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The World Needs an Economic NATO

Russia’s war has made sanctions a powerful tool of statecraft. It’s time to formally enshrine them.

By , a visiting senior fellow at the German Marshall Fund.
A demonstrator holds a sign during a protest calling for the European Union to impose further sanctions against Russia in Kyiv, Ukraine, on Feb. 21.
A demonstrator holds a sign during a protest calling for the European Union to impose further sanctions against Russia in Kyiv, Ukraine, on Feb. 21.
A demonstrator holds a sign during a protest calling for the European Union to impose further sanctions against Russia in Kyiv, Ukraine, on Feb. 21. Chris McGrath/Getty Images

British Foreign Secretary Liz Truss, in her London Mansion House speech on April 27, proposed that the G-7 “act as an economic NATO, collectively defending our prosperity. If the economy of a partner is being targeted by an aggressive regime, we should act to support them. All for one and one for all.”

Truss’s goal of modeling an economic security pact after NATO is a good one. It just needs fleshing out. Is it enough to involve the G-7? What would constitute an attack? What would be the response?

NATO’s strength and credibility, enshrined in Article 5 of its founding treaty, is its commitment that “an armed attack against one or more of them in Europe or North America shall be considered an attack against them all.” Since NATO’s founding in 1949, the bright red line drawn by Article 5—backed by U.S. military power and the continued commitment of the American people to their European allies—has deterred military aggression against NATO members.

British Foreign Secretary Liz Truss, in her London Mansion House speech on April 27, proposed that the G-7 “act as an economic NATO, collectively defending our prosperity. If the economy of a partner is being targeted by an aggressive regime, we should act to support them. All for one and one for all.”

Truss’s goal of modeling an economic security pact after NATO is a good one. It just needs fleshing out. Is it enough to involve the G-7? What would constitute an attack? What would be the response?

NATO’s strength and credibility, enshrined in Article 5 of its founding treaty, is its commitment that “an armed attack against one or more of them in Europe or North America shall be considered an attack against them all.” Since NATO’s founding in 1949, the bright red line drawn by Article 5—backed by U.S. military power and the continued commitment of the American people to their European allies—has deterred military aggression against NATO members.

Today, economic sanctions have become the Western tool of choice against Russia over its brutal invasion of Ukraine as well as the response to outlaw state actions from Myanmar to Iran. The scope of the sanctions being applied to Russia is unprecedented, suggesting that the sanctions tool is rapidly evolving into a significant element of statecraft.

To make clear to countries that they could face similarly devastating consequences if they engage in rogue actions, what is needed is an “Economic Article 5.” As a warning to rogue actors, like-minded nations should spell out in advance the actions that would trigger allied economic sanctions.

In recent years, sanctions have become increasingly sophisticated and intrusive.

In the past, economic sanctions have not necessarily deterred nations from bad behavior. But in recent years, sanctions have become increasingly sophisticated and intrusive. In the Ukraine case, they have included the unprecedented freezing of Russian central bank reserves, the seizure of oligarchs’ assets, and the closing off of the Russian economy from much of the world. The scope of sanctions is unprecedented and clearly has China and other countries worried.

When the United States, European Union members, or Japan are not willing to go to war—over Ukraine or the nuclear weapons programs of Iran and North Korea, for example—sanctions at least enable allies to make those malign activities painful, with long-term effects on a country’s economy, prosperity, and level of technological development.

NATO’s Article 5 implies, though that implication has never been tested, that an attack on a member would trigger or could rapidly escalate into a nuclear exchange. Such creative ambiguity has stood the test of time. Similarly, an Economic Article 5 need not be all or nothing, nor should it be.

The first step would be to decide on membership. Truss’s proposal for the G-7 to constitute an “economic NATO” would be a good starting point, especially since the G-7 already includes the entire EU as a “non-enumerated member.” Like NATO, the pact would be open to additional members.

The second step—admittedly, a diplomatic challenge—would be to spell out what actions would spark a collective economic response. Even if an aggressor’s action does not involve a member of any future such pact, the attempt to change any border by force—as Russia has done to Ukraine since 2014—should certainly be an actionable event calling for an immediate response. Allies should be able to agree on this principle in advance, disabusing Moscow of any misperception that further territorial seizures in Georgia or Moldova would go unpunished. It would also signal to China that any invasion of Taiwan would be met with allied unity, including a harsh economic and financial response.

Beyond this, forging an allied consensus will be more difficult. What if China merely blockades Taiwan or otherwise tries to disable its economy? U.S., European, and Japanese dependence on advanced Taiwanese semiconductors should be a convincing incentive to reach an allied agreement on sanctions, even in the case of economic coercion short of a military attack.

What about issues involving repression and human rights, which don’t constitute an attack on another country? Would there have to be a full-fledged genocide for an Economic Article 5 to be invoked? There is ample precedent for international agreement to sanction a country for human rights violations against its own minorities—for example, the Uyghurs in China and the Rohingya in Myanmar.

The value of an Economic Article 5 would be to signal to a would-be violator in no uncertain terms that the bloc’s major economic powers would punish it. Such advance warning would give oppressors a clear idea of the cost of violating international law or human rights norms before they engage in it.

Just as importantly, negotiation of an Economic Article 5 with clearly defined triggers and responses will resolve allied disagreement, haggling, and prevaricating on the nature and scope of the sanctions they are willing to impose. Hammering this out in advance, however difficult that may be, will strengthen the deterrent effect of sanctions and avoid the time delays that have plagued the otherwise surprisingly united sanctions on Russia.

Finally, one of the strengths of an Economic Article 5 would be its ability to agree ahead of time on an escalatory path if initial sanctions did not deter or modify the violator’s activities. They might keep this economic battle plan secret, as NATO does with its military response plans. Or they might make it public: “If you do X, we will do A; if you persist, we will do B; if you continue, we will do C.”

Before the Ukraine war, an Economic Article 5 would have been unthinkable. The history of allied disagreement over sanctions has been long and bitter, especially between the United States and Europe. But the coordination of sanctions over Tehran’s nuclear program and now the unprecedented cooperation on massively sanctioning Russia demonstrate that allies can work together. Now is the time to take advantage of this window of opportunity offered by the Ukraine crisis to solidify this experience by closely coordinating sanctions.

Such a common front could provide an even more effective resource in liberal democracies’ diplomatic and strategic toolbox. Agreement on what red lines cannot be crossed without consequences—as outlined in NATO’s Article 5—has kept the peace in Europe for decades. With U.S. leadership, European cooperation, and the involvement of other key allies, an Economic Article 5 could help keep peace far beyond NATO’s borders.

Bruce Stokes is a visiting senior fellow at the German Marshall Fund. Twitter: @bruceestokes

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