Transcripts For CSPAN Former Treasury Defense Officials Dis

CSPAN Former Treasury Defense Officials Discuss Sanctions Policy July 13, 2024

Good afternoon and welcome to this event on u. S. Sanctions and deterrence. It is a pleasure to have you here with us. Todays session is an opportunity to think about the deterrence and signaling effects of financial sanctions and as many of you know well, u. S. Sanctions are an economic tool which in general terms shut off access to the u. S. Financial system to entities that pose a threat to u. S. National security. The use of sanctions has become central to the exercise of u. S. The and National Security over the last decade. And is the favored policy tool of this administration. The topic for todays session is also the topic of a report that jordan and i cowrote and are releasing today. Here will have seen it as you came in. We haveincludes convening the session with the intention of achieving a better understanding of how the administration and congress you sanctions for signaling and deterrence and offer views and recommendations for how to improve the signaling and deterrence value for these instruments. Some of you may have seen over the weekend secretary minutia an stating that they are important alternative to world conflict. Whennk of that as helpful it comes to understanding what the Trump Administration is signaling. It gives us a lot to think about. Our sanctions meant as a deterrent . How involved is the military . Haverically, sanctions been used in times of peace and war and relatively recently they have been used against competitors as well as those that might pose a military threat to u. S. National interests. Andtopic of deterrence signaling for sanctions is not merely a topic we found interesting. As a matter of Public Policy and research. It is something we believe demands careful thinking in order to correct and update misconceptions about what sanctions can and cannot do and to bring greater credibility and utility for the use of this tool. Then move into a conversation with the rest of the panel. One thing jordan and i offer in the paper we wrote and something i feel strongly about is sanctions often have more impact. Point in aade that number of written pieces. The greatest impact of sanctions involve the signals. The signals they convey about the likely future u. S. Policy steps. It is essential that u. S. Policy officials communicate clearly to the targets of sanctions and to everyone else watching us both the gold and the intent of the measures so they are not misunderstood and when there is mixed messaging or inadequate public discussion of changes in sanctions policy including around the availability and g thess for delistin credibility and perhaps even the strength of this policy tool suffers. Ono mixed messaging sanctions can confuse or seriously put up put off u. S. Security allies complicating how they engage with u. S. Over shared National Security and foreignpolicy interests. And for people that work in a diplomatic role it is something you are bad to look at. And in challenging those relationships with allies and partners, there can be real effects on political and defense dealings between the u. S. And those close counterparts. By the way, i want to say i view about that credibility problems associated with sanctions to diminish the diligent people that work on sanctions. It is because of their excellent work that sanctions are as popular and is often used as they have become. Rather it is because this tool is maturing and there is more of a need to think about the coronation of sanctions with other foundational military tools and now is the right time to discuss the challenges that surround sanctions and gives more definition to the series of use including four deterrence. The terms for escalation and for deescalation. And how to signal about the use of sanctions policy. To do that, we have people with me on this stage. That as jordane and i were thinking about it we have particular respect for their views on this topic. We have asked them to bring their experience to bear. We are grateful for their feedback as we thought about this topic and have worked to put together the report we are releasing today. Im going to ask for some thoughts from the panelists up here. We will have a conversation together and then i will turn to the audience for your questions andcommon and bright ideas we will explain how you can participate in the interactive exercise. You may have seen some of the pieces of paper outside numbered one through seven. We will explain that in a minute. And this event is on the record and is being recorded. First, let me introduce to my left my collaborator and friend,. Susanna bloom, senior fellow and Defense Program director here at saint answer. David . The Deputy Director at the cia and before her that the undersecretary. Orber. End, eric l director of the financial integrity network. And also formally a Senior Advisor to the undersecretary of treasury. We will start with jordan. To kick us off. Strategist andty foreignpolicy planners face many challenges. Andshould National Security Economic Policy professionals focus on sanctions as a form of deterrence . Jordan thank you, liz and thank you to the foundation and center for hosting and convening the event. And thank you to my panelists. Why we thought it was important to focus on this topic sanctions have become the tool of choice for addressing Many International problems from weapons proliferation to human rights violations. Violations of an tegretol violations of territory. The greatest impact of sanctions can be in the area of deterrence. Deterring other countries from engaging in unwanted behavior. Dissuading a country from developing a nuclear weapon. From invading another country. From conducting ethnic cleansing. And we can think of many other examples and when used well, sanctions and sanctions threats and send important signals. If another country does take a certain anchor action, the u. S. Will impose certain calls costs on air. If the intentions are clear, it can prevent that other country from taking a certain step. Economic origin