Financial Sanctions Call for a New Bretton Woods Framework

By Karen Petrou

After World War I, the great powers decided on reparations to punish an aggressor for its carnage. After World War II, the great powers turned instead to reconciliation, creating the Bretton Woods Agreement to entice aggressors into good statecraft to gain access to a rules-based global financial order. Now, the great powers are reasserting themselves with a new kind of reparations: sanctions and even expropriations. We shall see if aggressors are dissuaded from still worse, but the post-1945 global-financial-policy construct is doomed. Given the vital importance of stable finance, it’s not too soon to think about what must come next to prevent 2022’s reparations from ending as disastrously as a century ago….