. And so oftentimes when you're going out and trying to use sanctions for regime change, you're on a fool's errand and you do wind up doing significantly more harm than good.

That's why I think you need more limited and achievable objectives. With Iran, there was criticism that the Obama administration took by focusing on the nuclear program. That's what Trump said. He said, "Well, we can't just have a nuclear deal. We need a deal that stops Iran from giving any money to Hezbollah or Hamas and stops Iran from building any missiles."

There was actually this list of 12 demands that then Secretary of State Mike Pompeo put out in 2018 from Iran. And if you added them up, it basically was tantamount to regime change. It would have forced the Iranian regime to completely change itself. And that is not a reasonable goal for sanctions.

At the same time, if it's okay, you know, people ask sometimes, "Do sanctions work?" But I never hear anyone ask, you know, "Does a bomb work?" Of course, a bomb works to blow something up, but it doesn't always get you what you want politically. I think the same is true of sanctions, but I think, unfortunately, our politicians are much more open to using sanctions willy-nilly. And speaking of that, are tariffs a form of sanctions? And if so, do you think this administration is wielding them recklessly?

Well, the administration is certainly wielding them recklessly. Historically speaking, tariffs have not been a weapon of economic warfare. They've really been a tool of economic policy. Very early in American history, they were used to raise government revenue before the income tax existed.

Of course, at that time, the federal government was a couple dozen people, right? So it wasn't nearly the scale that it is today. A more plausible economic goal of tariffs is to protect domestic industries from foreign competition. So a good example is during the Biden administration, when Chinese electric vehicles were really dominating the globe, Biden imposed an 100% tariff on Chinese electric vehicles to protect companies like Tesla and Ford and GM from foreign competition.

What Trump is trying to do now is he does sometimes cite these more economic goals for tariffs.

But he's really trying to use them as a cudgel, you know, trying to bully the Canadians into becoming the 51st state or bullying the Mexicans into, you know, beefing up security at the border. That is much more like sanctions. I think the difference, though, is that tariffs are quite a weak tool relative to sanctions. You know, with a tariff, it's just a tax on imports. So, you know, you can still buy things. A sanction is much, much stricter and much harsher.

Yeah, and the alliances, I mean, we're doing them on our allies in some of the examples that you gave, right? And as is very clear in Chalk Points, those alliances can be paramount when you're trying to put sanctions on another country. Let me go to caller Spencer in Oakland. Hi, Spencer, you're on.

Hi. I was wondering if the guest could make some remarks about the new BRICS program or cooperation between developing countries and about whether that's going to affect the United States' or Europe's ability to impose sanctions in the future and what

the role something like BRICS or something like the Swiss system plays in towards economic sanctions in general. I'm just trying to wrap my head around all of this stuff. So thank you so much. I'll take my answer off the line. Thank you.

Spencer, that's a very good question. And what we've seen over the course of the last decade or two of America wielding tools like sanctions and export controls and tariffs more aggressively than ever before, there's been a reaction. And foreign governments, particularly governments that have been either sanctioned themselves or fear that they could in the future, are taking steps to insulate themselves from American economic warfare.

I mentioned earlier that the dollar is the number one choke point that the US relies upon for economic warfare. And so it's no surprise that the Chinese government has been taking significant steps to try to insulate itself. In 2020, they launched a central bank digital currency, the digital renminbi, which doesn't rely on any of the intermediaries that normal cross-border payments does.

More recently and more concerningly, China alongside Saudi Arabia and the UAE, with some support from the BRICS, has built a platform called Enbridge, which allows countries to settle cross-border payments with each other without using the dollar at all. And these, in some ways, more efficiently than the dollar-based system.

I don't know if any of the listeners have sent an international wire recently, but it actually can take a week or longer to clear an international wire transfer. Some of these new, more technologically advanced systems like Enbridge, the one that China created,

you can clear a cross-border payment in about just a few seconds. So I do think we could be nearing an inflection point. I do not think that the BRICS are going to develop their own currency. This is something that Trump has been very nervous about and has actually threatened tariffs on the BRICS multiple times if they develop their own currency. But what I think is much more likely is that the BRICS

led by China and several other countries could develop these systems that are alternatives to SWIFT, alternatives to other dollar-based clearing systems that could significantly erode America's power to impose sanctions in the future. And listener Joan writes, "As our allies adopt the position that the U.S. under Trump cannot be relied on or trusted, should the day come where they feel they need to impose sanctions on us, what could they do and how exactly would it hurt us?"

