Walter Russell Mead rejects the premise that the US or even the EU can pressure Putin economically:
Putin does not worry nearly as much about the Russian stock market as western leaders worry about financial markets in their own countries. Putin broke the oligarchs as a political force years ago; in Russia, corporations exist to serve the state and not the other way round. He is not worried that business leaders will lose confidence in him; in Putin’s Russia, it is business leaders who worry about losing the trust of the country’s political master.
As for banking crackdowns and visa limits, it will help Putin, not hurt him, if powerful Russians are unable to leave the country or move their money around in the West. One of his worries is that various oligarchs and power brokers can put enough money in the west to be able to get out from under his thumb. He would like all of his backers to be dependent on him for continued enjoyment of wealth and property. If the West wants to fence his backers in, so be it. (If the west goes after Putin’s own golden horde of ill-gotten simoleons, estimated by many to be north of $50 billion, the calculation might change.)
Daniel Berman notes that, for the governments of the UK and Germany, an economic war with Russia would be political suicide:
Both the UK Conservative Party of David Cameron and the German Christian Democrats under Angela Merkel have staked their political legitimacy on a particular vision of austerity and the belief that this austerity can bring economic growth, the former to Britain, the latter to the Eurozone as a whole. In particular Merkel has enforced her vision of belt-tightening not just on Germany, but on much of the EU including Greece and Italy. In return the results achieved by both governments have been mixed. The UK is growing again, but only at a rate of about 2.4%, with Germany a bit lower.
That number is critical. Sanctions would almost certainly hurt, likely to the tune of a. 8% haircut in GDP growth over the next year, especially without extensive stimulus spending. Critically however either option would destroy the legitimacy of the governments implementing them. A Keynesian approach would make a mockery of the policies followed hitherto and lead to resentment against Germany, while allowing that sort of haircut would eliminate the limited growth both economies have achieved. In the UK it would discredit Chancellor George Osborne, and almost certainly lead the Tories, already substantial underdogs for 2015, to their doom.
Jordan Weissmann investigates the idea of fighting Russia with natural gas exports:
“You hear these calls for us to ship gas to Europe,” [energy security expert Michael Levi] said. “We do not ship gas to anyone. Private companies ship gas. And Europe doesn’t buy gas. Private companies in Europe buy gas. The reality is that North American natural gas is not going to be attractively priced for most European companies. You can approve all the terminals you want. You still aren’t going to get any American companies to lose money pursuing geopolitical objectives.”
Danny Vinik calls out Republicans for blocking IMF reforms that would allow Ukraine to borrow the money it needs:
The reforms would allow Ukraine to borrow approximately 60 percent more (from $1 billion to $1.6 billion) from the IMF’s emergency fund. That’s money that Ukraine can use to pay off its debts and avoid a default. In certain scenarios, the IMF makes exceptions and allows countries to access additional funds, as it did with Greece and Ireland after the financial crisis. But there’s no guarantee it would do so with Ukraine. By blocking the passage of the IMF reforms, Republicans are actively making it harder for Ukraine to pay back its loans.
The U.S.’s refusal to pass the reforms—which 130 countries have already approved—only hurts our credibility. Given the broad constituency of nations that want to help Ukraine, this won’t stop the IMF from offering a loan. But it’s a bit rich for the U.S. to call for IMF help when it refuses to pass basic reforms that would have no material effect on the United States and that most of the world has already approved.
The Dish 