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Mon April 28, 2014
News

Washington Levels New Sanctions At Russia, Pulls Some Punches

Originally published on Mon April 28, 2014 5:18 pm

Transcript

MELISSA BLOCK, HOST:

The new economic sanctions ordered by the Treasury Department today targets 17 Russian companies, along with seven government officials, some with close ties to Russian President Vladimir Putin. The individuals include the chairman and a board member of Russia's largest state-owned oil company. European governments are expected to add their own financial penalties, but so far, there's little sign the Russian leader is yielding to the pressure. NPR's Scott Horsley reports.

SCOTT HORSLEY, BYLINE: President Obama says Russia hasn't lifted a finger to diffuse the crisis in eastern Ukraine. Pro-Russian forces continue to occupy buildings in the east despite Russia's pledge in Geneva to encourage those forces to stand down.

PRESIDENT BARACK OBAMA: The Ukrainian government has, in fact, abided by that agreement and operated in good faith and we have not seen comparable efforts by the Russians.

HORSLEY: So the U.S. government is turning up the heat, freezing assets and barring business transactions with more Russian companies and individuals. Today's targets include two close Putin allies, Igor Sechin, chairman of the giant Rosneft Oil company and one of that company's directors, Sergei Chemezov, whose ties to the Russian president date from the 1980s when they shared an apartment complex in East Germany.

OBAMA: The goal here is not to go after Mr. Putin personally. The goal is to change his calculus.

HORSLEY: The Treasury Department did not sanction Rosneft itself, only the oil company's leaders. And while that could raise some interesting legal questions for Rosneft's business partners like Exxon Mobil, William Pomeranz, who's with the Kennan Institute for Advanced Russian Studies, says it also narrows the sanction's impact.

WILLIAM POMERANZ: Obviously, these people do not have access abroad, but nevertheless, I think what the U.S. has attempted to do is to reach deeper into Putin's inner circle.

HORSLEY: Congressional Republicans have criticized the Obama administration's efforts on Ukraine as tepid and incremental. Mark Dubowitz of the Foundation for Defense of Democracies argues the president was too quick to military options off the table. What's more, he says, the U.S. has been too deferential to Europe in crafting its sanctions.

MARK DUBOWITZ: There is no substitute for U.S. leadership and if we wait for the Europeans to get their act together on their own, we'll be waiting a long time.

HORSLEY: Obama, who's traveling in Asia this week, defended his efforts to coordinate with Europe. The goal, he says, is to isolate Russia and not allow Putin to frame this dispute as a latter-day Cold War standoff.

OBAMA: We're going to be in a stronger position to deter Mr. Putin when he sees that the world is unified and the United States and Europe is unified, rather than this is just a U.S./Russian conflict.

HORSLEY: That conflict has taken a toll on Russia's economy, even if the limited sanctions imposed so far are not directly responsible. Inflation in Russia is up. The government's bond rating is down and Charles Movit of IHS Global Insight, says concerns about greater fallout have driven tens of billions of dollars out of the country in recent months.

CHARLES MOVIT: It further erodes the attractiveness of Russia as a place to invest, and Russia needs a tremendous amount of investment.

HORSLEY: The Kennan Institute's William Pomeranz agrees Russia is paying a price for its actions in Ukraine, but he worries that may not be enough to change Vladimir Putin's mind if the Russian president sees a political or strategic advantage.

POMERANZ: It does not appear that there were any economists in the room, for example, when Putin decided that it was time to annex Crimea. He has also gambled that his popularity will be based on how he handles the situation in Ukraine.

HORSLEY: The White House stressed it still has the option to sanction whole sectors of the Russian economy if, for example, Russian troops cross the border into Ukraine. Said one official today, it's better to ratchet up the pressure than to fire every bullet in the gun. Scott Horsley, NPR News, Washington. Transcript provided by NPR, Copyright NPR.