As the Russian Federation’s (Russia) aggression in Ukraine has reached horrifying heights, leaders across the world continue to confront a similar question: what more can they do to counter Russia’s predations and support Ukraine without provoking another world war? So far, one of the United States’ main responses has been to impose increasingly punishing economic sanctions.
The United States has acknowledged that its sanctions must inflict a significant and immediate cost to have a chance at making a difference in the war in Ukraine. Yet little attention has been paid to the role that states like California are playing in strengthening the U.S. sanctions regime against Russia. On Mar. 4, 2022, little more than a week after Russia invaded Ukraine for the second time in the last decade, California Governor Gavin Newsom (for whom I work) issued Executive Order (EO) N-6-22. The EO requires all entities doing business with the state, which has the fifth largest economy in the world, to comply with federal economic sanctions. If a contracting partner fails to meet its obligations, California will terminate its agreement with that contractor.
But Newsom did not stop there. His EO not only requires state contractors with agreements valued at $5 million or more to report to the state on their compliance with federal sanctions but also to detail other steps they are taking to respond to Russia’s actions in Ukraine. Such steps, the EO states, could include “desisting from making new investments in, or engaging in financial transactions with, Russian entities, not transferring technology to Russia or Russian entities, and directly providing support to the government and people of Ukraine.” The EO also urges all California-based businesses, organizations, and governments to take further actions to support the government and people of Ukraine.
California’s bold action provides a roadmap for states and other jurisdictions and entities across the country to strengthen economic sanctions against Russia. To date, non-federal actors have remained largely untapped resources in supporting U.S. government efforts to aid the Ukrainian government and people. If these subnational and private actors adopt measures like those implemented by California, the United States would have a greater chance of imposing a real economic and political cost on Russia. Given the stakes, state leadership like California’s in bolstering federal sanctions merits far greater attention – and emulation – than it has received thus far.
Reinforcing Federal Economic Sanctions Against Russia
Sweeping U.S. sanctions against Russia in response to Russian President Vladimir Putin’s aggression in Ukraine seem to multiply with great frequency. Given the pace and extent of these sanctions, it can be difficult to discern the full scope of who and what have been sanctioned. As a starting point, American entities and individuals must be aware of their need to comply with federal economic sanctions, giving the U.S. sanctions regime a better shot at cutting off support for the Russian regime’s now month-long offensive in Ukraine.
Executive powers allow governors to take action in response to crises, including by compelling sanctions compliance by state partners. Unlike legislatures, state executives can also quickly update, expand, or roll back such actions as needed Though the scope of these executive actions is typically limited to state agencies and contractors, their speediness relative to legislative action is critical when world events are changing so rapidly. For instance, at the end of February 2022 and shortly after Russia’s renewed invasion of Ukraine, New York Governor Kathy Hochul directed New York state agencies to divest public funds from supporting Russia, a move that Ohio Governor Mike DeWine mirrored with respect to “any Russian institution or company.” As the war worsened, Governor Hochul went further, prohibiting state agencies from contracting with any companies that conduct business in Russia.
A handful of other states are supporting federal economic sanctions as well – some robust, some more symbolic. North Carolina Governor Roy Cooper recently required North Carolina’s state agencies to terminate contracts that directly benefit Russian entities; Colorado Governor Jared Polis issued a similar, though somewhat narrower, version of North Carolina’s order; and the governors of New Jersey, Vermont and Utah have taken other steps to support U.S. economic sanctions against Russia, such as banning Russian-produced and Russian-branded liquors as part of their authority to regulate alcohol.
But states could take far more significant actions to bolster the effectiveness of the U.S. sanctions regime against Russia. All signs to date suggest that the federal government is open to such action: it continues to expand its sanctions regime and broaden enforcement while making no public statements or otherwise indicating through direct outreach, litigation, or other means that it intends to occupy the field of Russia sanctions at this time. Consequently, the federal government appears to have set a floor, not a ceiling for sanctioned activity, making way for complementary foreign affairs actions by states and localities.
Expanding on Federal Economic Sanctions Against Russia
What more, then, can states do to bolster the sanctions regime imposed by the United States in response to Russia’s actions in Ukraine? The answer: a lot.
States can require contractors to report on measures they have taken, or will take, to curtail support for Russia and aid the Ukrainian government and people, as California did. Such reporting creates normative pressure for contractors to act. Given the American public’s overwhelming support for Ukraine and its people, no company is likely to want to report that it has taken no steps to support the Ukrainian government and people at this critical time.