Jones' comment is making me think of something that you said, Edward, which is that economic nationalism is on the rise. Talk about what you mean by that and where that could go. Yeah. So we are living in an age of economic warfare. We're not living in an age of American economic warfare. It's everywhere. Every country around the world is building up its economic arsenal, imitating what the United States has done.

And I think there is a real risk of a tit for tat global economic war that breaks out in the coming years. We're already starting to see the beginning of it with China. You know, for instance, during Trump's first term, when he started imposing tariffs on China in 2018, the Chinese government was not prepared. And so they just responded with the same sort of tariffs that we were putting on China.

I mean, the problem for China is that the United States imports a lot more from China than China imports from the US, so they can't match us tariff for tariff.

What China has developed in recent years is a full suite of economic weapons that looks a lot like our own. And so they have sanctions. And in fact, in just the last month, China has imposed sanctions on Illumina, the DNA sequencer company in the United States, on PVH, the apparel company, on Skydio, the biggest drone company based in Silicon Valley. All of those companies have been sanctioned by China in recent months. China has imposed export controls on things like critical minerals to the United States, and they've launched

anti-monopoly investigations into Nvidia and Google. So we are seeing that China is not just retaliating with tariffs, they're retaliating with sanctions and export controls and other weapons. And you know, once you start having this sort of tit for tat dynamic, it's not always clear where it ends. And I think it's highly likely, unless there's some significant de-escalation, that everyone could wind up worse off and we could all sort of end up in autarky by default. How worried are you, Edward, about minerals as economic leverage

that China holds? Very worried. So, you know, I mentioned that the dollar is America's top choke point. Semiconductor supply chains are another really important choke point that the United States controls. When it comes to the whole, you know, clean energy technology sector, from the critical minerals that are needed to build everything from solar panels to batteries, to the batteries themselves, to finished electric vehicles, China is the dominant player.

China dominates the clean energy space. And so that is a choke point that China has at its disposal and that it's increasingly weaponizing against us. I think what Biden tried to do through the Inflation Reduction Act was to channel strategic investment into the United States to ensure that we had some resiliency to Chinese economic warfare. Trump seems to dislike the IRA. So I'm quite worried that China could be waging these tools against us and we don't really have a great alternative.

Listener Matthew writes, the task force in charge of monitoring and enforcing sanctions against Russian oligarchs was recently shuttered by Trump. With this task force off the playing field, how can the current or future sanctions be effective? How can sanctions be at all meaningful without a way to make sure they're working? So this is a very important point, and I think it's important to zoom out. Why sanctions?

have American sanctions become so impactful over the recent two decades? A big reason is that the United States Department of Justice started enforcing them much more aggressively. You know, in 2010, Standard Chartered was fined about a billion dollars for sanctions violations. In 2012, HSBC was fined $2 billion. In 2014, BNP Paribas was fined $9 billion.

When fines are that large, banks feel compelled to take sanctions seriously, right? If they don't, they risk going out of business, you know, going bankrupt.

What I worry about is if Trump guts the legal enforcement apparatus of American sanctions, if he neuters the Department of Justice, ultimately companies will get wise to the fact that maybe they can violate tariffs or sanctions and not face any repercussions. I think more broadly, if Trump really does undermine the rule of law in the United States, which I know everyone is very concerned about,

Why would the dollar retain its role as the world's reserve currency? Very quickly, I think without the rule of law, you'd start seeing the advantages of the dollar against currencies like the euro or the Chinese RMB start to fade. We're talking about sanctions and other tools of economic warfare and how they've helped

advance U.S. goals in the past and where they have fallen short. Edward Fishman is senior research scholar at the Center on Global Energy Policy and an adjunct professor of international and public affairs at Columbia.

He held position at the State Defense and Treasury Departments under President Obama, and he has a new book called Choke Points, American Power in the Age of Economic Warfare. Listeners, what questions do you have about how sanctions work and how the U.S. wages economic warfare? Have you been personally affected by U.S. sanctions against Russia or Iran or somewhere else? What questions do you have about how Trump is using the U.S.'s economic weapons now?

