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Could the Latest U.S. Sanctions Hit a Nerve With Putin? Could the Latest U.S. Sanctions Hit a Nerve With Putin?

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Defense

Could the Latest U.S. Sanctions Hit a Nerve With Putin?

The asset freezes and travel bans of Russian officials are more of the same, but they inch closer to Putin's own finances.

(ALEXEY DRUZHININ/AFP/Getty Images)

photo of Marina Koren
April 28, 2014

Less than two weeks ago, there was a peace deal. Now, there are sanctions.

A recent agreement reached by diplomats from the United States, Russia, Ukraine, and the European Union quickly fizzled when Russia did not hold up its end of the bargain: pulling back pro-Russian militant groups in eastern Ukraine.

"Russia has done precisely nothing," a senior administration official said Monday.

 

Tension in the region continues to climb, and on Monday morning the Obama administration announced another round of sanctions against Russian individuals and companies.

Seven Russian government officials, including two whom the White House called members of Russian President Vladimir Putin's inner circle, will be sanctioned with asset freezes and visa bans. The U.S. will impose restrictions on more than a dozen Russian companies and deny export licenses to any high-tech products that the Russian military could purchase and use.

The executive order is the latest in a series of back-and-forth actions that have characterized the Ukraine crisis: Moscow steps up aggression in another country's territory, Washington warns, Moscow doesn't back down, Washington imposes sanctions. Some Ukrainian officials are saying that the U.S. action is not enough, while members of Congress are actually shouting that it isn't enough.

But this latest collection of sanctions reveals that the Obama administration is inching closer to hitting a nerve for Putin. Monday's roster of sanctioned individuals includes Igor Sechin, president of the Rosneft state oil company; Sergey Chemezov, the CEO of stated-owned corporation Rostec; and Gennady N. Timchenko, part-owner of commodities trading company Gunvor Group. These men are some of Putin's closest allies, and Putin—and his money—has long been linked to Gunvor.

By singling out these individuals, the sanctions reignite rumors of Putin's secret fortune, generated by investments in various state-run companies and economic sectors. The Russian president's exact personal wealth is unknown, but if estimates of $40 billion to $70 billion are true, the numbers would make Putin the richest head of state ever. The New York Times' Peter Baker explained Sunday:

Now, as the Obama administration prepares to announce another round of sanctions as early as Monday targeting Russians it considers part of Mr. Putin's financial circle, it is sending a not-very-subtle message that it thinks it knows where the Russian leader has his money, and that he could ultimately be targeted directly or indirectly.

"It's something that could be done that would send a very clear signal of taking the gloves off and not just dance around it," said Juan C. Zarate, a White House counterterrorism adviser to President George W. Bush who helped pioneer the government's modern financial campaign techniques to choke off terrorist money.

So far, the American government has not imposed sanctions on Mr. Putin himself, and officials said they would not in the short term, reasoning that personally targeting a head of state would amount to a "nuclear" escalation, as several put it.

So, work around the head of state. "The goal here is not to go after Mr. Putin, personally," President Obama said during a press conference Sunday in Manila, the Philippines. "The goal is to change his calculus with respect to how the current actions that he's engaging in in Ukraine could have an adverse impact on the Russian economy over the long haul, and to encourage him to actually walk the walk and not just talk the talk when it comes to diplomatically resolving the crisis in Ukraine."

Senior administration officials say the Russian economy has taken a hit from earlier U.S. sanctions, and "the impact on the Russian economy will only grow." The latest installment certainly hits closer to home in the Kremlin, but, as before, the actions largely send just a signal.

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