President Trump is meeting with Vladimir Putin in Anchorage, Alaska. Like everyone, I hope the meeting goes well and Putin agrees to a cease-fire as the first step toward a peace deal that will end the Russia-Ukraine war.
If Vladimir Putin misbehaves, President Donald Trump can completely turn off his economic and monetary spigot.
If anybody can negotiate an end to the war, Mr. Trump can. As I have said, Trump comes to this meeting with the wind at his back. He’s had remarkable, successful domestic policy achievements at home and abroad. Internationally, he obliterated Iran. And his extraordinary success in reordering world trade has made him the best known, most powerful, and most popular person on the planet. But I doubt that Vladimir Putin sees him this way.
The ex-KGB agent is a megalomaniac who wants to extend what he believes is the historical Russian empire. He doesn’t much care that he’s been murdering civilian men, women, and children. Or their homes. Or their hospitals. He doesn’t much care that at least 300,000people have died in this war. He’s bringing in mercenary troops from North Korea, China, and other communist despotic countries to wage this insane war. He thought he could just invade Ukraine and capture Kyiv in a couple of months, take control of all the land, but turns out he miscalculated badly. He has no interest in all this lost blood or treasure.
I say this not to state the obvious, but to underscore my personal view that Putin is completely untrustworthy and will do anything to distract from a real cease-fire or permanent peace deal. I sincerely hope I’m wrong. I support what President Trump is trying to do. Trump is the peacemaker. Putin is the war criminal.
All that said, President Trump spoke on the plane to Alaska about the consequences if Putin misbehaves like he always does and said there will be “severe” economic consequences if they don’t agree to end the war.
If Putin does misbehave, President Trump has an arsenal of trade and financial weapons that will choke off and totally ruin what’s left of the Russian economy. It’s a one-horse economy based on oil and gas. So, Mr. Trump can first significantly hike tariffs on anybody who purchases Russian oil or other Russian goods.
He’s already punished India for buying Russian oil, by slapping a 25% tariff on Indian sales to the U.S. — on top of the earlier 25% tariff. You could raise that to a 100% tariff. China is a big buyer of Russian oil and goods. They should not be immune to a major tariff hike. In other words, you wanna do business with Russia, then you can’t do business with the U.S.
And then there are secondary sanctions. Same idea: you buy Russian oil or other commodities, you cannot do any business with the United States. In other words, we’re saying not only are we sanctioning your business with Russia, but the secondary sanction is also any business with the U.S. And financially, we can enforce this. We can enforce this by blowing Russia completely out of the dollar payments system.
First there’s the Swift payment messaging ledger. All dollar payments, including all the international banks, must be recorded. So, we’ll know right away who’s helping Russia. Then we can prevent the transaction; the actual payment. We do that through the Federal Reserve wire, which is the actual payment system, the actual transfer of the money.
If U.S. or foreign banks want to sneak through a Russia-related payment, they could be denied access to the Fed wire — which shuts down the whole transaction.
The Swift system and the fed wire are of course dollar-based. But over 90% of world trading transactions are dollar-based, either directly or indirectly. Think of China, India, but one way or another they are going to pay through the dollar.
So, President Trump can basically turn Russia’s economic and financial water off. He can close the Russian spigot.
Does Putin know this? Well, I don’t know. But he will shortly find out if he doesn’t make a deal with President Trump.
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