U.S., E.U. sanctions on Russians amid Ukraine crisis have little impact on the ground


U.S. officials hope that Russian President Vladimir Putin, shown with members of his cabinet, will avoid a full-blown invasion of eastern Ukraine because of the threat of wide-ranging freezes targeting the banking and energy sectors. (Sergei Karpukhin/AP)

The sanctions on Russian President Vladimir Putin’s inner circle were supposed to roll back the chaos besetting eastern Ukraine. But here in Russia’s blossoming capital, such a retreat is nowhere to be seen.

Some targets of the sanctions are sitting down for softball interviews on Kremlin-controlled TV channels. Moscow’s stock market rebounded Tuesday for the second day in a row after the latest round of sanctions turned out to be weaker than expected. Chaos is spiraling in eastern Ukraine, where pro-Russian separatists stormed a regional government building in the roiling city of Luhansk on Tuesday. And tens of thousands of Russian troops remain arrayed on Ukraine’s border.

Russian officials have acknowledged that the sanctions will affect the economy, particularly the technology and defense sectors. But some of the targets have rolled their eyes, saying the United States and Europe are only inflicting wounds on themselves.

“After analyzing the sanctions against our space industry, I suggest the U.S. delivers its astronauts to the ISS with a trampoline,” Russian Deputy Prime Minister Dmitry Rogozin, the recipient of a U.S. asset freeze and travel ban, said Tuesday, referring to the international space station. The United States relies on Russian space shuttle flights to launch astronauts into orbit.

Obama administration officials say the impact of the sanctions cannot be measured through stock market gyrations or the defiance of Russian officials. They also say that Putin may be hesitant about a full-blown invasion of eastern Ukraine because of the threat of wide-ranging freezes targeting the banking and energy sectors, which would wreak havoc on Russia’s economy.

“We believe that [sanctions] can affect Russia’s calculus over time,” a senior administration official told reporters in a background conference call this week. The Moscow stock market is down 13.2 percent for the year, and the ruble is down 7.6 percent against the dollar — but those declines started before any sanctions were announced.

The latest U.S. move targeted companies owned by Russian officials and businesspeople already hit by a first round of sanctions, and it expanded the list of Putin confidants whose U.S.-based assets are now frozen and who will not be issued visas for travel to the United States. Exports to Russia of U.S. technologies that could have military uses were put on hold.

The European Union followed Tuesday with sanctions of its own, but it focused on officials tied to the chaos in Ukraine, not on the private sector.

In Moscow, life continues largely as before, a reflection of a sanctions strategy that has largely spared ordinary Russians — except for the sinking value of the ruble. Muscovites took advantage of a gust of warm weather this weekend to flock to parks, where the scent of grilled shish kebab and blooming tulips permeated the air. Workers in bright uniforms carefully applied new layers of paint to winter-blasted buildings and benches.

Ahead of a long holiday that begins May 1 and for many Russians will extend until after Victory Day on May 9, news channels have given as much weight to packed tourist flights heading to the newly Russian-controlled Crimea — an autonomous Ukrainian region until last month — as they have to the sanctions.

Russians “are not really feeling those sanctions, and I think they are not intended to be felt by ordinary citizens,” said Grigorii Golosov, a professor of political science at the European University of St. Petersburg. “They are intended and often explained as having a short-term effect, but they can’t, and they won’t.”

Instead, Russian officials have said that pressure from the sanctions would come at a more leisurely pace.

“The gravity of these measures is absolutely obvious to us,” Russian Deputy Foreign Minister Sergei Ryabkov said Tuesday in an interview with Gazeta.ru, a news Web site. He said they were a “revival” of a Cold War sanctions regime in which “countries of the West effectively dropped the Iron Curtain on deliveries of high-technology products to the Soviet Union.”

Some targeted officials, meanwhile, appear to be receiving rewards for their black-list status. Gennady Timchenko, who sold his stake in the Swiss-based oil trader Gunvor last month hours before being hit by U.S. sanctions, was appointed head of the Russian half of the Russian-Chinese Business Council on Tuesday, the Izvestia newspaper reported.

The U.S. Treasury Department said at the time that Putin was thought to have access to Gunvor funds, a charge the company denied. The new round of U.S. sanctions includes 11 companies owned or controlled by Timchenko.

Administration officials must also contend with the risk that sanctions that hurt the Russian economy will also affect those of Europe and the United States, yet another limit on the speed and power of the effort. The Monday listing of Igor Sechin, the head of oil giant Rosneft, will complicate his company’s business relationship with Exxon Mobil, which is exploring the Arctic region with the Russian company.

But sanctions targeting individuals rather than industry sectors are unlikely to have a big effect on behavior, said Kirill Rogov, a senior researcher at the Gaidar Institute for Economic Policy in Moscow.

“No one will stop buying oil or gas because of these sanctions,” he said.

Michael Birnbaum is The Post’s Moscow bureau chief. He previously served as the Berlin correspondent and an education reporter.
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