On March 20, U.S. president Barack Obama expanded economic sanctions against Russia following the annexation of Crimea. Donald N. Jensen, resident fellow at the Center for Transatlantic Relations, points out that so far, the West’s policy has been one of bureaucratic compromise, and it will only become effective if sanctions tighten enough to turn Putin’s inner circle against him.

 

 

One of the recently expanded economic sanctions imposed on Russia by the U.S., in reaction to Russia’s ongoing annexation of Crimea, is the blacklisting of Bank Rossia, which provides financial services to Russia’s elite, including several officials involved in the decision to invade Crimea and oligarchs with close ties to Vladimir Putin. Any assets the bank’s clients have in the U.S. will be frozen, and they will be barred from U.S. travel. Among those targeted were Sergey Ivanov, the head of the Russian presidential administration; Gennady Timchenko, a billionaire with ties to Putin; Yuri Kovalchuk, Bank Rossiya chairman and co-owner, whom the White House has described as the “personal banker” for Russian leaders; and Arkady and Boris Rotenburg, who, the U.S. Treasury says, have made “billions of dollars in contracts for Gazprom and the Sochi Winter Olympics awarded to them by Putin.” Obama left open the possibility of further measures against the Russian economy, including the key energy sector on which Russia’s economy depends, especially in light of menacing Russian troop movements near eastern and southern Ukraine. A dozen or so members of the Russian elite remain untouched.

Moscow mocked the first, more limited U.S. sanctions announced on March 17 (the Russian stock market agreed and actually rose) and responded by banning nine U.S. officials from entering Russia. And first, the Kremlin gave contradictory signals about whether it would retaliate. But after the new round of sanctions were announced, the Russian stock market declined and electronic payments inside the country were affected. The European Union, which is more heavily dependent than the U.S. on Russia for energy imports, has separately announced milder sanctions.

Despite the evident hand the Kremlin has played in the Ukraine crisis since last November, the White House initially tried to place blame for the Maidan crisis primarily on departed Ukrainian president Viktor Yanukovych, only mildly criticizing Moscow’s role and apparently seeking to insulate its cooperation with Russia on other issues. As late as February, the Obama Administration was working to put relations with Moscow back on track, after a “pause” in 2013, by quietly arranging a meeting between Putin and Obama this summer. The two leaders had also been discussing signing a trade agreement. Moreover, on February 28—the day Russian special operations troops, backed by pro-Moscow militants, seized control of Crimea—Obama warned only that any “violation of Ukraine’s sovereignty and territorial integrity would be deeply destabilizing, which is not in the interests of Ukraine, Russia, or Europe.” He did not mention the United States.

The Russian invasion of Ukraine, as the U.S. administration now realizes, represents a significant threat to America’s strategic interests. First, it shows that the West’s current deterrence model cannot constrain Russian behavior in Europe. The West’s nuclear and conventional forces were irrelevant; NATO was unable and unwilling to respond. The result has been an undermining of the security structures put in place after 1989. Second, the invasion demonstrates Russia’s desire to undercut the existing global order, which the U.S. leads. “In Russia,” Moscow foreign policy expert Fyodor Lukyanov has written—ignoring the enduring Stalinist legacy about which the Kremlin remains ambivalent—“the viewpoint has always existed… that the Soviet Union did not lose the Cold War, rather it surrendered and left the battlefield… Russia was unable to restore its rights in the new system. In other words, no one was willing to view Russia as an equal.” He suggests that Russia now wants to right that historical “wrong.”

Russia’s adventure in Ukraine, moreover, is dangerously based on destabilizing claims of ethnic kinship, culture, and history, rather than international law and the value of self-determination. Finally, the invasion of Ukraine is a challenge to Western values. The corrupt, authoritarian governance model Putin is imposing on Crimea reflects that of Russia itself. The Kremlin portrays Western democracies as decadent and in decline, a message that has resonance in Iran and China. There are many objectionable aspects of twenty-first-century Europe (and the West more broadly)—from bureaucracy to secularism to “stifling political correctness,” but in essence it remains a zone of freedom.

If the West’s sanctions against Putin’s inner circle get tight enough, they may ask why their fortunes are lost due to Putin’s imperial ambitions and why they should continue to support him. Just as Yanukovych’s demise was hastened when he lost the support of Ukraine’s oligarchs, the same could eventually happen to Putin.

As the Obama Administration has wrestled with ways to contain and reverse the Russian invasion, his team has faced a number of policy challenges. Above all, there has been an asymmetry in the sides’ interests in Ukraine: the West has potentially far more power to bring to bear, but Russia is more intensely interested and is situated next door. Moreover, Putin has tactical advantages because his authoritarian regime can react quickly (whereas the U.S. has tried to act in concert with its partners). Putin also does not play by the usual diplomatic rules: he gleefully stoops to thuggery—insulting foreign leaders, harassing diplomats, and invading a neighbor and pretending he has not.

The U.S. mistakenly assumed that Moscow’s calculations of Russia’s interests and acceptable international behavior resembled our own assessment of these factors. White House rhetoric has also limited the U.S.’s options. When Obama told Putin that the U.S. was not prepared to use military force to block Moscow in Crimea, the Russian president likely viewed this as an indication that the West would not challenge him in any serious way. From that point on, the 1994 Budapest Accord, which guarantees the territorial integrity of Ukraine and which Russia and the U.S. signed, was a dead letter.

Having ruled out force, the U.S. administration’s steps—welcome as they have been—have so far been hampered by disagreements over just how far to go using the economic weapons in the U.S.’s arsenal. Some officials have argued that sanctions should be vigorously used against Russia sooner rather than later. But others in the administration, especially economic officials, are reportedly wary of taking steps that could provoke retaliation. The White House is also under intense pressure from major American companies that do not want to lose business to competitors.

The resulting policy has been one of bureaucratic compromise: it is not clear whether the goal is to force Putin to withdraw from Crimea or to weaken his hold on power; neither is it clear why some officials are included on the list of U.S. sanctions targets and others are not. In any case, the policy of taking gradually tougher measures—presumably more people will be added and tougher economic steps taken if Russian troops move into southern and eastern Ukraine—gives the Kremlin time to adjust. With such an approach, the initiative to raise or lower tensions remains with Putin.

In the past, sanctions have not usually been an effective tool of international diplomacy—they neither compel a return to the status quo ante nor stop the transgressor from further folly. In the current crisis, moreover, they confirm the absence of a unified Western position toward Russia’s Crimean occupation. As they begin to bite, they are also likely to increase the momentum of the Kremlin’s turn both inward and away from the West. Meanwhile, Putin has given Russian elites, who stand to lose vast fortunes under a strict sanctions regime, a stark choice: either support the Kremlin or be seen as traitors. There is little sign that they are about to break with the president.

But if the West’s sanctions against Putin’s inner circle get tight enough, they may ask why their fortunes are being frozen or lost due to Putin’s imperial ambitions and why they should continue to support him. Just as Yanukovych’s demise was hastened when he lost the support of Ukraine’s oligarchs, the same could eventually happen to Putin. In a recent interview, Levada Center director Lev Gudkov argued that the center’s findings suggest that Putin’s core support is much diminished compared to years past, despite the wave of popular chauvinism manufactured by the Kremlin in favor of military action in Ukraine. Many Russians now see Putin as the leader of a corrupt clan, not the father of the nation. Gudkov predicts that the public will eventually pay more serious attention to the reasons why Yanukovych’s regime met its end.

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