Good, or good afternoon, rather and welcome to this event on u. S. Sanctions and deterrence. Im elizabeth, and i direct the Economics Program here at the center for new american security. It is a pleasure to have you all here with us, todays session is an opportunity to speak about the deterrents 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 those named people or entities that pose a threat to u. S. National security. And the use of sanctions has been central to the exercise of u. S. Foreign policy and National Security over the last decade. And in fact, i would say as a favorite policy tool in this administration in particular. The topic of this is a report by jordan to my left which i cowrote and were releasing today, those of us who are seeing nus person will see that as you came in. And take a copy. The report includes findings that came out of the work shom on signaling deterrents of sanctions, funded by the family foundation, and co organized by cnas and virginia gas liquid, with an extraordinary leadership role. We have had, we have convened the session today with the intention of achieving a better understanding of how the u. S. Administration and congress use sanctions for signaling and deterrence, and offer views and specific recommendations for how to improve the signaling and deterrents value for these instruments. As many of you have seen over the weekend, treasure secretary mnuchin said and im quoting an important alternative to World Military conflict. So i think of that as helpful when it comes to understanding what the Trump Administration is signaling when it uses sanctions. And it gives us a lot to think about there, our sanctions are meant as a deterrent to military conflict, how involved is the military, in thinking about their use, and historically sanctions have been used both in times of peace and in times of war, and relatively recently, they have been used both against competitors, economic competitors, as well as those that might pose a military threat to the u. S. National interests. The topic of deterrents and signaling for sanctions is not merely a topic that we find interesting. As a matter of Public Policy and research. But it is also something that we believe demands serious careful thinking, in order to correct and update misconceptions about what sanctions can do and what they cannot do. And therefore, to bring greater credibility and utility to the use of this tool. So let me just unpack that for a moment and i will say a couple of things and then we will move into a conversation with the rest of the panelists weve invited here today. One thing that we offer in the paper we wrote, and it is something i feel strongly, is that sanctions often have more potential to deter unwanted actions, than to compel policy reversals or regime change and that latter point is one that david has made in a number of written pieces. The greatest impact of sanctions sometimes involves the signals, the signals, powerful as they may be, that they convey about the likely future policy, u. S. Policy steps. It is essential that u. S. Policy officials, that they communicate clearly to the targets of sanctions, and everyone else who is watching that, both the goal and the intent of the measures, so that theyre not misunderstood, and when there is mixed messaging, or inadequate public discussion of changes in sanctions policy, including around the availability, and process for delisting and thats something that i hope we will have a chance to discuss in depth in this conversation, the credibility and perhaps even the strength of this policy tool suffers. Also mixed messages on sanctions can confuse or seriously put off u. S. Security allies. Complicating how they engage with the United States over shared National Security and Foreign Policy interests and threats. And for people who have worked in a diplomatic role, that is something that you had to look at. And unfortunately, in challenging those relationships, with allies and partners, there can be real effects on political and defense dealings, between the United States, and those, those close counterparts. So by the way, i just want to say, i dont offer that view about credibility problems, associated with sanctions, to diminish the bright and dedicated and clearly very diligent people who work on sanctions, in a post policy role, i think it is because of their excellent work that sanctions are as popular and as often used as they have become, rather because this tool is maturing, theres more, and more of a need for thinking about strategy and coordination of sanctions, with other, the foundational military tools of u. S. Deterrents. And now is the right time to discuss the challenges that surround sanctions and give more definition to the theories of use, including poor deterrents. The terms for escalation. And for deescalation. And how to signal about the use of sanctions policy. So to do that, we have the people who are with me up here on the stage, these are people who, as we were thinking about, it we particularly respect for their thoughtful and insightful views on this topic, and we have asked them to bring to bear their experience working on sanctions policy, from the Treasury Department, as well as from the Defense Department and the Intelligence Community, that experience to bear on this conversation. And joining us to speak for both of us, have been very grateful for their feedback and put together the report we are releasing today. So the format for todays conversation, i am about to ask for some thoughts from the panelists up here and have the conversation together and then about halfway through the event, i will turn to the in person audience for your questions and your comments and your bright ideas and we will explain to you 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 to you what that means in a minute. And just for a