The Obama administration said Thursday it is ready to target broad sectors of the Russian economy if Moscow continues what Washington calls a campaign to sow violence and disrupt Ukraine’s presidential election this month.
Drawing the clearest picture yet of what the next phase of economic sanctions would entail, administration officials outlined possible penalties on Russia’s defense, high technology, engineering and energy sectors.
These sectoral sanctions would be tailored to address particular areas of Russian trade vulnerability, Assistant Secretary of State Victoria Nuland told the House Foreign Affairs Committee.
“The idea here is to use a scalpel rather than a hammer,” Nuland said, by focusing on trade and investment categories “where Russia needs us far more than we need Russia.”
She emphasized that the United States and Europe are united on the need for a new round of sanctions if the Ukrainian presidential election is undermined by Russia.
Europe does far more business with Russia than does the United States, and some countries are very dependent on Russian natural gas, so economic sanctions could have far greater repercussions there.
If Russian President Vladimir Putin “disrupts these elections, sectoral sanctions will be triggered,” Nuland said. A month ago, she added, it would have taken a full-scale Russian invasion of eastern Ukraine to trigger such a move.
“We now see that he doesn’t need to come over the border to upset” the presidential election to replace former president Viktor Yanukovich, who fled to Russia after he was ousted by parliament in February following violent clashes in Kiev, Nuland said.
Putin said Wednesday the election was “a step in the right direction.” On Thursday, however, Russian Foreign Minister Sergei Lavrov said the election would be “senseless” if the interim government in Kiev does not end a military campaign against pro-Russian separatists in eastern Ukraine.
Nuland and Assistant Treasury Secretary Daniel L. Glaser left little doubt that more sanctions are likely. If approved, the new penalties would be the fifth round in a step-by-step attempt to increase economic pressure on Moscow.
Putin has shrugged off the sanctions imposed so far despite some measurable effects on the Russian economy.
Glaser told the committee that the Russian stock market has declined more than 13 percent and the ruble has fallen nearly 8 percent since the beginning of the year.
The next phase of sanctions would be far tougher, however, even though it would not go as far as some of Putin’s critics want. Instead of blacklisting most Russian banks or banning the purchase of all Russian energy exports, the likely sanctions would “slice across a bunch of different sectors at once,” Nuland said, “such that the pain is shared among sectors of the economy, and to help keep Europeans together because different ones are vulnerable in different sectors.”
European public opinion is mixed but generally favors a slower, less confrontational response to Russia’s actions in Ukraine than Washington is adopting.
Putin may have been appealing to European sensibilities with his somewhat conciliatory remarks Wednesday about the election and an appeal to pro-Russian separatists in Ukraine not to hold a referendum on secession this weekend.
U.S. and European officials are adamant that a divide-and-conquer approach will not work for Moscow.
The response to Russia must be unified within the 28-member European Union and between Europe and the United States, a German government official said Thursday.
“We don’t want to go down that road, but we are prepared to do it,” the official said of sectoral sanctions that would pinch the German economy.
“It will need to be a package that distributes the cost as evenly as possible and that looks at what can actually have an effect on the other side,” said the official, who spoke on the condition of anonymity to describe discussions between the U.S. and European officials.
European governments have argued that the May 25 vote should be a welcome development for Russia, which considers the current interim leadership in Kiev to be illegitimate. That argument holds that the vote, planned for all of Ukraine except the Crimean region already annexed by Russia, will confer legitimacy on the winner and will clarify Ukraine’s relationship with its much larger and more influential neighbor, Russia.