Judging Freedom - Russian Sanctions Shattering the Global Economy

Episode Date: March 29, 2022

#Russia #Ukraine #BidenSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

This new year, why not let Audible expand your life by listening? Audible CA contains over 890,000 total titles within its current library, including audiobooks, podcasts, and exclusive Audible Originals that'll inspire and motivate you. Tap into your well-being with advice and insight from leading professionals and experts on better health, relationships, career, finance, investing, and more. Maybe you want to kick a bad habit or start a good one. If you're looking to encourage positive change in your life one day and challenge at a time, look no further than Tabitha Brown's I Did a New Thing, 30 Days to Living Free. In the audiobook, Tab shares her own stories and those of others alongside

gentle guidance and encouragement to create these incredible changes for yourself and see what good can come from them. Trust me, listening on Audible can help you reach the goals you set for yourself. Start listening today when you sign up for a free 30-day trial at audible.com slash wonderyca. That's audible.com slash wonderyca. That's audible.com slash wonderyca. Hello there, everyone. Judge Andrew Napolitano here with Judging Freedom. Today is Tuesday, March 29th, 2022. And the issue of sanctions, of course, continues to rankle. You know, the president's

statement the other day in Poland that Putin should not be permitted to stay in power have pretty much taken the media focus off of sanctions. And the president's acknowledgement that sanctions don't really work, almost inexplicable, but that's what he said, have undermined somewhat the belief in sanctions, but sanctions bite, sanctions hurt, except they often bite and hurt the wrong person. My next guest, J.D. Tuccile, who was an editor at Reason Magazine and a writer for Reason, was an editor at Reason Magazine and in those days was, was an editor at Reason Magazine in those days, was editing my columns. He and I meet for the first time, although through the monitors. J.D., you wrote some fabulous stuff on sanctions, which I want to discuss, but let me welcome you

and thank you for coming to Judging Freedom. Thanks for having me on. So I have argued that sanctions are unconstitutional, that the Magnitsky Act and the Economic Emergency Act of 1977, which permit the federal government to confiscate property, violates both the Fourth Amendment, seizures without a search warrant, and the Fifth Amendment, taking property without due process. Yours is an economic argument. Make the case for us, please, against sanctions, either that they don't work, won't work, or harm the wrong people. Well, they definitely harm the wrong people. The political class is usually insulated because they can anticipate there'll be sanctions. They have access to state resources that the average person doesn't have. But when you impose sanctions, you're weaponizing finance,

you're weaponizing trade, things that are supposed to be neutral. And when you weaponize these things, you might get an effect. And right now, I think most Americans sympathize with Ukraine. We're not sympathetic to an autocratic dictator in the form of Putin and Russia. But these sanctions that are probably harming the Russian people more than they're harming Putin are also a signal to the world that trade, finance, the ability to exchange can be turned into a weapon by a very powerful Western political and financial class. And this is sending people running for alternatives. It's almost certainly fracturing the world, recreating economic blocks, breaking up the free trade, which had brought prosperity

in recent decades to so many billions of people around the world. And it's going to lead us to a world that is maybe safer from sanctions in the future. So the sanctions may end up being a one-shot deal, but it's a world that's going to be more isolated and more poor. It's going to be a poorer world in the years to come. So let's say that I'm a liquor importer in northern New Jersey. New Jersey has a crazy system for selling alcohol. Everything's got to go through the middleman. But let's say the middleman has paid a Russian vodka manufacturer $10 million for a cargo ship full of Russian vodka, and it arrives at Port Newark. What happens to it? What do the feds do? Do they seize it? Do they confiscate it?

