Economic sanctions are about more than imposing costs
Economic sanctions are more potent. That does not mean they are more successful.
Trade tensions between Washington and Beijing raise the threat of Chinese authorities targeting US companies operating in China. A spat with South Korea over Seoul’s agreement to deploy a US anti-missile system in 2016 demonstrated how the Chinese government can apply pressure.China is important for US leading brands such as Nike, not only as a center for manufacturing but also because of Chinese consumer demand. Disrupting the Chinese operations of US companies would be high-profile but limited in scope, sending a strong message to Washington without threatening broader trade flows and avoiding steps that carry the risk of instability, such as currency devaluation or a fire sale of US Treasury bonds.
When the US imposed sanctions last week on 24 Russian oligarchs and officials, and 12 related companies, in response to “worldwide malign activity” by the Russian state, the impact was not immediately clear. But by Monday morning it was unmissable.The share prices of Rusal, one of the world’s largest producers of aluminum, and its parent company EN+ Group, both sanctioned for their material connection to Oleg Deripaska (also on the sanctions list), fell roughly 50 percent. The wider Russian market was down 10 percent. Those, such as commodity traders, transacting with designated companies found related payments blocked as banks reacted to the news. Clearstream, a key component of investment market infrastructure, announced it would stop processing related securities transactions. …Russia has … become integrated into global supply chains and global finance. But just as globalisation has benefited Russia, this integration presents a vulnerability if the markets in which these companies operate are turned against them.