is he to competition. But the u. S. Has been integrating economic instruments of power with other instruments of national power, diplomacy, military, foreign aid, as well as it could. The problem isnk evident his relationship between economic and military means of deterrence. The problem here is that we have lacked a true understanding of how economic and military instruments Work Together in terms of deterrence. We think of troops stationed elsewhere. Military strategists have developed clear models of conflict escalation which sometimes gets referred to as an escalation ladder. The idea that portion could start from threats the idea that coercion could start with threats and move up the ladder. Economic coercion has remained largely absent from the escalation and deterrence models even though it has become so central to u. S. Foreignpolicy and even though sanctions are sometimes more devastating than acts of military force. As financial sanctions in particular have become more powerful, they can wreak havoc on other countries economies. Problem of conflict models not taking economic coercion , we effect into account ofue it increases the risks unintentional conflict escalation. Imagine if it is unclear whether certain ask of military coercion represent escalation from certain acts of economic coercion. Be a misinterpretation. A target might fail to perceive escalation. Clarifying the relationship between military and economic course of acts can prevent these kinds of misperceptions. And clarifying can help a target understand when the cost of flouting an International Norm are likely to outweigh the benefits of doing so. And adjust their behavior or delay. With that as our rationale, we in the report proposed what we cause a whole government escalation. We propose the u. S. Government developed a framework that incorporates military and nonmilitary means of coercion. This is not to suggest that we think economics should become a war fighting domain or that the u. S. Should be using sanctions more. We think it should be quite judicious in its use of this. We believe this will catch up to the reality of the international situation. Report we sketch a simple version of the whole of government escalation ladder. We have placed seven wrongs on the ladder going from private pressure and coercion all the way up to catastrophic actions with intervening steps including public threats, thats the second run, harassing actions. The third run. Damaging actions. Highly damaging actions. Devastating actions. Catastrophic actions. The seven runs. Iser the important idea here that military and nonmilitary threats or actions will be placed on a wrong on this ladder based on the expected him with the impacts waited weighted on a certain scale. Developinga nest an escalation model would be a major undertaking though we think it would be worthwhile. We propose the National Security council establish an interagency review designed to develop a framework. The main task would be to weight areas actions including economic sanctions based on the first full range of their and has a victory affects. Seek input from outside experts in International Allies. We think dialogue with International Allies is particularly important to develop a common understanding and approach. ,nce the framework is developed the National Security council could integrate it into National Security planning and the advisor could announce it publicly so that other countries, competitors could understand it, be aware of it, be more able to determine u. S. And correctly. U. S. Actions correctly. We would like to get your input on this as well. Some of you shouldve received a postit note when you came in. If not, there are more outside. We would like you did take a moment through the course of the panel to write down a course of action are measured. Inc. About where you might place it on the seven run escalation ladder. At the end of the session coming on can put your postit note one of the seven large papers outside representing each of the seven wrongs. Based on where you think it should go. We are interested to see what everyone comes up with on that. And you dont need to sign it. And you can create multiple ones. If you feel torn about whether a particular example should live in one or another category come you can write to them put them in both. Get out us is a way to a question that we have which is the premise of what we are doing here. How do people think about the severity of certain measures . Are we communicating clearly . Youlooking out at some of who are here with us today and knowing some of the issues or concerns with which you deal in your own research our government or business work, i thought of a couple i might offer to get you thinking about this. And then i might write down here. For example, by the way, these are entirely in my mind realistic examples. Pursuant to sanctions authorities. Sanctions on primary issuance of sovereign debt and secondary trading of sovereign debt. Pursuant to concerns about russias elections. This is an idea that has been circulating and exists in legislation. It would have a meaningful impact on emergingmarket trading globally. Wherever you put that come here is another one. Sanctions on Chinese Communist party officials. And protesters in hong kong authorities in hong president ssing the and signing into law a couple of weeks ago. Feel free to think about what owns you. To susannato move on who is our resident expert on this panel. Thank you for being here. Thinking about some of the planning andense working with defense policy officials. You are familiar with how that exercise works within some or many different circles. Thinking about escalation, escalation management, and youscalation, i wonder if would talk to us if in your experience the Defense Community thinks about sanctions. Or even thinks about sanctions from a planning perspective. And how you believe defense planners can usefully adopt thinking about conflict asolution including discussion of economic question is a tool of u. S. National security. In playing the game of what one thing does not belong, i will cut to the chase and