By Justin Sink, Jeremy Herb and Erik Wasson - 03/20/14 06:00 AM EDT
Russia has brushed aside the West’s punishment of its bullying of Ukraine so far, raising questions about what steps the administration could take to get Russia’s attention.
The White House has come under pressure from Republicans to take additional steps, and the administration and Congress have signaled tougher actions are coming.
Russia has laughed off U.S. sanctions so far, raising calls for tougher actions from the administration and Congress.
Obama is expected to expand the list of Russian officials subject to asset freezes and visa bans, and Sen. John McCain (R-Ariz.) is calling on Obama to use the Magnitsky Act to punish officials involved in human rights abuses.
A tougher approach would be to target major capitalists associated with Putin or to sanction Putin himself.
David Kramer, the head of Freedom House, argues that Obama must sanction the heads of major Russia companies, while Anders Aslund of the Peterson Institute said that the U.S. must impose the same level of sanctions now placed on Iran.
That would involve cutting off all Russian state companies from the international financial system and banning imports from Russian firms, with the exception of petroleum.
Obama should brand Russia as a “rogue power,” Aslund said. Besides kicking it out of the Group of 8, talk of admission to the Organization of Economic Cooperation and Development should end.
“If the U.S. does not act forcefully, it means U.S. security guarantees are meaningless and Ukraine a big mistake to give up its nuclear weapons,” he said.
There are two problems with economic sanctions.
The first is the possibility that Russia will brush them off given small volume of trade ($40 billion) between the U.S. and Russia and U.S. investment ($14 billion) in Russia.
In addition, tightening the sanctions risks hurting U.S. companies.
ExxonMobil, Citigroup, Ford Motor, General Motors, Boeing, and PepsiCo have made investments in Russia and are worried Putin could expropriate their assets.
The National Foreign Trade Council’s Richard Sawaya said tougher sanctions “would almost certainly not have their designed effect and they would have significant blowback for U.S. commercial interests.”
Andrew Kuchins from the Center for Strategic and International Studies said Iran-level sanctions would be too extreme, but hitting Putin’s chief of staff and top figures in some state-owned companies is called for, even if it hurts some big U.S. firms.
“The U.S. actions have to start getting into an area where there are negative consequences for U.S. business for them to have any effect,” he said.
The White House and U.S. allies will meet as the G-7 next week, and it’s anticipated they might push to expel Russia from the G-8.
The move wouldn’t punish Russia’s economy and will do nothing to change Russia’s annexation of Crimea, but experts say it would nonetheless hurt Moscow.
“I think Russia cares, because it liked being part of the G-8, being part of the national, industrialized powers,” said Will Pomeranz, the deputy director of the Kennan Institute for Advanced Russian Studies at the Woodrow Wilson Center. “It will be one less international organization that Russia will be able to participate in.”
Sam Charap, the senior fellow for Russia and Eurasia at the International Institute for Strategic Studies, said it won’t bite Russian President Vladimir Putin in the short term.
“Over time, it will be damaging to Russia to be excluded from the international community, but it’s not going to change things right now,” he said.
Military aid wouldn’t allow Ukraine to take on Russia in a full-scale war, but lawmakers say it would act as a deterrent as Kiev rebuilds its military.
“You could give them anti-air equipment; you could give them anti-tank. You could help up their training,” said McCain. “One of the things I would do is send our military to Kiev and find out how we can best assist them.”
The Senate’s No. 2 Democrat Sen. Dick Durbin (Ill.) has joined McCain in calling for the military help.
“Time and again, they asked us for military help. They need it. I think they should have it,” Durbin said while visiting Ukraine as part of a congressional delegation with McCain this past weekend.
The Pentagon has sent additional F-15s to Poland to show U.S. support for Eastern Europe, but there are concerns that sending military aid directly to Ukraine would escalate U.S.- Russia tensions.
The White House hasn’t ruled out military assistance, but White House press secretary Jay Carney said this week the administration is focused on economic assistance.
Will Obama reverse his plans on missile defense in Europe? Right now, it seems unlikely.
As part of a reset with Russia that now looks like a failure, Obama in 2009 canceled President George W. Bush’s plans for a long-range missile defense system in Eastern Europe that had irked the Kremlin.
Sen. Ted Cruz (R-Texas) on Wednesday called for the Obama administration to put the Bush-era missile defense plans back on the table, while other Republicans have argued the earlier cancellation sent the wrong signals to Eastern Europe and Putin.
So far, the Obama administration has shown no intention of changing its plans. A senior administration official said last week that the European missile defense systems have always been about countering “emerging threats” like Iran, and it has “never been about Russia.”
Vice President Biden reaffirmed the U.S. commitment to its current plans while speaking in Poland on Tuesday.
“Our missile defense plans continue on schedule, including our firm commitment to place an operational missile defense site here in Poland by 2018,” Biden said.
Strategic Oil Reserve
A test sale last week by the Department of Energy of five million barrels of oil fueled speculation the U.S. could open the strategic oil reserve to depress oil prices and hurt Russia’s economy.
The sale, which represented only a modest portion of the 727 million barrels kept by the government, drove oil prices to their lowest level in a month.
University of Calgary professor Philip Verleger argues that the U.S. would be able to “inflict substantial pain on the Kremlin” through the steady release of its reserves.
“An SPR oil release could also exacerbate the ruble’s decline and further increase the country’s internal economic difficulties,” Verleger writes in the Financial Times.
The White House has denied that the test sale was intended as a warning shot to Moscow, with Carney describing the move as “routine.”
But the White House spokesman sidestepped questions about whether the U.S. was considering a strategic sale, or whether it was feasible.
“I'm not going to get into speculation about that,” Carney said.
The problem with the move is that it would require congressional approval, and would face fierce opposition from oil companies that have built budgets around higher projected costs. Leaders in Saudi Arabia, another oil-dependent economy, could also protest the move.