final reminder this event is on the record and it is being recorded. Let me introduce to my immediate left joey tanner, my co writer and friend. Director of the project. And sue stan that bloom, senior fellow and defense director here. My colleague. And former deputy chief of staff for programs and plans for the deputy secretary of defense. Next, david cohen, who is currently a partner at will mer hail, formally the Deputy Director of the Central Intelligence agency and before that the former undersecretary of treasury for financial intelligence. And on the end, eric, director at the financial integrity network, also senior director at the center for economic and financial power, and also, formally a Senior Adviser to the undersecretary of treasury for terrorism and financial intelligence. So we will start with jordan to kick us off. And National Security strategists and Foreign Policy planners face many challenges. They are busy people. Why should National Security and Economic Policy professionals focus on sanctions as a form of deterrents, and what will that do to alter and improve those sanctions as a specific policy tool, and u. S. Deterrents planning more broadly . Well, thanks, first, i also want to thank the Frankel Foundation for its support and thank the center for american security, for hosting and convening this event, and also thanks susannah, david and eric for their really valuable input on this project. So why we thought it was important to focus on this topic. Sanctions, as liz has mentioned, have become the tool of choice for addressing Many International problems. From weapons proliferation to human rights violations, and violations of territorial integrity, interference in u. S. Elections, and in many cases, as was also mentioned previously, the potential impact of sanctions can be in the area of deterrents. Deterring other countries from engaging in unwanted behavior. For instance, dissuading a country from developing a nuclear weapon, from invading another country, from conducting ethnic cleansing, and to think of many other examples. And when used well, sanctions and sanctions threats can send really important signals that if another country does take a certain action, the u. S. Will impose certain costs on it. And when that signal is clear, it can deter the other country from taking that step. And it is also important to focus on this because economic coercion is central to economic competition in the 21st century, yet the u. S. Isnt integrating economic instruments of power with other instruments of national power, diplomacy, the military, foreign aid, as well as it could. And one area where we think this problem is evident is the relationship between economic and military means of deterrents. And the basic problem here is what we have lacked a clear understanding of how economic and military incidents Work Together, as tools of deterrents. Aspects of the u. S. Military posture are clearly meant to deter aggression by other countries, you can think of troops that the u. S. Has stationed in europe or east asia, and clearly theyre in part to deter potential aggression by russia, north korea and other countries and military strategists have developed clear models of conflict escalation, which sometimes get referred to as the shorthand of an escalation ladder, the basically idea being coercion could start from threats, and go up a ladder, to limited kinds of military action, to various kinds of devastating military action. But economic coercion, remains largely absent from these kinds of escalation and deterrence models, even though it has become so central to u. S. Foreign policy and even though sanctions sometimes are more devastating than actual military force. As financial sanctions in particular have become more and more powerful, they can wreak havoc on other countrys economies that may be greater than the type of havoc that can be wreaked by certain kinds of military action. And the problem of conflict models not taking economic coercion into account, weakens the ability of the u. S. To use sanctions effectively as a tool of deterrence, and we argue itted ins the rick of unintentional conflict escalation. So for instance, imagine if it is unclear whether a certain act of military coercion represents escalation from a certain action of economic coercion. The target of course, may misinterpret what the u. S. Is doing, may misinterpret u. S. Actions and perceive escalation when the u. S. Didnt intend to be escalating or conversely might fail to perceive escalation when the u. S. Did intend to be escalating in a conflict. And clarifying the relationship between military and economic coercive acts can prevent these kinds of misperceptions. Also clarifying this can also help target and understand when the costs are clouding an International Norm are likely to outweigh the benefits of doing so and able to adjust the behavior accordingly. So with that as our rationale, we, in the report, propose what we call a whole of government escalation framework, and we propose that the u. S. Government develop a whole of government escalation framework that in corps both military and nonmilitary means of coercion. And this is not to suggest that we think economics should become a war fighting domain. Or that we think the u. S. Sha be using sanctions more, in fact we think the u. S. Should be quite judicious in its use of sanctions. But instead, our goal is for deterrents and escalation to catch up to the reality of contemporary International Competition in which economics are being used as a tool of coercion as much as military and other instruments. And so in the report, we sketch a simple version of a whole of government escalation ladder, and we placed search rungs on this ladder, going from private threats of coercion, on the bottom, all the way up to catastrophic action and intervening steps include