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WTF Are Sanctions?? (and will they work against Putin?) - YouTube
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(suspenseful instrumental music)
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(ground explosions)
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- There is a war raging,
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and the world is taking sides
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but they don't want to get involved
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with troops and guns.
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So they're turning to a new weapon,
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an invisible one,
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a weapon that is only possible
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because of our deeply
connected world economy.
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- Sanctions.
[21]
(speaking foreign languages)
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- Sanctions.
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- Sanctions are this thing
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that just get thrown around
[26]
like we should all just
understand what they mean
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but sanctions are a kind of wonky,
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bureaucratic tool for economic war,
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and they're not super easy to understand
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unless you crack them open,
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and look at the mechanics
of how they work.
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and that's what I want to do to today.
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I wanna explain what
sanctions actually are
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what their goal is,
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and whether or not they actually work.
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So let's go.
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- The largest and most severe package.
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- Of economic sanctions.
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- That Russia has ever seen.
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(speaking foreign language)
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(ominous instrumental music)
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- Before we dive into this video,
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I quickly want to pause
for a commercial break,
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and thank today's sponsor
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who made this video possible.
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Thank you BetterHelp for
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and supporting this video.
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Let's dive into sanctions.
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(upbeat instrumental music)
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In the most literal sense,
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sanctions are this.
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A piece of paper.
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A bunch of lists that governments make.
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That is what sanctions are.
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Bureaucratic lists,
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but this is a weapon of war.
It looks a little bit different
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than the kinds of weapons
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we're used to seeing in war,
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but this is a weapon.
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I am looking at a list
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of hundreds and hundreds of names.
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People's names and their addresses
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as well as their aliases,
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their birthdays, their tax ID numbers,
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and anyone else that is also on the list
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that they might be linked to.
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Here in the US,
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this list comes from an office
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that is focused on thinking about
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things that come in
and out of our country.
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Sanctions are also this.
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This comes from the white house,
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and instead of people's names,
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it has industries and
products like crude oil,
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and liquified natural gas and coal,
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and alcoholic beverages,
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and diamonds and luxury goods.
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And that is the point here.
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What sanctions are, is
a giant list of people,
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and things that are not allowed
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to come into our country
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or whatever country is
writing the sanction.
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Oh, and the list includes,
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the sale of US bank notes like cash.
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Like you're not allowed to
send like a pallet of cash
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to the Russian government,
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according to Joe Biden.
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Okay.
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But here's where it gets interesting.
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I want to tell you how all these boring
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lists of paper
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that were drafted up in the past few weeks
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actually translate into economic war.
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What is happening right now
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in the global economy.
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It's totally invisible.
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It's not like tanks and guns.
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You can't see it, but
it's having a huge effect.
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And I wanna show you what that looks like.
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(suspenseful instrumental music)
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The best way to do this
is to look at Russia
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before all of these sanctions.
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You can see that Russia is connected
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to the world in a lot of different ways.
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I've color coded them for you.
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Blue is everything that Russia exports
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to other countries like oil, gold, coal.
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Orange is everything
flowing the other way.
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Stuff that Russia imports like iPhones
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from the US or cars from Germany.
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That's orange.
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Green is all of the money
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that needs to flow in and out of Russia
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to keep things running.
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That's money that businesses borrow
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from foreign banks
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or it's money that the Russian government
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has put into US dollars or Euros
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so that they have reserves
in case they need it.
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We'll call this the financial stuff.
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But then there's personal wealth,
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which we'll put in purple.
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One of the best parts
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about being a Russian billionaire
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is that you can spend
millions and millions
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of dollars on a flat in London or Paris.
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Or you can buy a yacht that you station
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in the port in the South of France.
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Russian billionaires have money and assets
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all around the world
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that they use as their global playground.
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And then of course,
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there's just regular Russians.
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People who fly around the world
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for tourism and business on airlines
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that are from many different countries.
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Those airlines fly over Russia
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in Russian airspace
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to get to a variety of destinations.
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So yeah.
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Russia is connected
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like we all are to the global economy.
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We trade, we move around
and everyone thrives.
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It's great.
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But then Russia invades
Ukraine a few weeks ago.
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- We are coming on the air
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because the war in Ukraine has begun.
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(ominous instrumental music)
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(ground explosion)
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- "This is totally unacceptable."
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Says the whole world.
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We want to retaliate and show Putin
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that we can't do that.
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We have to set a precedent that you're not
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allowed to invade your neighbor,
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but we can't send troops
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like we used to in the old days
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because now we all have these big weapons
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that could destroy our species.
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So we can't like start fighting
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with each other directly.
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So what do we do?
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"I know."
