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28 October 2022

How to respond if Putin goes nuclear? Here are the economic and political options.

Brian O’Toole and Daniel Fried

Losing on the battlefield, Russian President Vladimir Putin has resorted to implied threats of nuclear weapons use in his war of choice in Ukraine. The United States, Group of Seven (G7) nations, NATO, and the European Union (EU) have responded to his brinksmanship by reaffirming support for Ukraine and its territorial integrity.

Additionally, the United States and others have sent public (and, reportedly, private) messages on the severe consequences Russia will face if it indeed uses any type of nuclear weapon against Ukraine. Although unlikely, the chances of Russian use of nuclear weapons in its war against Ukraine are not negligible. After all, Putin surprised many (though not the US government) when he launched his February 24 offensive against Ukraine.

Laying out for the Russians the consequences of any nuclear use is a good idea. Those conversations must necessarily focus on military options as the most effective deterrent, but should not end with them. Even though Putin has eschewed traditional rational actor behavior in the political and economic sphere with his unprovoked and gruesome invasion of Ukraine, the West should still threaten severe political and economic steps in response to any Russian nuclear use. All these measures should be prepared for rapid application by the G7 and coordinated to at least some extent with other key countries, including China. Russia’s use of nuclear weapons against Ukraine would demand a fast, near-immediate response by a broad coalition of concerned states beyond just the current Western-aligned nations.

Impose a full economic, financial, and trade embargo. Turning Russia into Iran or North Korea, economically, should be the moral and logical starting point for any Russian use of a nuclear weapon in Ukraine. The G7 and EU countries have imposed extraordinary sanctions thus far over Russia’s invasion of Ukraine, but in large part, they have also been measured in their steps to avoid negative spillover to the global economy. Any nuclear weapon use by Putin in Ukraine must eviscerate any thoughts of a measured escalatory ladder. Morally, it would place Russia’s behavior far beyond the atrocities committed by similarly embargoed nations such as Iran, Syria—and even North Korea. Logically, it would also be incongruous for the West to hope that Russia under Putin can be a reliable participant in an international economic order that relies on mutually agreed-upon rules.

There may need to be some allowances for an extended wind-down of certain trade sectors (energy and perhaps some specified metals) and longer exemptions for continued food-related and medical trade, including Russian exports of grain and fertilizer. There would need to be carve-outs for humanitarian contingencies and measures to support the Russian people, such as authorizing communications apps and devices that allow beleaguered Russian dissidents and human-rights activists to communicate with the outside world. However, the baseline assumption for the day after Russian use of nuclear weapons against Ukraine should be that of a complete embargo: All Russian companies would be considered under full blocking sanctions with exceptions available. The overseas property of Russian oligarchs or Russian state companies should be made subject to nationalization.

Enforcement would include broad use of secondary sanctions against any foreign persons or nations, China included, that violate such sanctions. This would include the rapid imposition of sanctions on any bank, insurance company, logistics provider, or other financial or non-financial entity trading with Russia or facilitating prohibited trade. Given Russia’s use of practices to hide investments and their ownership, the United States, EU, United Kingdom, and G7 countries should consider regulatory (preferably) or legislative action forcing transparency and disclosure of any Russian investment or other significant ownership whether in a company, real estate, art, or financial instruments. The Russian state is familiar with money laundering and would almost certainly become more akin to a criminal enterprise, like North Korea, than a normal government, if it is placed under broad economic sanctions.

Sanctions on this level will have a significant, negative impact on the global economy. However, it is unlikely that they would be much more economically destabilizing than the use of a nuclear weapon on European soil. Western nations must make clear to Putin and his inner circle that they are ready to bear the economic consequences.

Seize Russian state assets. Within days of Putin’s February 24 attack on Ukraine, G7 countries locked down over three hundred billion dollars of Russian foreign-exchange reserves held in their countries. That effective freeze does not, however, allow the use of those funds for any purpose. We have noted elsewhere that there is widespread desire to make use of those funds for Ukraine’s reconstruction, given both Russia’s responsibility for the war and the problem of asking the taxpayers of G7 countries to pay to rebuild Ukraine while sitting on large amounts of Russian state funds.

There are enormous legal complications in doing so, however. Russian nuclear use would make taking those assets for use in Ukraine, including post-nuclear attack reconstruction, an immediate objective. Arguments over precedent should and probably would give way to a categoric imperative of acting against nuclear weapons use.

Remove Russia from international organizations. Although Russia was kicked out of the G8—thus making it the G7—back in 2014, it remains party to a number of international organizations. Should Russia use a nuclear weapon in Ukraine, its participation in other international organizations should be reviewed. The first place to begin curtailing Moscow’s participation should be in economically focused organizations, including the Group of Twenty (G20) and international financial institutions such as the World Bank and International Monetary Fund (IMF), and perhaps even the World Trade Organization. Expelling or curtailing membership in any of these bodies would be unprecedented and, interestingly, not explicitly in violation of their existing bylaws. Therefore, expelling Russia would entail a complex political and bureaucratic undertaking, and require substantial support of the governing members of each institution; the IMF would require at least 85 percent of voting members to agree to expel Russia, for instance. Political support for such a drastic action may be more forthcoming following a Russian nuclear strike.

There may be good arguments for keeping Russia engaged in international political organizations such as the United Nations and the Organization for Security and Co-Operation in Europe, as venues for potentially valuable diplomacy with the Kremlin even after nuclear weapons use. However, Russia’s membership even in those groups should be reviewed and reconsidered in light of such a dramatic escalation.

Now is the time to consider and prepare such severe responses, and to coordinate them ahead of time within existing G7 and transatlantic forums. There should be no illusions about the lengths to which Putin will go in Ukraine.

The West’s planned responses need not be made public but could usefully be communicated both to the Russian government and to other strategically important nations that stayed relatively neutral in the current conflict, such as China, India, Turkey, South Africa, and Saudi Arabia.

But this planning shouldn’t preclude the United States and its allies from responding to the horrors Putin is inflicting right now with conventional weapons. They should prepare for the worst while continuing to intensify current efforts across the board—military, economic, and political—to constrain Russia and help Ukraine defend itself and prevail.

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