States can follow New York’s lead in banning state agencies from contracting with companies that conduct business in Russia. Notably, New York’s ban does include a carveout: agency heads may determine that contracts with Russian-based businesses should continue when “necessary” to perform the agency’s functions and where no suitable alternative exists. States can extend the similar restrictions (and discretionary exemptions) on Russian entities to companies and government officials in Belarus, given that country’s close ties to Putin and Russian elites. States can stop importing and purchasing Russian and/or Belarusian goods. Or, in the mold of prior movements, they can consider various forms of divestment, such as calling on public pension funds to halt the flow of money to Russia and ban the purchase of Russian debt, as Newsom did.
States can support Ukraine through non-economic measures as well. For instance, building upon a three-decade long relationship, the California National Guard as well as the federal government have provided direct support to Ukraine’s Ministry of Defense, Ministry of Interior, and Armed Forces. To expand upon these efforts as the war commenced, the California National Guard stood up an emergency operations center at its headquarters in Sacramento. Staffed day and night, the center receives and conveys real-time Ukrainian equipment and supply needs to the U.S. military’s European Command and shares information from Ukrainian military officials with U.S. counterparts.
California also donated medical equipment to Ukraine, including a medical station encompassing beds, wound and IV kits, a defibrillator, wheelchairs, and other necessary supplies, through a California-based humanitarian aid non-profit, Direct Relief.
These types of state actions, which are consistent with the object and purpose of federal economic sanctions, create a “sanctions plus” regime that reinforces federal restrictions. Such state measures, which align with federal sanctions, are less likely to be challenged as infringing on the foreign affairs power of the federal government. They carry significant political and moral weight too. Even if any single state’s investments or Russia-related contracts are not sizable, collectively, state measures demonstrate that American governments and leaders from across the political spectrum are engaged in the fight to defend Ukraine, the world order, and international institutions that the U.S. helped create three-quarters of a century ago.
Some may worry about what would happen if Russia’s aggression in Ukraine ends and the U.S. government decides to roll back its own sanctions. But neither the federal nor state measures are intended to be permanent. Should the U.S. government’s reasons for sanctioning Russia cease, the federal government could move quickly to revoke its sanctions targeting Russia.
When rolling back sanctions, the federal government should make clear that it expects states and others to follow suit. Otherwise, state actions could complicate, or even contradict, federal actions against Russia. But such a scenario is avoidable. And in California’s case, it is assuredly so, as the state’s executive action hinges on compliance with federal sanctions, not California’s own economic measures. Similarly, state executive orders requiring pension funds to consider divestment or withholding further investment in Russia do not threaten to breach pension fiduciary duties or federal sanctions, as the pension boards have the independent authority to evaluate what, if any, actions should be taken with respect to their holdings and obligations. Thus, state and other subnational actions can and should remain in lockstep with federal sanctions even as circumstances change.
Serving as Models for Others to Act
Finally, state actions to reinforce and build on federal sanctions can create a template for local action. For example, North Carolina’s executive order, which requires its state agencies to terminate contracts that provide direct benefits to Russian entities, expressly calls on localities to “adopt similar policies.” The aim, North Carolina explains, is to ensure public dollars do not support Russia or Russian entities. Thus, the state provided an explicit roadmap for localities to follow, allaying any potential concerns that local actions would be preempted by the state. The state also made clear precisely how localities could help.
California, for its part, called upon not just localities but also businesses and non-profits to take additional steps to counter Russia and assist Ukraine. Several sizable global corporations based in California have already adopted measures in this direction. Apple, for instance, has announced that it will stop selling its products in Russia. Microsoft did too, and further committed to helping to protect Ukrainian cybersecurity, among other actions. Twitter is labeling tweets that contain content from Russian state-affiliated media websites to try to counter Russian disinformation efforts. California’s actions could encourage other companies to take similar or even more robust actions, with potentially far-reaching impacts given the significance of the California-based technology industries and the economic heft of the localities that host them.
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When Russia launched its second recent invasion of Ukraine over a month ago, the U.S. federal government acted swiftly to punish the Russian regime, largely through economic sanctions. Imagine how much louder and more powerful the U.S. response would be if a chorus of states, localities, and private actors built upon the federal government’s lead.
(This article was written in the author’s personal capacity, and all views expressed are her own.)