You can call us at 866-733-6786. You can email forum at kqed.org. And you can find us on Blue Sky Facebook, Instagram, and Threads. I do want to zoom out a little bit. Because you played such an important role in the Obama administration,

especially with regard to putting sanctions on Russia in the wake of its annexation of Crimea. I want to zoom out and sort of look at why sanctions worked less well against Russia. And we're coming up on a break, but let's just get started. Can you just remind us of 2014 and what you did?

Sure. So the situation in 2014 was very different from the Iran sanctions. So while Iran's nuclear program was arguably the top national security threat facing the United States, it was sort of a slow-moving crisis, right? It wasn't like we woke up one day and they were about to build a nuclear weapon. It was gradually increasing in sophistication and size every year.

With Russia, I remember it viscerally coming into the State Department on a February morning in 2014 and seeing the TVs playing CNN and showing little green men showing up in Crimea raising the Russian flag over government buildings. The US government was taken completely by surprise by Putin's annexation of Crimea in February and March of 2014. And so as a result, we were really playing from behind, right? We were racing to catch up to events.

There were a number of challenges. One was Russia was a permanent member of the UN Security Council. So in order to do multilateral sanctions, we couldn't go through the UN. We had to build a coalition of the willing. That's why people like myself and critically Ambassador Dan Fried, who was the sanctions coordinator at the time and a key character in my book Chokepoints, built this coalition with the Europeans. That takes a long time, right? So it took months to stitch together a transatlantic coalition to impose sanctions on Russia.

I think the other issue was that we were deeply integrated with Russia's economy at that time. Russian state-owned enterprises had something like $700 billion worth of dollar-denominated debt. So we needed to find a way to pressure Russia without tipping the global economy into a recession. And we'll find out how right after the break. Listeners, stay with us. You're listening to Forum. We're talking with Edward Fishman. I'm Ina Kim.

This is Forum. I'm Mina Kim. We're talking about sanctions and other economic weapons and how the U.S. has used them against Russia, Iran and other countries with Edward Fishman. His new book is Choke Points, American Power in the Age of Economic Warfare. So continue, Edward. You know, you have all of these issues that you need to address to be able to impose sanctions.

Right. And it is only in the summer of 2014, so four or five months after the crisis starts, that we have that international coalition in place and we have viable sanctions options, options that we think will really constrain Russia without, you know, re-inflaming the Eurozone crisis, which was still going on at the time.

What happens though, interestingly, is even after those sanctions are imposed in the summer of 2014, the oil price internationally collapses. It falls from over $100 a barrel to something like $50. So it falls by half within just the second half of 2014. And so the combined effect of the sanctions that we put in place in the summer of 2014 and the collapsing oil price

really sends Russia's economy into a tailspin. In the winter of 2014-2015, they're against the ropes. And I think had we increased pressure more, we might have been able to get a just peace in Ukraine. The challenge at the time is that the Europeans were petrified. They were worried about the amount of economic damage done to Russia, and they thought it was going to wind up spilling over into their own economies. So it was at that point that Angela Merkel, the German chancellor, and Francois Hollande,

the French president, took a flight to Minsk, the Belarusian capital, and negotiated a ceasefire with Putin and Poroshenko, who was the Ukrainian president at the time.

And that really was done just as much to, you know, ease the economic situation as it was to really stop the war in Ukraine. Your mantra when it comes to sanctions had been something like "Go big or go home." You've compared it to antibiotics. Just talk about that. It feels relevant here. Yeah. So I think oftentimes with sanctions, we try to have it both ways, right? We try to impose a lot of pressure on a country like Russia, but really without hurting ourselves in the process.

And I understand that goal, but I think what you wind up getting then is incremental middling sanctions. And I think that's what Putin faced. And as a result, by the time we get to 2021, 2022, he doesn't fear sanctions nearly as much as he did in 2014. He feels like he can survive even if the West imposes more dramatic sanctions. I think that's part of the reason deterrence failed in 2022 and he invades Ukraine a second time.

