Danny Vinik uses charts on Russian exports and imports to explain why American sanctions against Russia pack little punch:
The little blue areas in each graph is the United States. The purple is Europe. Without the E.U.’s cooperation in implementing sanctions, American sanctions won’t hurt Russia very much. Of course, because the the E.U. economy is so interconnected with Russia’s, it means any economic sanctions will also hurt the E.U. That’s the reason that countries like Germany and the Nertherlands are withholding support for sanctions and instead pushing for a diplomatic solution. That may make sense for those countries, but it makes the U.S. threat of sanctions very weak.
Vinik also looks at what Russia sanctions would mean for US companies:
The U.S. Chamber of Commerce estimated that U.S. exports of goods and services to Russia in 2011 was more than $10 billion. That’s not much compared to the $2.1 trillion in total exports that American companies did that year. Nevertheless, Russia is an emerging market with growing incomes, and U.S. companies have been actively looking to increase their investment there in recent years. Companies like Pepsi, Coke, and Ford will be reluctant to support any economic sanctions that dig into their bottom line, especially if the European Union refuses to implement their own sanctions. Since the U.S. and Russia do very little business together (only $30 billion in 2013), any unilateral sanctions from the U.S. will only have a marginal economic effect, although they may offer symbolic value as well.
Peter Feaver wonders what Putin’s counter-counter-move will be:
The commentary has rightly focused on the immediate A-B-C moves: (a) what Russia has done in Crimea, (b) what the West should do in response to that, (c) what Russia would do in Crimea and Ukraine after the West has acted. Less attention has been paid to the things we will all be talking about once those preliminary moves have taken place: how Putin will seek to impose costs on the West for the sanctions and other diplomatic steps we take in move “b.” Germany appears to be quite concerned about this, though much of that concern may just be about lost business opportunities. Of greater importance will be the cost-imposing strategies available to Putin elsewhere on the geopolitical chess board, especially Syria, Iran, and perhaps even Afghanistan.