The Dynamic Effects of the Russia Sanctions, Public and Private
Say you lead a foreign country who you expect might encounter harsh condemnation from the West at some point; how would you harden your economic system to protect against such sanctions?
I generally appreciate the West's sanctions on Russia for what strikes me as Putin's utterly unjustified invasion of Ukraine. That includes both the official government-imposed sanctions, and similar sanctions imposed by large private organizations, such as Visa, Mastercard, American Express, and PayPal. (My guess is that the line between the public and private here is not entirely crisp, since I suspect that a reasonable organization like that, especially a heavily regulated financial intermediary, would consult with important governments before taking action; and I also suspect that such an organization would be quite open to "suggestions" from such important governments, even if those suggestions aren't actual commands.)
At the same time, surely thoughtful foreign leaders are looking at this, and wondering: Might this happen to my country at some point, if it does something that sufficiently alienates the West?
Might it happen even as to something that appears to my country to be quite justified (e.g., an invasion of a neighbor that actually did do something very bad to us, or internal actions towards people my country views as rebels or terrorists)? Might it happen even as to nonmilitary actions on our part, if those actions are viewed as insufficiently liberal or egalitarian by the West? Indeed, if the sanctions are viewed as a great success story, a cornerstone of the New International Security Order, might they be pursued more often?
And if so, what can and should I do to harden my economic system against such threats?
My guess is that the Xi Jinpings of the world have already long thought about this, though I expect they'll think about it more now. And my guess is that most countries have considered it in at least some measure.
But I expect that other countries that are at least in some measure skeptical of Western attitudes, practices, and institutions—even ones who are friendly, but who might see themselves as at some point being at loggerheads with us if circumstances shift enough (I'm thinking, for instance, of India or perhaps even Israel)—are going to be thinking especially hard now. Surely they won't give up on globalization, which is vital to their economies; but I expect that they'll want to know what sort of escape hatches or protective measures they can create in advance as an insurance measure, even at some considerable cost.
In any event, this is not my field, so perhaps I'm mistaken on this; but it intrigued me, and I thought I'd ask our readers: What do you think countries can effectively do to protect themselves against such Western reaction (however justified the reaction might be)? And what do you think they are likely to do?