My own vision for sanctions is that we should use them far less. We should not be using sanctions to try to affect goals like regime change, which will never happen in countries like Cuba or Venezuela. But when we do use them, when vital national security interests are at stake, as in a war in Ukraine where Russia is literally trying to conquer its neighbor, we should be willing to impose dramatic sanctions on Russia, even if it means a temporary spike in inflation or gasoline prices at home.

What I would want to see presidents do is to communicate to the American people why a little bit of temporary economic sacrifice at home is worth it for the sake of broader security interests. I haven't seen presidents willing to do that. Yeah, we did impose big sanctions in 2022 after the invasion. Can you just remind us broadly the categories of sanctions that we've imposed against Russia that Trump could use?

Yeah. So at first in 2022, what Biden did was he tried to maximize sanctions on Russia without touching the key sector of Russia's economy, which is oil and gas. So he imposed really significant sanctions on the Russian banking sector, on the two biggest banks in Russia, Spare Bank and VTB. Critically, we froze the assets of the central bank of Russia, so something like $300 billion of assets that are frozen largely in European banks.

And then there are really dramatic sanctions on the Russian military industrial complex. So, you know, the big sort of Lockheed Martin of Russia is a company called Rostec, which was sanctioned as well as sort of all of its affiliates. But it wasn't until the end of 2022 that we started imposing some sanctions on Russian oil. And it really wasn't until the very last two weeks of Biden's time in the White House, so January of this year, that the Biden administration imposed a serious frontal assault on the Russian oil sector.

So it's only very recently that we've gotten to energy sanctions. And I think that's what has Putin so scared right now and so desperate to take that Trump to lift those energy sanctions. The EU is also sanctioning Russia. If we were to ease sanctions...

How would that affect the force of EU sanctions? I think the EU would almost certainly not lift their sanctions and if anything they'd probably strengthen their sanctions to try to compensate for the weakening of American sanctions. So I don't think that very much would be accomplished by lifting US sanctions alone. I don't think

You'd see a race by U.S. companies to get back into Russia, especially if EU sanctions and British sanctions and Japanese sanctions remained in place. So I think all it would be would be to give a big public relations victory to Putin and so a rupture in the transatlantic relationship that nobody needs right now. Yeah. And in the meantime, I mean, Ukraine, right?

Yeah, I mean, stabilized. Yeah, 100%. I mean, look, we need to be, you know, I think there's been with Trump's rhetoric, like the fundamental situation has been muddled, you know, Ukraine has been invaded by Russia, Russia seeks to effectively end Ukraine as a sovereign state, right? They're seeking the most maximalist objectives. And even after the call that Putin and Trump had the other day,

it is not clear at all that Putin has taken even one half step back from those maximalist objectives. So I do think that getting rid of sanctions now, which are our key lever alongside military support for Ukraine to try to protect Ukraine's rights to exist as a sovereign state, if we were to give that up, I mean, it would just be a colossal failure of this whole effort and a gift to Putin.

And there'd be absolutely no guarantee that there would ever be any economic deals. Anyway, we were touching on this earlier, but this listener writes, what responsibility do we have to the citizens bearing the brunt of our sanctions? If we as a country are willing to bear the cost by going to economic war with these countries, shouldn't that also include accepting their refugees or fleeing the impact of said sanctions? And yeah, we were talking about this, you know, in the context of Venezuela and Cuba and so on. How do you answer that question?

Yes, the United States definitely has a responsibility when it comes to countries that are under sanctions. While sanctions are never targeted at regular ordinary people in foreign countries, it's a fact that government officials don't admit that ordinary people oftentimes are the most affected because they don't have the type of life preservers that, you know, the regime in Iran or in Russia has, right?

So, what are our responsibilities? I think at the very minimum, it's to have significant humanitarian exemptions. And by U.S. law, we're not allowed to impose sanctions on things like food or medicine and medical devices.

Still, sometimes it's hard for these sanctioned countries to import food and medicine because of things like inflation, right? If their currency is being devalued, foreign food may cost more. So I think it is imperative for the United States to provide things like food aid and medical aid to these countries.

In terms of accepting refugees and asylum seekers, I think that is another way that we can support countries that are under sanctions. Typically, if you're a country that's being sanctioned, it's partly because your government's an authoritarian government that is not running things particularly well and probably engaging in all manner of human rights abuses. So I do think it's incumbent upon us to have open arms to people who are legitimately fleeing oppression in some of these governments.

