The Logic Behind Obama’s Step-by-Step Approach To Russia

CREDIT: AP Photo/Charles Dharapak

bama makes a statement on Ukraine from the South Lawn

The Obama administration on Thursday put forward the latest in a series of sanctions intended to serve less as a punishment for Russia’s reassertion of control over Crimea and more of a warning — come nearer and you won’t enjoy what happens next. And it would seem that the White House is beginning to put some weight behind these statements.

All in all, the Obama administration strategy with Russia has been one of incremental responses designed to provide proportional countermeasures while attempting to avoid encouraging further escalation from the Kremlin. That approach was mocked rather solidly on Monday, both from commentators and the actual target of the sanctions. The previous day, Crimea voted in a referendum largely seen around the world as illegitimate to break away from Ukraine and join the Russian Federation. In the executive order signed earlier this week, the White House named a total of 11 individuals — including seven Russians and four Ukrainians — as having their assets in the United States frozen and banning them from entering the country in response to Crimea moving forward with the vote.

The response from Monday’s designees were less than ideal from Washington’s point of view. “In the U.S. I care about Tupac Shakur, Jackson Pollack, and Allen Ginsberg. I don’t need a visa to enjoy their works,” Vladislav Surkov, Presidential Aide to Vladimir Putin, told a Russian newspaper. Deputy Prime Minister Dmitry Rogozin took to Twitter to mock Obama, asking if “some prankster” came up with the sanctions list. The administration insisted that the first round of individuals listed was an initial shot across the bow towards Russia, a chance for them to change course before the full weight of U.S. pressure was brought to bear.

The logic behind taking such a seemingly small steps made more sense on Thursday. Two days earlier, Russia had again defied the U.S. in officially moving to annex Crimea into its territory. In response, this morning saw the unleashing of sanctions against 20 more Russian officials, including several from deep within Putin’s inner circle. For example, one of the individuals listed is Gennady Timchenko, “one of the founders of Gunvor, one of the world’s largest independent commodity trading companies involved in the oil and energy markets,” according to the Treasury Department. “Putin has investments in Gunvor and may have access to Gunvor funds.” Timchenko has already sold his stake in Gunvor to his business partner in anticipation of the coming sanctions. Yuri Kovalchuk — the prime stockholder at Bank Rossiya, which has also been sanctioned — is Putin’s personal banker and will surely not enjoy the inability to access funds held in dollars.

In addition, Obama today announced that he had also signed another executive order — the third in the last two weeks — that grants the Treasury Secretary the ability to potentially place sanctions on Russia’s “financial services, energy, metals and mining, engineering, and defense” industries. “This is not our preferred outcome,” Obama said in a statement from the South Lawn. “These sanctions would not only have a significant impact on the Russian economy, but could also be disruptive to the global economy. However, Russia must know that further escalation will only isolate it further from the international community. The basic principles that govern relations between nations in Europe and around the world must be upheld in the 21st century.”

Given the response to today’s sanctions, it appears that the message Obama wanted to send appears to be getting through. Credit agency Standard & Poor dropped their outlook on Russia’s economy from stable to negative in the aftermath of the new sanctions’ announcement. Russian business leaders are upset that after waiting an hour to speak with Putin over the hundreds of millions of dollars in value he’s cost their companies, he spoke with them for only five minutes. And rather than heralding closer ties with their allies, Moscow’s move into Ukraine has spurred enough backlash that Belarus — which has talked of joining a European Union like alliance with Russia — is now talking about forming a partnership with NATO.

Journalists with longtime experience in Russia are also taking note. “Wow,” the Guardian’s Shaun Walker said after the sanctions’ announcement. “For everything Obama did wrong on Syria, he’s doing right on Russia,” The New Republic’s Julia Ioffe tweet out. “The list goes on and on and includes ministers, lawmakers, businessmen all with two things in common: their wealth and their proximity to Putin,” Buzzfeed’s Miriam Elder wrote. “The Kremlin must be freaking out.”

And in response to Monday’s sanctions, timed coincidentally enough, Russia released its own list of sanctions against U.S. government officials. While short on financial punishment, White House officials like Deputy National Security Adviser Ben Rhodes joined elected officials such as Senate Majority Leader Harry Reid (D-NV) in being banned from travelling to Russia. All six elected officials were quick to declare their pride in being on the Kremlin’s list. “I guess this means my spring break in Siberia is off, my Gazprom stock is lost, and my secret bank account in Moscow is frozen,” Sen. John McCain (R-AZ) said in a statement.

Give the scope of the three executive orders signed, the pressure brought to bear against Russia could still increase in coming days and weeks should Moscow decide that Crimea isn’t enough Ukrainian territory incorporated into the Federation. Indeed, the main goal of the upped pressure seems to be preventing Russia from moving further into eastern Ukraine as the Russian Foreign Ministry has hinted may still be possible. The result of such a move, the White House argues, would unleash more punishment than the Russian economy can bear long term. In downgrading the Russia economy, Standard & Poors warned that Russia could see its current account surpluses disappear by 2015. If the massive cash stockpiles that Russia has saved up over the oil price boom that has funded its resurgence over the last decade are already under threat, the White House’s plan for squeezing Putin may prove to be a winning one.