Banks and Tanks: Is the Economic Arsenal Working Against Russia?

Open Source is the world’s longest-running podcast. Christopher Lydon circles the big ideas in culture, the arts and politics with the smartest people in the world. It’s the kind of curious, critical, high-energy conversation we’re all missing nowadays.

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It’s banks against tanks in the Ukraine war that’s now about everything: about the courage of Kyiv, about hope holding on in a horror show, kids in the roaring hell of it. Columns of refugees heading out of Ukraine, and a 40-mile convoy of invading Russian armor on the way in. Somewhere behind the cellphone videos of this ferocious war, there’s an unseen layer we’re looking at this hour: war as it’s waged in the bank vaults where looted wealth of super-rich Russians is now frozen. The Central Bank of Russia is shut off. Russia’s economic life is held hostage. The strategic choice by the US was not to join and escalate the ground war, but to punish Putin and Russia if they chose war. And now we see how the economic arsenal works.

Extremes of cruelty and danger are combined in this war in Ukraine. We are examining them this hour with one guest who has two specialties: the battlefield and the global banking system. Adam Tooze at Columbia University is both war historian and modern economist, joining this installment of our collaboration with the Quincy Institute in a radio/podcast series we’re calling In Search of Monsters. Tooze’s daily newsletter, called Chartbook, is required reading now, covering the force of banks against tanks, so to speak. The money piece is a theater of warfare we’re not used to seeing in real time; Tooze makes it seem potentially decisive. Those sanctions that disrupt Russian banking, the freezing of Russian assets abroad—all that on top of the heroic rising of the Ukraininian people, the Molotov cocktails and street defenders of Kyiv could turn the tide.

From the episode:

Adam Tooze: We expected the Russians would roll over the Ukrainian defenses, do it quickly, and then in retrospect, we would deliver punishment in the form of sanctions. And I think to the consternation, to a degree, of the political class and the leadership on both sides of the Atlantic, we actually find ourselves in a very difficult, different situation, which has unleashed a whole bunch of other dynamics now, because for obvious reasons there’s a huge democratic enthusiasm across Western Europe in particular. Vast demonstrations, 700,000 people plus in Berlin at the weekend, in favor of the Ukrainian resistance.

And then on top of that, the already planned anticipated sanctions. I think the sanctions were calibrated in the minds of the EU and the Biden administration depending on how severe Russia’s infraction of international law was going to be. But since it has been complete, and this is a full scale invasion and open war, I think it was always in a sense expected that they would ramp up quickly.

Now we’re actually in a situation in which there is a war which is undecided. The Russians haven’t won as quickly as people anticipated, and so the sanctions are not retrospective punishment (as they were of Russia after its annexation of Crimea) but as it were intruding into the war itself. I remain very skeptical as to whether they will swing the outcome. But certainly it creates a powerful, extraordinarily dramatic dynamic between the battlefield and the events in financial markets and in the main centers of Russia.

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