Former Treasury Secretary Larry Summers said price caps on Russian energy should be tightened to maximize the impact of sanctions on the country as Ukraine’s war drags on for a year.
The former president of Harvard University said on Fareed Zakaria GPS on Sunday that the economic sanctions against Russia have not hit hard because a country that makes up a significant portion of the world’s GDP, such as China, India and Turkey, has not participated.
Russia’s economy will grow 0.3% this year, the IMF said, better than the UK or Germany, despite sanctions and frozen central bank reserves.
Trade with Russia’s neighbors “has increased significantly over the past year, suggesting they serve as a way station for goods to enter Russia,” Summers said.
Summers said the conflict has now become a “war of attrition,” meaning a military strategy in which one side tries to exhaust the other to the point of fatigue. The way to win the economic aspect of this, Summers said, is to support Ukraine’s economy, which has left bombed cities and millions in need.
Russian assets should be the ultimate resource to foot the bill for Ukraine’s reconstruction, Summers said.
In addition to Ukraine, Russian assets should be used to “support the developing countries that have paid and suffered greatly from higher food and energy prices due to Russian aggression,” Summers claimed.
It could set a “healthy precedent” for countries involved in cross-border aggression, such as Russia, to lose state assets, Summers added.
The Russian funds are held in international bakery institutions, “which in turn hold claims against the treasuries of the great countries, mainly the United States and the Europeans.” It gives them the ability to confiscate assets and spend them as they see fit, with a “strong precedent” of cases in the Iraq War.