Moscow protest against sanctions Anadolu Agency/Getty Images

Sanctions and the Risk to the Dollar

Any US administration should pause before cutting off access to the dollar-trading system as a way to punish misbehavior by foreign governments. Over time, even legitimate actors will find alternative commercial and financial channels if they come to feel that dollar access is conditional on not running afoul of US interests.

CAMBRIDGE – How can the US respond to cyber attacks by foreign powers or their proxies? It is an issue that has faced President Barack Obama in the wake of reports of Russian hacking during the United States’ recent election cycle. But it’s not just about Russia or Obama. President-elect Donald Trump will face the same problem. And he won’t have very good options, either.

“Naming and shaming” is pretty unsatisfying, because hackers rarely feel any actual shame. Similarly, criminal indictments – a measure previously taken against Chinese hackers – probably won’t bring anyone to trial. US Vice President Joseph Biden has put counterattacks against Russian computer networks on the table, but that could trigger an escalation, while ceding the moral high ground.

Economic sanctions may seem like a simple and inexpensive way to register disapproval for foreign hacking; in Russia’s case, existing sanctions against its largest banks and Russian President Vladimir Putin’s closest associates could be tightened. But resorting to sanctions too frequently can have far-reaching consequences that eventually diminish the US’s role in the global economy.

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