17 July 2014
The U.S. Treasury Department announced on July 16 that it has imposed a new round of sanctions on Russian entities in the financial services, energy, arms and related material sectors, as well as those undermining Ukraine’s sovereignty or misappropriating Ukrainian property. In particular, the Treasury imposed sanctions that prohibit U.S. persons from providing new financing to Russian enterprises Gazprombank, VEB Bank, Novatek and Rosneft, thus limiting their access to U.S. capital markets.
The Treasury also targeted eight Russian arms firms that produce small arms, mortar shells and tanks. The individuals targeted for sanctions include Aleksandr Borodai, the self-declared prime minister of the Donetsk People’s Republic; Sergey Beseda, a senior Russian Federal Security Service (FSB) official; Oleg Savalyev, the Russian Minister for Crimean Affairs; Igor Shchegolev, an aide to the Russian President; and Sergei Neverov, the deputy chairman of the State Duma.
“Russia has continued to destabilize Ukraine and provide support for the separatists, despite its statements to the contrary,” said Under Secretary for Terrorism and Financial Intelligence David Cohen. “Because Russia has failed to meet the basic standards of international conduct, we are acting today to open Russia’s financial services and energy sectors to sanctions and limit the access of two key Russian banks and two key energy firms to U.S. sources of financing, and to impose blocking sanctions against eight arms firms and a set of senior Russian officials.”
In response, Russian President Vladimir Putin said on July 17 that the U.S. sanctions will take relations with Russia to a “dead end” and damage U.S. business interests in Russia. “Sanctions have a boomerang effect and without any doubt they will push U.S.-Russian relations into a dead end and cause very serious damage,” he told reporters in Brazil, as reported by the Reuters news agency. “I am convinced that this harms the long-term strategic interests of the American government and American people.”
Zenon Zawada: The Western strategy on sanctions has been effective despite the Russian government continuing to support the armed conflict in eastern Ukraine. They have made Putin hesitate against open intervention in Ukraine, whether involving soldiers or “peacekeepers.” The big question is how many rounds of sanctions will it take to break Putin’s will in pursuing his geopolitical goals in disintegrating Ukraine. That’s almost impossible to answer when Russian foreign policy largely depends on the conviction of a single individual.
However, given that Putin views Ukraine as essential to renewing Russia’s role as a world power, we expect he will resist capitulating beyond the next rounds of sanctions, which may be imposed at the next EU summit on August 30. Support for Putin’s position within the Russian government and beyond remains quite solid, from what is apparent.