American, European and Russian sanctions

Mar 23rd 2014

By J.P.P. | WASHINGTON, DC

WHEN the American government announced the names of the Russians and Ukrainians who would have their American assets frozen, officials said that these were the toughest sanctions aimed at Russia since the end of the Cold War. The response from those on the list suggested otherwise. "I don't have accounts abroad," said Vladislav Surkov, one of the architects of Russia's pretend democracy. "The only things that interest me in the U.S. are Tupac Shakur, Allen Ginsburg and Jackson Pollock." The response from American politicians singled out by Russia was equally playful. "I guess this means my Spring Break in Siberia is off," said John McCain, a senator. For Mary Landrieu, a Democratic senator facing a tough race for re-election in Louisiana, a place on Vladimir Putin's blacklist must seem like a blessing. Given that their targets seem so delighted, do these sanctions actually matter?

Compared with the restrained, euphemistic language in which diplomats usually deal, the sanctions announced by America and Europe against individuals for their part in swallowing Crimea are strikingly direct and personal. Very different American presidents have tried similar approaches to dealing with Russia. George W. Bush looked Mr Putin in the eye and got a sense of his soul; Barack Obama tried to reset relations between the two countries. American and European governments have preferred to avoid confrontation with Mr Putin wherever possible. Sanctions were not imposed after the murder in London of Alexander Litvinenko, a former KGB agent, nor in response to Russia's war with Georgia in 2008. So far the measures announced are nowhere near as forceful as the sanctions placed on Iran, which have helped cripple that country's economy. But taking the same approach with Russia would be difficult: its economy is not as isolated as Iran's. Greed and fear play a part too.

The measures announced by Russia's government will have little practical effect, but the European and American sanctions are more meaningful. America's Treasury department notes that even those people who do not have any assets in America to freeze often find it difficult to obtain financial services elsewhere. They will, for example, be unable to carry out any transactions using dollars. Western banks, mindful of recent government probes of HSBC and Standard Chartered for breaking similar embargoes, will not want to go near them. For many of the Russians and Ukrainians named this will matter little. For others, such as Gennady Timchenko, the boss of an oil-trading firm called Gunvor that, according to the Treasury department, has links to the Kremlin, the sanctions are likely to hurt.

None of this is likely to change Russia's behaviour in Ukraine. That does not mean the sanctions are insignificant. The imposition of visa bans, asset freezes and so on felt like a throwback to an earlier era when arguments between the Soviet Union and the West would result in the ritual expulsion of diplomats from embassies. It marks a low in post-Soviet relations relations between Russia and the West; the moment when the hope that Mr Putin's Russia could be a useful ally died. Yet the sanctions may also offer some comfort to those Russians who are fed up with Western governments talking about the importance of democracy while welcoming oligarchs who exploited its absence to enrich themselves.

Dig deeper:
London has more to lose than most when it comes to scaring off oligarchs (March 2014)
We report on the Kremlin's favourite oil trader (May 2012)

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American, European and Russian sanctions

American, European and Russian sanctions

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