As the Obama administration and its European allies were toughening their sanctions against Russia this week, a somewhat different tone was being set in St. Petersburg, where Russian President Vladimir Putin was seen wrapping former German chancellor Gerhard Schröder in a bearhug.
A photo of the embrace — taken at a lavish 70th-birthday party for Schröder hosted by a subsidiary of the Russian gas monopoly Gazprom — made front pages across Europe on Tuesday and caused the government of Chancellor Angela Merkel no small amount of embarrassment.
Merkel’s government quickly distanced itself from Schröder, now a top official at a German-Russian company that operates a gas pipeline between the two countries. But the picture served to highlight the cozy relationship between the Kremlin and Germany’s energy interests — one that forms a major obstacle to President Obama’s efforts to present a solid, unified Western front in the face of Putin’s aggression in Ukraine.
The administration has been upfront about the reality that Europe has a lot more to lose from sanctions against Russia than does the United States.
At the moment, asset freezes have been imposed against Russian individuals and, in the U.S. case, also against certain businesses. If a decision is made to move toward what the Europeans call “Tier 3” measures against entire sectors of the Russian economy, a senior administration official said, it would be on the basis of a “shared commitment” in which “one nation isn’t bearing a significantly greater share of the burden as against other nations with different interests in different sectors.”
Sanctions against Russia’s massive energy sector, for example, would probably be most effective in getting Putin’s attention but would also disproportionately harm Germany, which relies on Russia for more than a third of its natural gas and oil supplies.
Britain is anxious about banking-sector sanctions. France, whose defense industry is in the midst of completing a $1.6 billion ship contract with Russia, worries about defense sanctions. The Mediterranean countries are concerned about luxury goods and the Nordic countries about timber.
“That’s the challenge,” said one European diplomat. “How can they devise it so that the pain is distributed evenly?” Major companies in each capital are lobbying to ensure that their interests are not affected by the dispute over Ukraine.
Obama made numerous calls to allied leaders before and during the week-long Asia trip he completed Tuesday. But despite assurances from administration officials and public statements by European leaders that they are now on the same page, “things are not quite as clear-cut as ‘are we ready or are we not’ ” for sector sanctions, said the diplomat, speaking on the condition of anonymity about the sensitive negotiations.
“There has been a degree of disconnect between what you hear from some leaders and what is being said by their foreign ministers and officials in Brussels,” where European Union members have been in almost continual session on Ukraine.
Germany, Italy, Greece, Cyprus and others advocated holding back when foreign ministers met Monday to approve a new round of individual sanctions, diplomats from E.U. member countries said. Although Britain and others advocated matching the United States with new measures against Russian companies, those urging caution won the day, and the E.U. on Tuesday released a list of 15 more Russians and Ukrainians, for a total of 48, now subject to European asset freezes and travel bans.
Further discussions are scheduled for Wednesday to consider proposals to add specific companies and some of the people the administration calls Putin “cronies” who are already on the U.S. list.
Secretary of State John F. Kerry used a speech Tuesday to the Atlantic Council in Washington to urge the Europeans to step up sanctions and to increase their defense budgets. “This moment, without reaching for any hyperbole, because the moment is serious enough, is about more than just ourselves,” Kerry said. “The fact is that our entire model of global leadership is at stake.”
Beyond the question of how to distribute sector sanctions equitably among the allies is the question of what should trigger them. Opinions range from a continuation or escalation in Russia’s destabilizing actions in eastern Ukraine — what Obama on Monday somewhat vaguely called further “Russian aggression” — to only full-out military invasion.
“We’re not at the stage yet where we have to make a decision,” said a second European diplomat.
Yet the ongoing turmoil in eastern Ukraine, where pro-Russian militants Tuesday stormed the regional administration building in Luhansk while Ukrainian police stood and watched, has steadily eroded European reluctance.
Germany is considered essential to any attempt to pressure Moscow through sanctions. Merkel, who will meet with Obama in Washington this week, was originally reluctant to sign on to bolder steps against Russia.
But she now appears near a tipping point following the seizure in the eastern Ukrainian city of Slovyansk of European military monitors, four of them Germans. Officials in Berlin watched aghast as the men were paraded before cameras this week, an act that also seemed to cut through a strong undercurrent of sympathy for Russia running through the German public.
“The German bar [for tougher sanctions] is definitely higher than the American bar,” said Olaf Boehnke, head of the Berlin office of the European Council on Foreign Relations. “But this hostage case is really something that has the potential to make a difference.
“If they don’t see Putin using his influence on the separatists to calm this situation down,” Boehnke said, “you are getting closer to a German red line.”
Faiola reported from Berlin.