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Says all the angry Western leaders.
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"Let's start to mess with all of this.
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That'll teach 'em."
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Welcome to economic war,
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which again like I said, starts like this.
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A bunch of bureaucrats making lists
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of people and things and vessels
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that are now not allowed in their country.
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But the hope is that it
creates a domino effect
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that changes the course of this war.
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And let me show you how that might look.
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(suspenseful instrumental music)
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Okay, so this is Russia
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happily connected to the global economy.
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These sanctions target
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every one of these connections.
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Like let's just look at imports.
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One of the first things the EU did
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was ban their countries
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from selling luxury goods to Russia.
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So the EU like, "Yeah.
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Like we're pro Ukraine.
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Like we're drafting up these sanctions
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to hurt Russian billionaires."
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And then out of nowhere,
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Italy crops up and is like,
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"Yeah, can we get an exemption?
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Like, can we sell our goods?
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Because we have like Gucci and Armani,
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and come on."
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And they actually got an exemption.
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And then people were like, "Wait, no.
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We're not giving you an exemption.
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Just because you have all
these fancy designers.
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Like come on Italy, get with it."
[400]
And Italy was like, "Ugh, fine."
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But it wasn't just the EU who started
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cutting off these connections.
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Singapore banned their people
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from selling electronics and computers,
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and Taiwan where all
the microchips are made,
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banned their companies
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from selling those microchips to Russia,
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which is a giant deal
[414]
because microchips are in everything.
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(upbeat instrumental music)
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Hundreds of international companies
[419]
that were in Russia
[420]
started to read the tea leaves,
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and they're like, "We're out of here."
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Like imagine if McDonald's and Ikea,
[425]
and Apple all left your city,
[427]
and then Netflix announced
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that it no longer is streaming
[430]
in your country all in the same week.
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Like this is real punishment.
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This is what economic war looks like.
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(upbeat instrumental music)
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Okay, so that's imports.
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The same thing starts
happening the other way.
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Russia is a giant exporter of oil and gas,
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and all sorts of fossil fuels.
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And so the west trying to inflict
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punishment on Russia.
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Bans their countries from importing
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Russian oil and gas.
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That is a huge blow to Russia.
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Like the second biggest exporter
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of refined and unrefined
petroleum on earth.
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The economic war is heating up,
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and in the middle of all of this,
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Vladimir Putin gets up and announces
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that he sees this as an act of war,
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and that he is putting his nuclear weapons
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on high alert as a response.
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(speaking in foreign language)
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- Like this is
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real war tactics we're talking about here
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with real consequences.
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All right.
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Let's get to the fun sanctions
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like watching rich people squirm.
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(wine splurging)
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- Oh.
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- Back to this list
that the government made
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of Russians who they really don't like.
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(suspenseful instrumental music)
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Those people now cannot
travel to our country,
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and any country whose list they are on,
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and any money that they
had in our country.
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Like if they had it in an American bank,
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it's now frozen.
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They can't touch it.
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Like it's totally inaccessible to them.
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Their yachts and their private jets,
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if they're in our
jurisdiction can be seized.
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Everyone on this list is now a target,
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and there are hundreds of them.
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In fact, I've been deep in the OFAC
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sanction list.
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There are 712 Russians on this list
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in case you wanted to know.
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It's all there on the OFAC website.
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So going through this list,
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you kind of get curious.
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You're like, "Who are these people?"
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I now know their birthday
and their address,
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and all of their aliases,
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but like who are they?
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Are these war criminals?
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Are they like military
generals or something?
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Well, no. There's actually
a few categories here.
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The biggest one is
probably Russian lawmakers.
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There are not 300 of them
that are now sanctioned
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but then you have a bunch of rich Russians
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who are the heads of defense, energy,
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and media companies.
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I see.
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Make the most powerful
Russians uncomfortable,
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and hopefully the will turn against Putin,
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and get him to stop the war.
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That's the logic.
[558]
And then you have this 26-year old
[560]
Instagram star
[561]
who's also on the sanctions list.
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Wait what?
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Yes.
[564]
Polina.
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The daughter of the very rich
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Foreign Minister of Russia
[568]
who lives a very fancy life in London.
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And the UK sees this
and they're like, "No.
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You've got blood on your hands too.
[574]
Put her on the list."
[576]
And she's on the list.
[576]
And now she can't travel to London
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where she has a bunch of money,
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and she has a big fancy flat,
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and she's stuck in Russia.
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She's on the list.
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This is happening to hundreds
[585]
of rich Russian people.
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And like we don't know
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if all of them are
connected to Vladimir Putin.
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We're just like,
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"You're super rich and influential.
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So we're gonna make your life hard."