say it is me. The competition we find ourselves in is the return of great power competition, competition with china and russia, and it has many different aspects. Exists across all of these spheres and get in the policy community, the different spheres are silos. They do not interact very well. This is a great opportunity to be on the panel and i would be remiss if i did not mention our forthcoming report on competition in china that does Something Different and addresses all of these different aspects of competition together in one place. Framework, when you think about competition with an adversary, should address all of those things as jordan outlined. A whole government approach when thinking about escalation in a competitive space. I have to say that the department of defense has an appetite or this. When i was in dod, i cant tell you how many meetings that sat in where the war fighter, the person charged with planning the , and he would come into the pentagon and discuss what should be happening and then you 20 minutes left to talk about the war. The actual use of the military instrument. As frustrating as it was in the moment, it is an indicator that there are people across the Defense Community who are hungry to have this conversation and eager for an interagency planwork to allow its together and how we will manage the competitions. Of areas some examples of planning between dod and state. It is very hard. We speak fundamentally different languages. We have a different planning culture. And different ways to think about competition and conflict. I dont eat to make it sound easy but there is a robust constituency on the defense side that wants to talk more about this. It would be helpful if they were talking to experts in it as opposed to each other only. I will say a little more about what is happening on the military side. Our contemporary thinking about escalation has many of its roots in the nuclear space. Context feel there is a that we always have to offer when we are looking at expanding this. Not everything translates nicely. There does not mean that are not valuable and interesting concepts that you can work into your thinking. Is very military accustomed to having escalation dominance meaning the u. S. Can pursue a maximally aggressive military agenda visit of the many different visavis Different Military adversaries. That is not the case anymore. Chris doherty has recently done some writing on that. There is a need to reinvigorate our thinking about control and escalation dominance. That is happening in the Defense Space. The time is right to open the aperture further and invite our other Community Members into these conversations. Framework thing i will mention is the idea of deterrence by denial versus deterrence by punishment. Because of the changing nature of conflict and the evolution of threats and the military space posed by china and russia, dod is looking carefully about determines by denial. Stopping the adversary from achieving its objective. I think when we looked at sanctions in the economic space, we are often also talking about deterrence by punishment. If you try that, you may succeed but we will make it hurt. It will be so painful that you will rethink making the attempt even though it is not a direct blockage or prevention of the adversary goal. That is another thing which is important to keep in mind. I cant help but make a couple of comment about the parallels i see. Thinking about in the history of sanctions some of the first and most important sanctions were also born out of a concern about nuclear proliferation. These are still some of the oldest authorities, most used authorities. And the methodology around their here in has parallels thinking about escalation and sending a signal which is characterized by much less theoretical work around that which is one of the reasons why we started this project. For example, when it comes to Global Financial system the u. S. Does have escalation dominance. When it comes to using the dollar. However, some kneeling concerns has caused people to consider whether escalation by punishment or escalation or rather deterrence by punishment or escalation control may actually be more useful concept to guide this thinking. Can i ask you a followup question which is to say as you are thinking about that aperture exercise, particularly with regard to russia and china in thinking about our planning for challenges of those two strategic competitors. It was interesting you mentioned in your opening remarks the comment that he views sanctions as an attorney to best as an alternate as an alternative to work. To war. For this ever to be successful, it requires leadership in the nsc. Having witnessed firsthand previous attempts at interagency justing, means not leadership from the nsc but an active translation function. And perhaps a willingness on the other federal agencies outside the Defense Department to planning frameworks. When you have a decadelong andcy of multiyear planning operational planning and strategic level planning, there is more of a history in dod then i think is resident in many of the agencies. Those are some of the critical components in making Something Like this work. I want to comed, next to you. I am mindful of the fact that you have worked in treasury in different capacities. And an important leadership role in the intelligence community. And in the private sector. Can you talk a little bit about signaling in particular . What that looks like and to the extent that there was discipline around what the signal should be and a methodology about how to communicate that, and if you could give us an example or two to ground us. A realworld grounding. Liz andhank you to jordan for involving me in this project. I will give you some realworld sanctionsf how we use for signaling purposes. Let me take a step back first to put this into a conceptual framework which i admit, while i was a treasury, never did. The broader theoretical we arennings of how that sanctions in a way we are thinking about it today. , was notn ladder thought about in a rigorous way. F

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