Do they send it back? Well, I mean, that's a great question. And I don't know that this is entirely precedented right now because we're turning trade between private dealers and private buyers into political weapons for the political class. But what we do know is that these two parties are going to be frightened in the future of dealing with overseas buyers and sellers. So that buyer in New Jersey is probably going to find new sources that aren't in Russia. It's going to near-shore purchases in the future, vodka of other imports. It's probably going to be less reliant on dealing with countries overseas, or not even the countries, but with dealers overseas in countries that may be crosswise with Western authorities. And vendors, those Russian vendors,

are going to want to buy buyers in countries where they know that the money is going to clear, that where they're, again, not crosswise with political authorities, even though the buyers and sellers may not agree with the politics of the people in charge. They're going to nearshore their efforts. Let me ask you about the other end of this transaction. What happens, again, I'm a hypothetical liquor importer in northern New Jersey. What happens to the $10 million that I wired to my manufacturer in St. Petersburg, Florida? What happens to that cash? Can I get it back?

Can he even wire it back to me? Or do Joe Biden's sanctions prevent that from happening? There's not a lot of due process in what's being done here. I mean, there's an awful lot of proclamations about cutting off access. We know that the SWIFT system, the means of transferring the money between countries, has been politicized. That's why Russia is turning to alternative sources. China has an alternative to SWIFT. Russia and China and Iran and other countries around the world are now turning to these systems that can't be politicized. But that money may end up in limbo, and it'll be there at the mercy of political authorities. The person who sent it, who thought

that they were making a purchase, may not have access to it until the politicians decide where it's going. And the recipient, the person who sent a cargo, will not have access to it because that was the whole point of the sanction. So the financial system ends up being subject to political considerations with, you'll notice, no due process involved. These are all political decisions. Right. The statutes that I referenced earlier, the Magnitsky Act, which is Obama era, 2016. So Biden was his vice president, of course. And the International Economic Emergency Act, which is 1977 Carter era, provide that the president can just declare a person or an entity a human rights violator

and then seize their assets, whether it's a yacht in the Bay of Naples or whether it's a truckload or a cargo container full of Russian vodka at Port Newark. And then if the owner or the person claiming to be the owner wants it, they have to submit to the jurisdiction of an American court, which many of them don't want to do any more than we would want to submit to the jurisdiction of any foreign court, and prove that they are not a human rights violator. American concepts of jurisprudence on its head, that the government can take something from you and you have to prove that you are worthy of it rather than the government proving fault against you. But switching gears a little bit, how have the Biden sanctions harmed the middle classes in Russia? Well, it's impoverished them. Their credit cards are frozen. They were cut off from access to a MasterCard and Visa. The Russian state stepped in and developed Mir, which allows them to use their cards and make purchases within the country.

But the value of the ruble has plunged, of course, because of the sanctions, which means that they don't really have access to anything sourced from overseas so things like ikea has pulled out a lot of private companies uh the business class and the financial class has worked in lockstep with political class in a lot of this so they're cutting off access to the average russian middle class person who may not have any sympathy whatsoever to this invasion of Ukraine. Politics obviously vary from person to person. Very few of them acted in any way that had an impact on this. This is not autocratic country. It's not as if Putin especially cares

what the average Russian thinks, but they are definitely impoverished. Their access to furniture, food, electronics, the basics of life is severely curtailed by political decisions made deliberately as a weapon of war against Russia. One of my emailers asks if the ruble is tied to gold. Would or could Putin have done something like that? Well, no, this is interesting, and I think we're going to see a rejiggering of the international financial system. Putin thought that he'd insulated himself from sanctions by keeping, rejiggering his bank's central reserves, but a lot of them were held overseas in currencies in London, New York, other countries. And the assumption in years past was that because they were central reserves held

by a sovereign power, they were immune to seizure. That proved not to be the case. If you don't hold it, you don't own it. And it can be seized by the Western political class or anybody. I mean, maybe a hundred years from now, it would be China doing this. But you're at risk from seizure. So I think you're going to see money changing. The dollar is not going to be relied upon internationally the way it has been. Somebody is going to want to have an alternative.