So you envision a potentially bleak scenario if economic warfare were to go away. Is that because you see then it naturally moving towards actual warfare on a battlefield?

Yeah, so you asked me earlier, Mina, about economic nationalism. So I think that what is driving this age of economic warfare? I think it's a fundamental asymmetry between the fact that our global economy is still designed for the benign geopolitical environment of the 1990s, but we're living in a very intensifying period of great power competition, right? So almost inevitably, economic interdependence is going to unravel.

I think there's one possibly positive scenario in which we have less trade, less financial relationships with adversaries like China and Russia, but maybe more with our friends like Canada and Mexico and Europe. This is the whole idea of "friendshoring," right? Where we still have economic interdependence, but maybe less with our adversaries. And I think that world might be a good one, right? We may still have prosperity and we may even feel more secure because we're not vulnerable to Chinese economic warfare and they may not be vulnerable to ours.

But I think there is this bleaker scenario, and it's the one that I worry that President Trump is taking us into. Because Trump is not just wielding economic warfare against our adversaries, he's doing it against Canada, Mexico, Colombia, the EU, our friends. And I think where that takes us is a world where you have a chaotic breakdown of the global economy. And what history shows is that when states can't feel confident in their ability to secure resources just through buying them through open trade,

they're tempted to seize them. They're tempted into things like imperialism and conquest.

And honestly, when I hear Trump talking about seizing Greenland for its mineral resources, it scares me because, you know, normally if Greenland has mineral resources, you'd say, well, let's have a trade deal with Denmark and we can buy more resources from Greenland, right? But the psychology of this sort of economic nationalism leads to you thinking, well, the only way I can have those resources is by physically planting the American flag on Greenland's territory.

And speaking of just this age we're in now, I do want to ask you about the role of cryptocurrencies in terms of posing a threat to U.S. economic power and its ability to effectively wage economic warfare.

Yeah, so the whole idea of cryptocurrencies and digital currencies is that they disrupt this whole intermediary infrastructure, like correspondent accounts in New York City, where all the dollar-based payments go through. So almost certainly, if you were to have a significant rise in digital currencies, you would have a change in how international payments exist, and you'd have a disruption to the current paradigm for American sanctions.

My own view is that we are heading toward a significant disruption in how payments operate. That doesn't necessarily mean that American power or American financial power will be undermined. I think if the U.S. emerges as the leader in the digital currency space, whether that's through a central bank digital currency or a very well-regulated stablecoin ecosystem here in the United States for cross-border payments, it may actually strengthen American financial leadership.

The thing I worry about is that China so far has the lead in areas like central bank digital currencies. And while Trump has been supportive of cryptocurrencies, it's been sort of in this Wild West

kind of a way, right, where he's launching his own meme coin. He's talking about a strategic cryptocurrency reserve for all these types of currencies that probably are worth nothing, sort of like the tulip bubble, you know, going back several centuries. And I think that has a significant risk of both undermining our own financial system and making China seem like the more reliable player in the digital currency space. We're talking with Edward Fishman. And let me remind listeners, you're listening to Forum. I'm Mina Kim.

Let me go to caller Paul in Mill Valley. Hi, Paul. You're on.

Hi, thanks for taking my call. I tuned in a bit late, but Mr. Fishman, I heard you talk about sanctions should be used less. I was glad to hear that, and only used when there's an extreme situation. I work with humanitarian and peace-building groups. I run a network of groups that are affected by sanctions, but in an unrelated way. Many of your listeners may not realize, even though humanitarian aid often is licensed or carved out of sanctions,

you still have to pay your workers, you still have to make financial transactions in places like Syria and Yemen. And banks don't like doing that. It's called de-risking. Even though it's legal to pay your staff, even though it's legal to transfer money, you often can't get it there. So, can you comment a bit on that? It's not just State Department sanctions, it's Department of Treasury regulations. So, even though it may be allowed, it makes it really, really hard to execute programs.

