Crisis in Ukraine

03.17.14

Obama Has 4 Days to Stop Putin in Crimea

Russia has agreed to a ceasefire in Crimea until March 21, which gives the Obama administration little time to prevent a war. Can anyone change Putin's calculation in time?

Now that Crimea has “voted,” the Obama administration is ready to start unveiling sanctions against Russian and Crimean leaders who are linked to what the West is calling Russia’s invasion and subversion in Crimea. But with a fragile ceasefire set to expire by Friday, the sanctions are unlikely to work in time to head off a conflict.

There are signs that the short-term measures being contemplated, which include asset freezes and visa bans for Russian government officials and business leaders, will not be biting enough to really put pressure on Putin and his friends.

According to one independent analysis being studied by the Kremlin and reviewed by The Daily Beast, such measures could be a drag on the Russian economy over time and an embarrassment for the Russian government, but would only be an “inconvenience” for the Russian economy in the near term. More drastic measures would include going after Russia’s ability to interact in global financial markets, which the analysis calls “disruptive,” and restrictions on Russian energy exports or trade sanctions, which the analysis says would be “catastrophic.”

The analysis by Macro-Advisory, an investment firm operating in Russia, predicts that the West, especially European countries, will not move to impose “disruptive” or “catastrophic” sanctions on Russia until Putin crosses another red line, such as the outright invasion of Ukraine.

“The key risk [for Russia] is Stage 3, i.e. a ban or restrictions on Russia’s interaction in global financial markets and/or any selected restrictions on trade or investment with Russia,” the report stated. “Investors assume that Stage 4 [catastrophic] sanctions are not yet on the agenda simply because these would also have a negative contagion to several EU countries, and many high-profile companies, as well as indirectly on the global economy.”

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On CNN today, Josh Rogin broke news that the Kremlin is preparing a list of U.S. politicians to sanction.

Meanwhile, the crisis in Crimea continued to unfold Sunday, when a reported 95.5 percent of voters opted in a near-choiceless referendum to leave Ukraine and join Russia. President Obama called Vladimir Putin shortly after the results were announced to reiterate that vote would never be recognized by the United States and the international community. It was a violation of the Ukrainian constitution, Obama added, made under duress of military intervention.

“He emphasized that Russia’s actions were in violation of Ukraine’s sovereignty and territorial integrity and that, in coordination with our European partners, we are prepared to impose additional costs on Russia for its actions,” a White House read-out of the call said.

The Obama administration's plan to impose those additional costs was set last week. Secretary of State John Kerry revealed, perhaps accidentally, that the U.S. had no intention of waiting for the results of the Crimean referendum and was planning a “very series of serious steps on Monday” against Russia.

You want to isolate them, you want to make it more difficult for the people who have been getting a free ride on the Western economic system.”

Also on Sunday, the Ukrainian government announced that it had struck a truce with the Crimean government and the Russian foreign ministry (which still doesn’t acknowledge that Russian troops have taken over Crimea) that will avoid attacks on Ukrainian bases inside Crimea until March 21. A leaked document reported to spell out the Russian position on Ukraine sets terms the West is not likely to accept as an offer to stave off war.

A senior State Department official said this weekend that the administration is not predicting that the coming sanctions will be enough to change Putin’s calculus on Crimea and reverse course there.

“I would simply say that there have already been significant costs.  Just take a look at what’s happening to the Russian stock market.  Look at what’s happening to the Russian ruble,” the official said. “So as both – as the United States, Canada, the European Union, others exact further costs, we’ll just have to see what cost-benefit analysis President Putin makes.”

The administration is also bracing for Russian retaliation to the limited sanctions being rolled out Monday. Michael McFaul, who served until last month as U.S. ambassador to Russia, said he expected the Obama administration to announce sanctions against Russian officials in the coming days and that the Kremlin would respond--as they have done in the past--with a sanctions and travel ban list of their own. "They will have their own list and their own people they will sanction in terms of travel and assets in Russia," the former ambassador said "I fear someone like me could be on that list." 

McFaul as ambassador was demonized by Russian controlled media and harassed by the country's intelligence service. His private schedule as ambassador in the past would be shared with Russian media, who would ambush him at public events. In more ominous moves, anonymous videos appeared on the internet accusing McFaul of being a child molester. Because of his work on civil society, Russian hardliners have portrayed him as an agent of influence seeking regime change in Moscow. 

Last year, in response to the U.S. creation of the Magnistky list, a list of Russian human rights violators subject to sanctions, Russia created its own list of Americans banned from traveling to Russia. The list included Bush administration officials including John Yoo, a former US Justice Department official, David Addington, the chief of staff for former vice-president Dick Cheney, and two former commanders of Guantanamo Bay.

Toby Gati, the White House senior director for Russia during the Bush administration, said that broad attacks on the Russian economy are not practical but well crafted, targeted sanctions against Russian elites can  have the effecting of placing pressure on Putin if implemented smartly.

“Remember this, unless we are coordinated with the Europeans, the Russians are going to get missed signals,” she said. “The question is how do we want to hurt them. You want to isolate them, you want to make it more difficult for the people who have been getting a free ride on the Western economic system.”