The global financial system is being wielded to bring Russia’s economy to heel. KevinTDugan spoke with Lloyd Blankfein about watching the system Blankfein helped build get turned into a weapon
Photo: Justin Lane/EPA-EFE/Shutterstock Before Lloyd Blankfein left his condo at the luxe Faena House in South Beach on Monday afternoon, the billionaire former CEO of Goldman Sachs and I were talking about the global response to Russia’s war in Ukraine. “I know this will sound very unbankerlike,” he said, “but I think it crossed everyone’s moral threshold.” Moral threshold.
Goldman Sachs has a long, wobbly history in post-Soviet Russia as one of the many western banks that rushed into the country seeking to cash in on a potential gold rush of oil and debt sales after the Berlin Wall fell, as the New York Times reported back then. No bank was as influential in the region as Goldman, however. In 1992, Goldman — then under the direction of its co-chair Robert Rubin — pushed economic shock therapy to Boris Yeltsin’s new government.
It seemed to me that what Blankfein was getting at in bringing up morality wasn’t just the ugliness of war. He had lived through the Cold War and sided with capitalism . The current global financial system could be a force for good even if it weren’t used to create prosperity but to destroy billions of dollars of a country’s wealth as a deterrent. “The United States benefits from the architecture of, frankly, the postwar national security system but also the financial system,” he said.
What makes these sanctions different has to do with an apparent mistake on Putin’s part: Central-bank reserves aren’t always kept in a big bank vault, and Russia had stored its money in countries that are the most enraged about the invasion. The proposal to freeze the Bank of Russia, originally made by Canada’s finance minister, was soon taken up by the U.S., the U.K., and other European countries — even Switzerland abandoned its neutrality to freeze Russia’s assets.
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