Paul, thanks. Paul, you're right. And I think, you know, one of the concepts that I try to really bring to life in my book, Choke Points, is that, you know, the frontline infantry in American economic wars are not government officials. They're banks and companies, right? I mean, the American government doesn't freeze assets. Banks freeze assets. And what the U.S. government has shown is that they're very good at controlling

persuading banks not to do business in foreign countries like Iran. This is the whole idea of Stuart Levy that Mina and I were talking about earlier in the conversation. What we're less good at is persuading banks that they should do business in certain jurisdictions. And so you're exactly right. Once you start having sanctions on a country like Somalia for any reason, you may impede things like remittances that may be perfectly justified from hardworking immigrants back to their home.

I think that what's incumbent upon the United States is to try to provide written comfort to banks when they aren't doing activities that we think they should be doing. But I think more to the point is we should have fewer sanctions programs. We have something like 30-plus sanctions regimes right now.

You know, if the Department of Government Efficiency was actually doing its job, maybe it would bring those 30 down to, you know, three or four, you know, and we would have, you know, significant sanctions against Russia and Iran and, you know, export controls against China, which I think are real three, you know, critical national security threats to the United States, but far fewer against other developing economies where sanctions are probably doing more harm than good. So talk me through what would be

A good way to be thoughtful about the way that we are determining sanctions and then implementing them as well. I know you've advocated for something along the lines of a permanent Council of Economic Warfare. Why would that do it?

I think it would. I mean, it would at least help. Just so folks understand, I mean, the paradigm now for how sanctions or tariffs or export controls are imposed, it's a very haphazard process. You have the State Department with a role, Treasury, Commerce, the CIA, the National Economic Council, the National Security Council. There's so many cooks in the kitchen that, you know, it's sometimes hard even to figure out who the right person to talk to is.

I contrast this with the experience I had when I got to work at the Joint Chiefs of Staff for General Martin Dempsey, who was the top military leader in the United States. You know, the way the Pentagon prepares for conventional war, it's much, much more professionalized, right? You know, creating different options for what to do if China were to invade Taiwan.

rehearsing them, doing military exercises where we kind of find the flaws in our plan. We don't do anything like that for economic warfare. Frankly, we don't take it very seriously. And that's a problem because economic warfare is reshaping the globe.

It is changing the paradigm of globalization that we all grew up in, where economic relations were win-win and restructuring the global economy. And given the stakes, we need to be doing this much more professionally and much more rigorously than we ever have in the past. And so this council would bring together all of these different departments, talk about it, figure it all out.

Yeah, and I think the key is doing this type of analysis ahead of time so that you're not surprised. You have the whole range of options available for sanctions against different countries that have been vetted. You've analyzed the potential economic harms, the potential externalities that you want to mitigate against, and you actually can plan for it. And you don't have to just do everything on the fly.

By the way, other governments have been doing this. Japan now has a minister for economic security. That would be the equivalent of us creating a whole new government department for economic warfare. So we are falling behind in this area. Business Neuron Discord writes, making Greenland or Canada 51st state reeks so awfully of Liebenschrom. It is pathetic and reckless. Our trade allies should probably sanction the U.S. for this rhetoric.

Are you optimistic that we're moving in the right direction, Edward Fishman? I'm sorry to say no, I'm not optimistic right now because I do worry about, you know, that the comments Trump makes, whether or not he's serious about trying to seize Canada or Greenland, they suggest this view that you can't have any sort of permanent economic relationship with another country.

If I do have any cause for optimism, and what I will say, I hope people read Chokepoints because I spend a lot of time talking to officials from the first Trump administration like Robert Lighthizer who really designed Trump's economic policies.

is that there is a lot of entrepreneurialism that happens under Trump. He gives people quite a long leash. And I think over the next six months, we may see some of this chaos shake out in which some of the more rational minds in the Trump administration have a bigger role and a bigger say. And I think that will only increase in likelihood if the economy continues to do poorly, which it has in the last month.

The book is Joke Points, American Power in the Age of Economic Warfare. Edward Fishman, thanks so much for talking with us. Mina, this has been a lot of fun. Thanks for having me on. Thank you. And thanks to our listeners for their great questions today and insights as well. And my thanks to Mark Nieto and Susie Britton for producing today's segment. You have been listening to Forum. I'm Mina Kim.

Funds for the production of Forum are provided by the John S. and James L. Knight Foundation, the Generosity Foundation, and the Corporation for Public Broadcasting.

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