U.S. Russian Sanctions Seen Ineffective as Putin Provoked

By Indira A.R. Lakshmanan, Ilya Arkhipov and Kasia Klimasinska Apr 28, 2014 2:33 PM ET

The Obama administration's decision to tighten the noose around Russian President Vladimir Putin's inner circle risks provoking a cycle of retaliation that escalates the crisis in Ukraine.

The penalties imposed on seven officials and 17 companies are spurring a “maximal consolidation of elites in the past 10 to 15 years,” according to Andrei Belousov, Putin’s top economic aide and a former economy minister. Deputy Foreign Minister Sergei Ryabkov told Interfax that Russia won’t let the measures go unanswered.

The only way that sanctions will “alter Putin’s course of action is if they inflict enough pain on the oligarchs who support his regime that they tell him it’s not worth it,” Gary Hufbauer, an economist and sanctions specialist at the Peterson Institute for International Economics in Washington, said in a telephone interview today. “I don’t think these sanctions are going to do that.”

Warned by U.S. Secretary of State John Kerry about making an “expensive mistake” in Ukraine, Putin has seen his approval rating soar to a six-year high in the wake of the seizure of Crimea. While markets breathed a sigh of relief as Russia’s largest banks avoided U.S. sanctions, Putin may take the latest salvo of sanctions more personally, according to Konstantin Simonov, president of Russia’s National Energy Security Foundation.

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http://www.bloomberg.com/news/2014-04-28/u-s-russian-sanctions-seen-ineffective-as-putin-provoked.html