A US Treasury Department official has confirmed what I had conjectured: the administration is pursuing a fear, uncertainty, and doubt sanctions strategy:
“One of the purposes of sanctions is to create uncertainty and to create the expectation in the marketplace that worse could be coming,” said David S. Cohen, the Treasury Department under secretary who oversees sanctions. “That uncertainty has led the market to punish the Russian economy.”
It must be noted that Putin is also pursuing a FUD strategy, but with armor and combat aircraft. The continued presence of large Russian formations hard on the border with Ukraine, which pose a constant threat of invasion, is definitely sowing FUD in Ukraine (and in some western capitals). Today Putin cranked up the implied threats by staging large numbers of combat and support aircraft to Crimea.
Putin clearly hopes that the mere threat of invasion will so intimidate the Ukrainian government that it will either capitulate, or collapse, thereby leaving Putin free to pick up the pieces. In either outcome, Putin would achieve his objectives without a shot being fired by his main force units.
Cohen’s statement identifies the crucial assumption underlying these FUD strategies: they are intended to “create the expectation . . . that worse would be coming.” But can those expectations be sustained?
What happens if the threats are never carried through? In the case of financial sanctions, what conclusions will Putin draw if his continued aggressive actions do not actually cause Obama or the west generally to do something worse?
Especially for someone like Putin, who is predisposed to consider the west generally and Obama in particular to be weak and soft, he will conclude that the threats are a bluff. The deterrent effect of the threats will disappear.
Ukrainian officials could make similar judgments about Putin if he doesn’t invade. They could conclude that he is deterred by the direct and indirect costs of invasion.
Strategies that rely on manipulating expectations through threats are fraught with dangers. The potential for miscalculation and misinterpretation is high. Not carrying through raises doubts about the credibility of the threats, which could lead the target of the threat to become complacent and act in a way the threatener cannot accept. This risk is particularly great for Putin, given his overweening self-confidence and his disdain for the US, the west, and Obama. The risk is compounded by Obama’s history of drawing then erasing red lines.
In other words, FUD wars seem to be a cheap way of waging conflict, and they can be. But expectations are tricky things, and the infinite regress of expectations about expectations, and expectations about expectations about expectations can lead to complexity and miscalculation. Which means that FUD wars can very easily lead to real wars. Which means that you should fear the uncertainty, and doubt that FUD is a prudent strategy.