Breaking Down Obama's Slick Russian Sanctions Play
07/18/14
Nikolas K. Gvosdev
Sanctions, Security, Russia, Ukraine, United States
"They are more than an annoyance, but far from catastrophic."
Listening to President Barack Obama announce
the imposition of new sanctions against Russian companies and entities,
I winced when I heard the line, "These sanctions are significant, but
they are also targeted—designed to have the maximum impact on Russia
while limiting any spillover effects on American companies or those of
our allies." I had an image of the classic trope of the angel and devil
sitting on the opposite shoulders of the Chief Executive, whispering
into his ear as he spoke, except the two figures were replaced by Fred
Hiatt of the Washington Post, urging stronger, more punitive, unilateral
action in defense of freedom and U.S. values against the tyrant Putin,
on the one hand, and Rex Tillerson, the CEO of Exxon Mobil, warning of
dire consequences to the U.S. and global economy and of the damage
American companies might suffer as a result—with a corresponding loss of
jobs just months before a critical midterm election.
The
measures that have been enacted are much tougher than previous
iterations that focused on targeting individuals; they freeze any U.S.
assets of a number of major Russian defense contractors and bar major
Russian energy firms from being able to access U.S. credit markets for
anything more than short financing. While Russian companies publicly
tout their ability to obtain capital from other sources—starting with
China—there is no doubt that the cut-off of longer-term dollar financing
for major energy firms like Rosneft and Novatek will have a negative
impact on their operations. (Curiously, while Gazprombank is sanctioned,
Gazprom is not—a seemingly backhanded recognition that messing around
with one of the critical sources of Europe's natural gas might not be
welcomed across the Atlantic. Most of Novatek's gas production is
destined either for the Russian domestic market or for China, given that
it now has the right to export liquefied natural gas (LNG).)
But
we should not overemphasize their importance. They are more than an
annoyance, but far from catastrophic. They will create problems for the
Russian economy, but they are insufficient in scope and impact to alter
the Kremlin's calculus on Ukraine's importance to its strategic plans,
as I detailed in a longer piece for this magazine.
Read full articlehttp://nationalinterest.org/feature/breaking-down-obamas-slick-russian-sanctions-play-10908
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