public threats, thats the second rung, harassing action, the third rung on this ladder, and damaging actions, highly damaging actions, and devastating actions, and then catastrophic actions are the seven rungs, the labels that are used for them, but the important idea here is that military and nonmilitary threats or actions would be placed on a rung on this ladder, based on their expected impacts with the impacts of military, economic and other nonmilitary actions such as Cyber Attacks weighted on a single scale, so they can be compared directly to each other in terms of what kind of impacts they might have. Now, developing a fully flexed out whole of government escalation model would be a major undertaking by the u. S. Government, and we think it would be very worthwhile. So we proposed that the National Security council establish an interagency review that would be designed to develop a new whole of government escalation framework, and the main task of this review would be to weight the severity of various military and nonmilitary actions, including economic sanctions, based on the full range of their anticipated effects. And the review should solicit input from outside experts and International Allies who think dialogue with important on this to develop a common understanding and approach, and then once this framework is developed, the National Security council could integrate it into National Security planning and the National Security adviser could announce it publicly so that other countries, competitors, could understand it, be aware of it and then be more able to interpret u. S. Actions correctly and be more likely that the signals that the United States is sbiintending t send to other countries would be received as intended. So, liz mentioned this design exercise, so wed like to get your input on this as well, and so some of you should have received a postit note when you came in, if not, there are more pos postit notes outside. Wed like you to take a moment during the course of the panel to write down a coercive action or measure and think about where you might place it on a seven rung escalation ladder, at the end of the session you can put your postit note on one of the seven large papers outside which represent each of these seven rungs based on where you think it should go, and were interested to see what everyone comes up with on that. Thank you. And i will just say, you dont need to just to add on to this you dont need to sign it, and you can create multiple ones and if you feel torn about whether a particular example should live in one category or another, you could write two and put them in both. This, for us, is actually a way to try and get out a question we have which is really the premise of what were doing here, how do people think about the severity of certain measures . Are we communicating clearly . Rather, is the u. S. Government, and, frankly, observers, communicating clearly about the them . Are they understood . And looking out at some of you who are here with us today and knowing some of the issues or concerns with which you deal in your own research or government or business work, i thought of a couple that i might just offer just to get you thinking about this. And that i might write down here. So, for example, one that i thought of, by the way, these are entirely in my mind realistic examples. Theyre pursuant to existing sanctions authorities or theyve been discussed by congress or by the administration. So one would be sanctions on primary issuance of sovereign debt and secondary trading of sovereign debt. Russian sovereign debt. Pursuant to concerns about russias election interference. This is an idea thats been circulating, exists in congressional draft legislation. Would have a meaningful effect on emerging market trading globally. So where would you put that . Heres another one. Sanctions on Chinese CommunistParty Officials involved in crackdowns and protests on protesters in hong kong pursuant to authorities human rights authorities, the new hong kong law passed and signed into law by the president a couple weeks ago. So, feel free to think about what concerns you and where youd put that there. Okay. So now were going to move on to susan susanna who is our resident defense policy expert on this panel. Thank you for being here and speaking to some of these issues based on your experience in defense planning and working with defense policy officials. You are familiar, of course, with the way that that exercise works within some, many defense circles, includesing thinking about management, escalation management, deescalation when merited. I wonder if youd please talk to us about how, in your experience, the Defense Community thinks about sanctions and talks about sanctions, even thinks about sanctions from a planning perspective, and how you believe defense planners can use fully adapt thinking about conflict escalation to and include appreciation of economic coercion as a tool of u. S. National security. So, in case anyones playing which of these things doesnt long belo belong, ill just cut to the chase. Its me. Thanks for inviting me into your circle. You know, its something that we here at cnas think about a lot is the fact the competition that we find ourselves in, competition with china, competition with russia, has many, many different aspects. Military aspect being only one. Technology, economics, diplomatic, it exists across all of these spheres and yet in the policy community those different spheres are siloed. They dont interact very well. Right . Thats what i was so excited when liz asked me first to look at the paper and be on this panel today. Its a great opportunity, and i would be remiss if i also didnt mention our forthcoming report on competition with china that actually does something a little bit different and addresses all of these digitfferent aspects o compet