The psychological factor of naming these [Russian “crony banks”] is not to be underestimated. First of all, it removes the curtain cloaking this shadowy “crony economy,” full of small, strange banks whose business is far from obvious. It shows the Russians that we know how and by whose hands the economy runs. Furthermore, says prominent Russian economist Sergei Guriev, “the continuation of adding companies and banks indicates that future sanctions may include certain truly systemic financial institutions.” …
“I don’t think the Russians quite understand the extent to which the world financial system is integrated with the dollar and the U.S. financial system,” says one administration official involved in the sanctions deliberations. “I don’t know if these people have assets in the U.S. I always suspected most of their assets are in Europe. But once the U.S. banking system has redlined you, it’s hard to do business. You’re radioactive.”
Which is why it’s starting to work. Western financing in Russia has seized up.
But Bershidsky thinks the sanctions are too weak:
The banks are too small to matter: At worst, the holders of almost $2 billion in private deposits at SMP Bank will have to find a new bank if they plan to use their debit and credit cards overseas. Some significant omissions suggest that the list’s drafters intentionally avoided Putin’s friends’ major possessions. Volga Group, for example, holds a 23 percent stake in Novatek, Russia’s biggest independent natural gas producer, and a 32.3 percent stake in Sibur, a major petrochemical producer. Kovalchuk’s Abros holds stakes in a large pro-Putin media holding as well as one of Russia’s biggest insurance companies, Sogaz. Sechin runs state-owned Rosneft, Russia’s biggest oil company. And though Washington officials earlier suggested Gazprom chief Alexei Miller would be mentioned, he is conspicuously absent. So is his company, long used to make Ukraine toe Russia’s line.
Keith Johnson complains that the sanctions don’t hit Russia’s energy sector:
Seriously targeting the energy sector would be crucial, though, because energy exports make up more than half the Russian government’s revenue. Gas sales to Europe, in particular, are a point of vulnerability for Gazprom, since about three-quarters of its sales go to Europe. But Russia’s oil firms, especially Rosneft, are also huge producers and long-time partners of big Western firms, with ambitious expansion plans. …
Big Oil firms continue to talk up their investments in Russia, and some, such as Royal Dutch Shell, plan to ramp up investments in major energy projects in Russia. European countries continue to plan major deals with Russian nuclear power firms. Big European companies that have long-standing trading ties with Russia, meanwhile, are arguing against a ramping-up of sanctions.
So why bother with sanctions at all? Keating’s take:
The best reason for sanctioning Putin that has little to do with influencing his decisions on Ukraine may be that, as Dan Drezner argued the last time around, it will gain the U.S. some leverage for the future. Indeed, sanctions are generally pretty bad at deterring bad behavior by hostile regimes, but the carrot of lifting sanctions has been pretty effective lately. It’s hard to believe that the U.S. could have made as much diplomatic progress as it has with countries like Iran or Myanmar if it hadn’t been able to offer sanctions relief in exchange for concessions.
The relationship between the United States and Russia has been profoundly damaged, probably for years to come, by the Ukraine crisis. Even if the U.S. may not be able to do much to influence Putin now, it’s seems basically inevitable that the two superpowers will face another crisis soon and it could certainly help to have something concrete to offer Russia’s most powerful people in exchange for cooperation.
Granted, in the short term, that’s pretty cold comfort for Ukraine.
Fred Kaplan makes a moral case, even as he acknowledges that sanctions don’t often work:
Sometimes, as with South Africa’s apartheid system, sanctions are worth imposing on moral grounds. And, in that case, because the sanctions were so deep, widespread, and long lasting, they finally paid off.
In this sense, sanctions against Russia are worthwhile, too. First, the West has to do something about Putin’s incursions and threats in Ukraine, and the fact is, there’s not a lot it can do. Second, if Putin isn’t determined to invade Ukraine outright, the pain of the sanctions to date—and the threat of more pain to come if he escalates—might affect his calculations on the costs of going ahead and the benefits of keeping still.
However, it’s illusory to think that these or any other sanctions will have more than a marginal impact on Putin’s behavior, especially when it comes to Ukraine, which has been integral to Russia—as a market, a supplier, and a security buffer—for centuries. If Putin decided that it was in his vital interest to chop off eastern Ukraine and call it a part of “New Russia,” then no economic sanctions—none that the United States and Western Europe can plausibly impose—would dissuade him from doing so.
John Cassidy wonders whether Putin will respond rationally:
[I]f the previous round of sanctions—which extended travel bans and asset freezes to a number of people and institutions close to Putin—did not change Putin’s behavior, it’s questionable whether these new measures, which are basically more of the same, will have much impact. Indeed, Putin’s failure to rein in the pro-Russian forces that have seized buildings in Donetsk and other cities raises three disturbing possibilities: first, that he is not fully in control of the local militants; second, that his cost-benefit analysis doesn’t weigh the economic costs imposed by the sanctions very highly; and third, that he’s not the wily rational actor everybody has assumed him to be. He might be something else.