Business groups exhale on sanctions

Business groups expressed relief Thursday at the White House’s new round of sanctions against Russia, arguing they strike the right balance between punishing Vladimir Putin and protecting the economy.

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Lobbyists for U.S. firms had been urging Congress and the administration to take a measured approach to Russia’s annexation of Crimea, and warned against broad unilateral measures such as sanctioning the Russian central bank or blocking imports.

President Obama announced Thursday that the U.S. would target 20 Russian officials and business “cronies” of Putin, as well as Bank Rossiya, but refrained from imposing the kind of broad restrictions that many in business had feared.

“The U.S. business community appreciates the circumspect approach of officials in the administration and Congress to the question of sanctions in response to recent events in Ukraine,” said Myron Brilliant of the U.S. Chamber of Commerce.

Brilliant praised the administration for coordinating the sanctions push closely with the European Union. Industry groups worried that if the U.S. were to go it alone in sanctioning Putin, the only real consequence would be to allow foreign competitors to get a leg up in the Russian marketplace. 

“The close coordination we’ve seen with the European Union is particularly important given that the EU’s annual trade with Russia is approximately 15 times larger than that of the United States,” Brilliant said. “A go-it-alone approach by the United States could be both economically damaging and ineffective in accomplishing its goals.”

European leaders meeting in Brussels announced Thursday night that the EU would target 12 individuals in addition to 21 already named, with sanctions. No broader measures were announced but leaders instructed the European Commission and member states to prepare for possible additional measures.

Richard Sawaya of The National Foreign Trade Council said hitting Bank Rossiya appears proportional at this point. 

“This is a small private Russian bank. This is not the Russian central bank,” he said of the financial institution, which has about $10 billion in assets. “We are still not talking Iran-land.”

Sawaya said that coordination with Europe has been “positive” but the administration should focus on giving Russia more incentives to back away from any further invasion of Ukraine. 

“If the only tool you think you have in your tool box is a hammer then all you see is nails,” he said. 

The administration did issue an executive order allowing for possible future sanctions on whole sectors of the Russian economy, but indicated it was in no rush to use that power. 

“This provides us with broader tools to highlight the future choices facing Russia’s leadership, and our use of these tools will be based on careful consideration of what will be most effective in meeting that objective,” Treasury Secretary Jack Lew said.

Sawaya said the broader sanctions threat was the real “shot across the bow,” and that he hoped they were never used.

The National Association of Manufacturers said it is remaining vigilant. 

"We continue to seek to safeguard manufacturing employees and manufacturers' investments around the world. Historically, multilateral sanctions have been more effective than unilateral sanctions in achieving our objectives," said NAM Vice President of international economic affairs Linda Dempsey.

Security experts are more divided on the targeted approach.

“I think it is terrific,” said Kori Schake, a Bush-era State Department official now at the Hoover Institution. “Sanctions are hard to use well. You don’t want to hurt the society, you want to hurt the authorities. The administration has made clear there is an escalation ladder in trying to forestall other subsequent Russian actions.”

Schake said that the administration could also point to congressional eagerness to increase sanctions as it tries to get a diplomatic end to the crisis.

“We can always threaten other countries with the recklessness of our Congress,” Schake said.  She recommended that Obama make fewer public statements scolding Russia in order to defuse the situation.

Andrew Kuchins of the Center for Strategic and International Studies, however, said the new sanctions are “too little, too late.”

“This is the list the administration should have announced on Monday. Waiting four more days only gave the real ‘cronies’ the opportunity to move any assets they might still have had in the USA, which is unlikely they did have anyway. So certainly this move was expected by Putin and Co.; the only surprise is that it came so late,” he added. 

Kuchins recommended stronger action and for Obama to take the crisis more seriously.

“Obama does not understand Putin, and he certainly does not understand the stakes involved and the very real possibility that this will blow up — I mean really blow up — and destroy his presidency and legacy,” he said.