Europe hits Russia with sanctions after moving troops to eastern Ukraine

But experts have described the first wave of European sanctions – as well as those announced by the United States on Tuesday – as gradual and unlikely to change Putin’s calculations in the short term. Instead, the West’s response has set the stage for a protracted pressure campaign, with Putin and European leaders all weighing their next moves.

“It’s going to be a lot slower,” said Julia Friedlander, senior researcher at the Atlantic Council who served as the White House’s top adviser on European Union and economic issues from 2017 to 2019.

Even if Western governments impose heavier sanctions in the coming weeks, it could take months before any measures have a significant impact on the Russian oligarch’s class or economy.

As Russia faced an overlapping round of sanctions in recent years, for its annexation of Crimea and poisoning of dissidents, Putin embarked on an effort to hoard enough foreign currency, gold and other assets to survive being cut off from Western credit and markets, at least temporarily. , says Friedlander.

‘It won’t have the immediate impact that you would want sanctions to have as a deterrent effect,’ she said, while adding that Western governments have enough weapons to cause ‘extreme economic consequences’. .

Germany and Nord Stream 2

Germany’s decision to suspend certification of the Nord Stream 2 gas pipeline was perhaps Europe’s most severe blow on Tuesday, jeopardizing a multi-year project that could earn Russia billions over its lifetime. lifetime.

However, the blow will not be felt instantly. Even without the suspension, the project faced a lengthy regulatory review process before going live.

The question of whether to halt the pipeline project had been a sticking point between the United States and the German government as measures to deter Russian aggression were discussed in recent weeks. President Biden had sworn that if Russian troops entered Ukraine, “there will be no more Nord Stream 2. We will end it”. Scholz – the one in a position to stop it – had been more evasive, saying only that “all options” were on the table when it came to punitive tax measures against Moscow.

But on Tuesday, the chancellor said his government had withdrawn an economy ministry report on the impact the pipeline would have on the security of Germany’s gas supply.

“It may sound technical, but it’s a necessary administrative step,” he told a news conference. “Without this certification, Nord Stream 2 cannot start operating.”

Scholz gave no clear indication of how long the certification process for an $11 billion pipeline project will be delayed, but when asked if it could be restarted, he said the certification process reassessment of the report “will surely go on forever”.

“Germany did the right thing,” said Brian O’Toole, a former sanctions adviser at the US Treasury Department’s Office of Foreign Assets Control. “It’s a project with huge geopolitical ramifications beyond the narrower economic ones.”

“That’s not to say there aren’t material economic costs, even if they’re less than major bank sanctions,” said O’Toole, also a senior fellow at the Atlantic Council. “How much did [Russian state-owned gas company] Does Gazprom spend on this? It’s billions of dollars. There is definitely an effect there.

But Peter Beyer, the German government’s coordinator for transatlantic cooperation and a parliamentarian for the German Christian Democrats, criticized Scholz for not taking a bolder political decision.

“Chancellor Olaf Scholz continues to hide behind an administrative act due to disagreements within the party,” he said, referring to reported splits within Scholz’s centre-left Social Democrats over how to face Russian aggression. He accused Scholz of “passing the buck” to his coalition partners, the Greens, who lead the economy ministry.

Britain and the Oligarchs

In Britain, Johnson has delivered many harsh speeches, warning that Putin is planning “the biggest war in Europe since 1945”. But analysts and even some lawmakers in the Prime Minister’s party were disappointed by the sanctions announced on Tuesday – against well-insulated banks and previously targeted oligarchs who likely kept their assets out of Britain.

The three billionaires, all involved in the energy sector, have been on the US sanctions list for years. Gennady Timchenko of investment firm Volga Group and Boris Rotenberg, co-owner of SGM Group (Stroygazmontazh), were hit with US sanctions in 2014 after Russia invaded and annexed Crimea. Igor Rotenberg, nephew of Boris Rotenberg and former majority shareholder of Gazprom Drilling, was placed under US Treasury Department sanctions in 2018.

