Vladimir Putin’s new invasion of Ukraine has heightened scrutiny of wealthy Russians living in London, New York and Paris, enjoying all the comforts of the West as their deranged leader rushes headlong into violent confrontation with the world. free.

Unsurprisingly, calls are mounting for the United States and its European allies to impose tougher sanctions on those oligarchs who supported Putin’s regime without having to suffer. This is long overdue and will shake the foundations of Putin’s kleptocratic regime – although the results may come too late to help Ukraine.

Putin’s rise to power has been defined by corruption. As the leader of the ruthless oligarchs vying for power in post-Communist Russia, his job was to let them steal as much as they wanted – as long as they stayed out of politics. The legacy of this sprawling kleptocratic scheme is today one of the most unequal societies on the planet.

With combined assets of $640 billion in 2020, Russia’s 500 richest people – who make up less than 0.001% of the population – control more wealth than that held by 99.8% of the adult population.

And what do they do with all that money? Invest in new businesses and create jobs? Of course not. More than half of the wealth controlled by the wealthiest people in Russia has been taken to tax havens and Western financial centers.

Russian oligarchs are too scared to keep their wealth in Russia, for the simple reason that it could be stolen by Putin’s regime or another crook at any time. Those close to Putin, known as his “wallets,” have also put their money to work for him by bribing Western politicians, buying up sports teams and other schemes to expand Russian influence.

But hiding funds overseas also makes them vulnerable to freezing or seizure by US law enforcement. America has a unique ability to prosecute adversaries in this manner due to the status of the US dollar as a global currency, which effectively extends its jurisdiction over financial crimes worldwide. By targeting the stolen wealth that sustains Putin’s regime, the US should be able to use it as leverage over the strongman and deter him from malicious behavior like invading Ukraine.

There are two problems, however: the Biden administration seems unwilling to do so, and even if they were, the expatriate oligarchs are no longer necessarily the ones pulling the strings in the Kremlin.

It’s because Putin has shrewdly managed to tame the oligarchs, instead surrounding himself with sycophant security bosses who share his uncompromising vision for making Russia great again. And encouraged by the Obama administration’s anemic response to Russia’s first invasion of Ukraine in 2014, Putin has since kept Russia’s economy on a war footing by amassing hundreds of billions of dollars in foreign exchange reserves and deepening trade and investment ties with China.

Putin has managed to shield himself from the worst effects of Western sanctions, whether directed at his cronies or at the broader Russian economy. This makes it harder to punch Putin, and to do that we’ll have to punch him harder and faster.

Unfortunately for Ukraine, the Biden administration has instead played into Putin’s favor by pursuing endless diplomacy instead of engaging in serious deterrence.

The sanctions announced by President Biden in response to Russia’s recognition and invasion of the Donetsk and Luhansk regions are indeed stronger than those issued by Obama in 2014, but the bar was quite low. Months after Putin began to build up his forces, the US hit two banks already under sectoral sanctions, added new restrictions on Russian sovereign debt, targeted a handful of oligarchs and shut down the Nord Stream 2 pipeline already interrupted. It is not the paralysis of the Russian economy that such a moment calls for.

This would include powerful sanctions to isolate Russia’s financial system and the most lucrative business sectors of the global economy. And that means hunting down Russia’s oligarchs and business elite with targeted sanctions and enforcement actions until they reach breaking point. Only then could they consider challenging Putin’s seemingly unassailable power.

Of course, we cannot ignore our role in all of this. Russian elites may be the stealers, but they rely on Western lawyers and bankers to launder the dirty money for them. This is why continued efforts to ban shell companies and strengthen anti-money laundering regulations are so important.

We must also bear in mind that China is watching closely. Invading Taiwan might look less appealing if Xi Jinping thinks the United States will start hunting down his supporter’s private overseas wealth in addition to any measures that impact the wider Chinese economy and population. Like Putin, Xi cares no less about the lives of his own citizens. But he is worried about preventing palace coups.

The Biden administration and its European allies missed the window for effective sanctions deterrence while Putin was still building up his forces, and we can’t be certain that even the tough measures taken now will stop the tanks from rolling anymore. far in Ukraine. But in the longer term, making life as hard as possible for Russia’s most powerful people outside the Kremlin could eventually lead them to question whether putting up with Putin is worth it.

It also shows Putin, Xi and others that the United States has become aware of how authoritarian leaders rely on corruption to prop up their regimes – and will not hesitate to drop the hammer when our friends Democrats are threatened.

Nate Sibley is a researcher at the Kleptocracy Initiative at the Hudson Institute.