Why Putin Isn’t Worried About Sanctions

The Russian president won’t feel their effect — but ordinary Russian citizens will.

Matryoshka dolls in the likeness of then-Russian Prime Minister Vladimir Putin and President Obama stand on display at a souvenir stall St. Petersburg in 2010.
National Journal
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Marina Koren
March 3, 2014, 9:19 a.m.

When ten­sions es­cal­ated in East­ern Europe last week, Pres­id­ent Obama warned Rus­si­an Pres­id­ent Vladi­mir Putin that mil­it­ary in­ter­ven­tion in Ukraine would lead to “costs.”

Now that a Rus­si­an par­lia­ment-ap­proved in­cur­sion in­to Crimea, a sov­er­eign ter­rit­ory of Ukraine, is well un­der­way, the United States and oth­er world powers are de­term­in­ing ex­actly what those costs are.

Sev­en of the Group of Eight lead­ing in­dus­tri­al na­tions, in­clud­ing the U.S., have sus­pen­ded pre­par­a­tions for an or­gan­iz­a­tion sum­mit in So­chi in June “un­til the en­vir­on­ment comes back where the G-8 is able to have mean­ing­ful dis­cus­sion.” Sec­ret­ary of State John Kerry, who is trav­el­ing to Kiev on Tues­day, said eco­nom­ic sanc­tions and travel re­stric­tions for in­di­vidu­al Rus­si­an of­fi­cials are on the table. Some mem­bers of Con­gress are push­ing for the pres­id­ent to im­pose trade sanc­tions, while oth­ers are call­ing for Rus­sia’s im­me­di­ate ex­pul­sion from the G-8.

Brit­ish Prime Min­is­ter Dav­id Camer­on is draw­ing up his own set of sanc­tions against Rus­sia, and Switzer­land, Liecht­en­stein, and Aus­tria have frozen the as­sets of ous­ted Ukrain­i­an Pres­id­ent Vikt­or Ya­nukovych and 19 of his of­fi­cials on or­ders from the new Ukrain­i­an gov­ern­ment.

Such polit­ic­al rep­rim­ands are all well and good for na­tions that want to avoid any mil­it­ary con­front­a­tion with Rus­sia. But they won’t quell Rus­si­an ag­gres­sion in Ukraine.

World lead­ers are boy­cot­ting dip­lo­mat­ic dis­cus­sions and threat­en­ing sanc­tions? Big deal, says the Krem­lin.

This week­end, Ger­man Chan­cel­lor An­gela Merkel told Obama that Putin soun­ded out of touch with real­ity when she spoke with him on the phone. The Rus­si­an pres­id­ent, she said, was “in an­oth­er world.”

That’s be­cause he is. Right now, Putin has tun­nel vis­ion, and it’s aimed right at Crimea. At the south­w­est tip of the pen­in­sula lies Sevastopol, the warm-wa­ter port that nev­er freezes over. Sevastopol houses a cru­cial nav­al base, leased by Rus­sia from Ukraine, of the Black Sea fleet.

The base sig­nals the end of Rus­sia’s mil­it­ary route in­to the Medi­ter­ranean, which makes it a power­ful stra­tegic as­set for the coun­try. Putin won’t give it up without a fight, and sanc­tions won’t change that. Pre­serving Rus­si­an in­terests reigns su­preme. An in­ter­ven­tion in Ukraine is un­doubtedly risky, but so is los­ing the base, and by ex­ten­sion Mo­scow’s power­ful glob­al stand­ing. For Putin, the fal­lout from los­ing the base far out­weighs the ef­fects of sanc­tions and polit­ic­al snub­bing.

The Rus­si­an pres­id­ent is bet­ting that any sanc­tions would be re­l­at­ively short-lived. Push­ing Putin too far could be dan­ger­ous. Many European na­tions haven’t for­got­ten about their deep eco­nom­ic ties to Rus­sia, in­clud­ing their de­pend­ence on its crude oil and nat­ur­al-gas ex­ports. For West­ern Europe, im­ple­ment­ing ser­i­ous eco­nom­ic sanc­tions would be un­wise, as Rus­sia could re­tali­ate by cut­ting off the gas pipelines that run through Ukraine to Europe. And U.S. sanc­tions would barely make a dent in the Rus­si­an eco­nomy: Rus­sia ac­counts for less than 2 per­cent of Amer­ic­an trade.

So far, West­ern Europe is sidestep­ping sanc­tions. The European Uni­on and the gov­ern­ments of Ger­many and France have pushed for me­di­ation between Mo­scow and Kiev, not sanc­tions. The or­gan­iz­a­tion’s emer­gency meet­ing on Monday is “ex­pec­ted to res­ult in a strongly worded state­ment of con­dem­na­tion, but no im­me­di­ate pun­it­ive meas­ures,” ac­cord­ing to the EurAct­ive Net­work, which re­ports E.U. policy news. Any ac­tion by the United Na­tions is un­likely, thanks to Rus­sia’s veto power as a per­man­ent mem­ber of the Se­cur­ity Coun­cil.

The in­ter­na­tion­al com­munity can fire off as many warn­ings as it likes for now. The chances of Putin listen­ing are slim. “Rus­sia was, is, and will be an em­pire with an etern­al ap­pet­ite for ex­pan­sion. And it will gath­er whatever spuri­ous reas­ons it needs to in­su­late it­self ter­rit­ori­ally from what it still per­ceives to be a large and grow­ing NATO threat,” writes Ju­lia Ioffe at The New Re­pub­lic. “Try­ing to har­ness Rus­sia with our own lo­gic just makes us miss Putin’s next steps.”

But if world powers are ser­i­ous about im­pos­ing sanc­tions against Rus­sia, the time ap­pears to be now. Rus­sia’s eco­nomy has taken a hit since the stan­doff in East­ern Europe began in earn­est a few weeks ago. On Monday, the Rus­si­an stock mar­ket fell by 13 per­cent, and the ruble dropped to a his­tor­ic low against the dol­lar. Rus­sia only re­cently over­came double-di­git in­fla­tion, Quartz re­ports, and the plum­met­ing value of the ruble could push in­fla­tion back up.

Ul­ti­mately, eco­nom­ic sanc­tions likely won’t stop Putin from push­ing to se­cure Crimea for Rus­si­an in­terests. Nor will sym­bol­ic pen­al­ties and White House phone calls al­ter the course in East­ern Europe. But the in­ter­na­tion­al com­munity’s pun­ish­ments will be felt most acutely by or­din­ary Rus­si­ans, many of whom don’t want to go to war.