So the Russians have built up their gold supplies pretty tremendously. And I wouldn't be surprised to see them and other countries, maybe the BRICS countries, Brazil, Russia, India, China, South Africa, maybe try to develop a trusted alternative currency based on commodities, gold included. My God, what a head scratcher that would be if the American economy, which isn't tied to anything other than the whim and the will of the Federal Reserve, were to be compared to the ruble and it were to be tied to something as stable and not a shrink. But what the heck do you think the president meant when he said sanctions don't work? Told that to my former colleague, Peter Doocy at Fox, sanctions don't work. What is he talking about? Biden has, as we've seen, a habit of speaking off the cuff in ways that suggest that random neurons may have something more going for them than policy considerations. I think he knows. I

mean, sanctions don't work against governments. I mean, they work against populations very well. If you want to impoverish a population, cut it off from imported food, electronics, clothing, everything else. But political figures, people who have access to the power of the state to confiscate taxes and take the resources they want or in the best position to endure sanctions so to the extent that sanctions are going to work against the government cutting them off from weapons you know military resources i could see why biden might or any government might want to turn to that but overall general sanctions are going to hurt a population much more than they're going to hurt a government. The population is not going to be able to endure what the government can endure. One of my writers asks how the federal government can get away with taking the property of Americans. So we'll go back to my hypothetical where I'm the liquor

importer in northern New Jersey. Two months ago, I wired $10 million to my manufacturer in St. Petersburg, Florida. A week later, he puts them on a ship. A month later, they arrive here, and I can't get them. Can I go to court to get them? And the Supreme Court has said, are you ready for this? No. Only the Russian can go into the court to undo the sanctions because I am collateral damage. I am not the target of the sanctions. Well, old Joe

may have problems with his neurons, but he knows, he must know the harm that he's visiting on the American economy and the American banking system and freedom of commercial intercourse in the United States by imposing these sanctions. What do you think? Well, I think to a large extent, what we're seeing is that popular political causes, when people get caught up in a moral crusade, they will tolerate almost anything and so you can take what's effectively international civil asset forfeiture something that when it's applied to regular people on the street most people recognize most americans recognize as being kind of awful and unjust but you take it and you apply it to russians and you use terms like oligarch which is a very generic term that applies to a whole lot of people who aren't necessarily bad

individuals. And you say we're going after the Russian oligarchs. What does that actually mean? Well, some of them are bad people in terms of being Putin supporters, they support the invasion, but then you got Roman Abramovich who's intervening on behalf of Ukraine and actually got poisoned apparently while trying to mediate between Ukraine and Russia. So the moral crusades will overcome considerations about justice, overcome considerations about the law, and maybe it shakes out in the future, but unfortunately it also may set a precedent for the future. How long do these things last, J.D.? I mean, is Joe going to change his mind tomorrow, or will he change his mind if there's some absurd peace accord between Russia and Ukraine?

You know, if there's not pushback, if this is taken to work, if they get away with it, it's going to be a precedent for the future. And that is why you're seeing other governments, the BRICS countries, you're seeing Argentina, you're seeing Turkey, setting up alternate channels for finance, alternate channels for trade. Saudi Arabia is talking about taking the Chinese yuan for payment for oil instead of the dollar. The dollar, to a large extent, its steady value, to the extent that it's steady in a period of inflation, is based on petroleum. If it's no longer the default payment system for petroleum, if other currencies are accepted, it becomes much more like any other currency. And it is going to be subject to the same kind of fluctuations as other currencies. So you're seeing other countries fearful of future sanctions for

getting crosswise with the West, with the US, with the EU, and making sure that they are not vulnerable in the future the way Russia is vulnerable now. There is going to be long-term fallout from this, and it's going to make the world much more fragmented. J.D., one of the best conversations that we've had on Judging Freedom about the economic effect and injustices of the American government sanctions. Thank you very much for joining us. It's been a pleasure. Judge Napolitano, remember, like and subscribe Judging Freedom. freedom.