Gavin Wilde, a former director of Russia, Baltic and Caucasus affairs at the National Security Council who served in the Trump administration, called the British targets “low hanging fruit”.

“The banks they hit were sort of set up by Russia waiting for sanctions,” he said, meaning their international exposure is limited. As a result, he said, there will be “more symbolism in the UK than impact”.

Likewise, Wilde said, targeting Timchenko and the Rotenbergs could send a message to Putin “personally,” due to their reported ties to the Russian president and their “patronage over some of his own finances.” But Wilde noted the absence of more prominent figures, including Roman Abramovich, owner of Chelsea Football Club in England.

Tom Keatinge, director of the Center for Financial Crime and Security Studies at RUSI, a London think tank, noted that non-governmental organizations have identified more than 150 people with links to Britain who may have been targeted under the legislation passed on February 10.

“You don’t take a pea shooter into a shootout,” Keatinge said, expressing dismay at the penalties announced so far.

He disagreed with the strategy of withholding some firepower if things got worse. “Convincing someone to change actions they have already taken is much more difficult than preventing someone from doing so in the first place,” he said, adding that Western sanctions against Russia after the invasion of Crimea in 2014 had little impact.

Wilde said Britain’s financial entanglements with Russian oligarchs are limiting his options. “The more boulders they knock over, the more it’s an indictment of their laxity over the past two decades on dirty Russian money flooding their system,” he said.

EU unites on additional sanctions

As Russian tanks rolled through eastern Ukraine, EU diplomats rushed between calls and meetings to prepare their response. They came out on Tuesday night with an agreement on a first round of sanctions, suggesting there would be more to come.

The EU sanctions will target individuals and entities linked to the latest Russian measures, including 351 members of the State Duma, the lower house, who voted to recognize the two breakaway regions in eastern Ukraine.

The bloc will also target the Russian state’s ability to access EU financial and capital markets and services, “limiting the funding of their policies”, Borrell said. In a tweet – which later appeared to have been deleted – he said there would be no more shopping in Milan, diamonds in Antwerp or partying in Saint-Tropez for Russian officials.

European Commission President Ursula von der Leyen hailed what she called a “solid” package that “contains a number of calibrated measures”.

But the package was less ambitious than some expected – and the impact on Putin, or his plans, remains to be seen.

For weeks, European officials have been warning of “massive” sanctions in the event of further Russian escalation. Today, European officials say Russian troops are on the ground in eastern Ukraine, but the “mother of all sanctions” package they promised is being held in reserve.

Europe and its allies appear to be opting for a step-by-step approach, said Edward Hunter Christie, senior fellow at the Finnish Institute of International Affairs.

“It’s progressive,” he said. “The measures are not the strongest from the point of view of economic impact, but they have a high symbolic value and they are important as a first signal of resolution or credibility.”

Christie said he expects Europe and the United States to respond to other Russian measures with tougher measures, such as export controls.

But the EU remains divided on what counts as an escalation or an invasion by Russia, as well as what specific measures the sanctions should include.

Over the weekend, Ukrainian officials urged Europe to impose sanctions on Putin before he acts. “We don’t need your sanctions after the bombing happens and after our country gets shot, or after we have no borders and after we have no economy or part of our country will be occupied,” Ukrainian President Volodymyr Zelensky said. said in an interview with CNN.

But US Secretary of State Antony Blinken said the United States and its allies did not want to outline their plans “until the tanks actually move, the planes actually fly, the bombs actually drop”.

Now US and European leaders may wonder why they didn’t act sooner or do more.

“These are tough penalties, but they can survive,” Christie said. “I suspect that if the situation escalates much more seriously, there will be additional measures that have not yet been announced or even discussed.”

Adam, Booth and Miller reported from London. Morris reported from Przemysl, Poland. Quentin Ariès in Brussels and Rick Noack in Paris contributed to this report.

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