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Please change this.
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Speaking of travel,
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tons of countries have written sanctions
[599]
that ban Russian airlines
[600]
from entering their airspace,
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and tons of airlines
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have cut their routes to Russia.
[605]
So now the flow of people,
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just human beings, tourists,
[608]
and business travelers
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has come to a screeching halt.
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Okay.
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Finally, the last category is big money.
[614]
This is actually like
the hardest one to see,
[616]
and understand,
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but maybe the biggest and most important.
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You have to understand
[620]
that the Russian government
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holds on to tons of
reserves in other currencies
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like Dollars and Euros and British Pounds.
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They do this because if their currency,
[630]
the Rubles, falls,
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they can take their
Dollars and buy a bunch
[633]
of Rubles and raise the price back up,
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and stabilize it.
[636]
But now all of their foreign reserves,
[638]
their Euros and Dollars are frozen
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in like American and like British banks.
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♪ You wanna build a snowman ♪
[646]
The Russian government
can't get their hands
[648]
on their money in other countries.
[649]
Okay, but the finance thing gets crazier.
[651]
Russian banks were then kicked out
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of the system where banks can send
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giant amounts of money to each other.
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It's called SWIFT.
[658]
They were kicked out.
[659]
Now, they have to route
all their big payments
[661]
through like China,
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which is like their one
friend in all of this.
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And one more on the finance piece,
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regular Russians can't use
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their credit cards anymore
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or their debit cards
because Visa, MasterCard,
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American Express all pulled out of Russia.
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Like that would suck.
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So all of this is to say,
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that Russia went from looking like this
[679]
to looking like this.
[681]
Totally isolated.
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And that was the goal.
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To isolate Russia from the global economy,
[687]
and make them feel pressure on all levels.
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The people, the oligarchs,
[692]
the government, the military,
[694]
the hope here is that the rich
[696]
Russian billionaires
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who have a lot of influence in politics
[698]
as well as the people
who are now suffering
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because they can't get
in on the global economy,
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they will all look to
Putin and be like, "Dude.
[706]
Enough, we're done."
[707]
So the question is, will it work?
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Well, it depends on what your definition
[712]
of work is.
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In terms of creating economic pain.
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Yes, it's already working.
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I mean look at how hard the Ruble crashed
[720]
after the war started.
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Because remember,
[721]
the government can't get
its hands on all of its
[723]
foreign reserves to help stabilize
[724]
their currency.
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The Moscow Stock Exchange
closed down for weeks.
[727]
The economy is shrinking.
[729]
There is scarcity in Russia.
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But for me,
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the definition of will this work,
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is will this change Vladimir Putin's mind
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to get him to stop
fighting this stupid war?
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And that's a question I do not know
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the answer to
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because sanctions are
not like normal weapons.
[745]
We've had guns and missiles and bombs
[747]
for a long time.
[748]
We know how they work.
[749]
We know how they deter people.
[750]
We know who they hurt
[752]
but sanctions are not that old,
[755]
they're as old as our fairly new
[757]
Global Economic Order.
[758]
We make these lists and put on these bans
[762]
for travel and industries
and financial systems.
[765]
And we just sort of hope
[766]
that the ripple effect
[768]
makes it to Vladimir Putin's brain.
[770]
But I'm just not sure
[771]
Putin is a rational actor anymore.
[773]
And that is the
contradiction of sanctions.
[776]
Is usually we put sanctions
[778]
on countries like North Korea.
[780]
These pariah states where the leader
[783]
is not a rational actor anymore.
[784]
They're bent on some
weird ideological vision.
[787]
They're surrounded by a bunch of yes men.
[789]
And so sanctions turn into just another
[792]
narrative that they can use to say,
[794]
"We are the victims.
[796]
We are embattled."
[797]
The rest of the world is at war with us.
[799]
Plus frankly, Russia still has a way out
[803]
of some of these sanctions.
[804]
China is still their ally in this,
[807]
and China is deeply connected
[808]
to the world economy.
[809]
Oh and also, do we really think
[811]
that Russian billionaires
are gonna be stopped
[812]
by a list from a bunch of bureaucrats?
[815]
These people are well-resourced.
[817]
They're gonna find ways
[818]
to get around the sanctions
[820]
whether it's shell companies
[821]
or middleman or whatever.
[822]
It's just gonna be a
little less convenient
[824]
for them.
[825]
So in the end,
[826]
it's the Russian people
who are gonna suffer
[828]
the most here.
[829]
Well, that is after the real victims
[832]
of this whole thing, the Ukrainian people
[834]
who have had country
[835]
senselessly stolen from them.
[838]
(soft instrumental music)
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