U.S. Futile Sanctions Against Russia

By Rachel Ehrenfeld
Tuesday, March 18th, 2014 @ 2:49AM

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Barack Obama today announced that 7 Russian and 4 Ukrainian citizens who will be sanctioned by the United States as retaliation for Russia’s expected unlawful takeover of the Crimea.  This comes after Crimea’s 95-percent-plus decision by referendum to leave Ukraine and join the Russian Federation, and before Russia’s recognized Crimea’s independence tonight.

Obama sees the Crimea referendum and Russia’s recognition of the results as violations of international law. Thus he based the sanctions on the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) (IEEPA), and the National Emergencies Act (50 U.S.C. 1601 et seq.).

Earlier in the day, the EU declared sanctions on 21 people without mentioning their names.  Sources say that while there was undoubtedly an overlap between the U.S. and EU designation list, none of people designated by the EU were at the level of eminence of the top of the U.S. list. This comports with a general sense that the Europeans would be more inclined to keep the door open for dialogue.

The administration regards these sanctions as stage one in a larger sanction scheme that may be imposed if Russia doesn’t reverse its course. The next stage would  sanction oligarchs who comprise Putin’s key supporters. When asked why Putin wasn’t among those sanctioned, “a senior U.S. Official” said that it would be extraordinary to target a head of state, but implied that if subsequent sanctions did not achieve the desired result, Putin might well be designated eventually. Incredibly, the Obama administration seems to think sanctioning high Russian government officials close to Putin is enough to persuade him that the US is ready to act.

But is it?  And are these sanctions going to bite? In Moscow, “One of the targeted officials [Deputy Prime Minister Dmitry Rogozin] appeared to mock the U.S. sanctions, reportedly saying on Twitter: ‘Comrade Obama, and what will you do with those who have neither accounts nor property abroad? Or didn’t you think of that?'”

Michael Singh of The Washington Institute for Near East Policy said, “It’s unlikely that these [sanctions] will really get President Putin’s attention. Maybe the time for this sort of first step was several weeks ago.”  Both Senator John McCain and Rep. Ed Royce announced impatience with the paucity of Obama’s support for Ukraine and the speed at which the administration was proceeding with really effective sanctions.

In general, the Obama administration seems to believe that if Russia is given an “off-ramp,” it would move to spare itself further international disapprobation; if Russia negotiates, the issue could  be resolved.

As expected, the disapproval of the U.S. and EU of Russia’s actions in Crimea hasn’t had the slightest effect on Putin.  The Russians clearly rigged the election in Crimea knowing full well that 95-percent approval of union with Russia would be seen for what it is: a fraud.  Putin even allowed the rigging to include the shipment of ballots for use in Crimea that were pre-marked.  A senior Obama administrationofficial says that there was “concrete evidence” of this.

As long as Obama proceeds as though he can pressure Putin into reversing course, no sanctions regime will work.  If Russia won’t accept a negotiated agreement to respect Ukrainian sovereignty, which is Obama’s goal, sanctions are meaningless.  The situation that the president has put the U.S. in is very much like our situation with Iran.  Iran now has what it wants because we have given up the option of force and have loosened sanctions in order to get a meaningless agreement.  Russia now has what it wants, and we can do nothing about it.  Hence, no “diplomatic solution.”

As with all sanctions regimes, the sanctions sometimes harm the sanctioner, not only the sanctionee.  Europe knows this and has kept the gloves on, so to speak. Its trade with and energy dependence upon Russia mean that Europe’s economy will be substantially harmed if Moscow retaliates on sanctions.  Some say that the U.S. hasn’t much to lose.  But is that true?

The New York Post today reported that over the last week there has been a record $100 billion in withdrawal of U.S. Treasury bills.  (The old record was $32 billion for a single week.) The Post quotes Lou Crandall at Wrightson ICAP LLC as saying, “This is only speculation on our part, but it seems likely that the Russian authorities had more than $100 billion of Treasury debt in custody at the Fed, and it doesn’t seem implausible that they moved it to a jurisdiction where it would be less vulnerable to a US asset freeze.”  While Wall Street bankers assure us that this will bring no great harm to the U.S., if true, the withdrawal of 80 percent of Russian holdings in Treasury debt in custody of the Fed will surely mean that sanctions against the Russian oligarchs, should they come, will bite far less than supposed.

The sanctions will affect U.S.-Russian relations in several ways.  Not that it means much, but the Washington-Moscow “condominium” on Syria is likely to be completely over. Russian aid and succour to Iran is likely to increase. Talks on nuclear-weapons issues and defense transparency have already been suspended with the U.S. smarting from a serious lack of cooperation anyway.  There is also the U.S. dependency Russia to send American astronauts into space for at least $70 million each. This kind of money is the amount an average billionaire oligarch would spend to buy a top-scale apartment in NYC, just one of many luxuries most oligarchs would be willing to forgo to stay in Putin’s good graces.

Below are Obama’s executive sanctions order and a related White House fact sheet, in which the sanctionees are named and the reason for the sanctions supplied.

THE WHITE HOUSE Office of the Press Secretary

For Immediate Release

EXECUTIVE ORDER ——-

BLOCKING PROPERTY OF ADDITIONAL PERSONS CONTRIBUTING TO THE SITUATION IN UKRAINE

By the authority vested in me as President by the Constitution and the laws of the United States of America, including the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) (IEEPA), the National Emergencies Act (50 U.S.C. 1601 et seq.) (NEA), section 212(f) of the Immigration and Nationality Act of 1952 (8 U.S.C. 1182(f)), and section 301 of title 3, United States Code,

I, BARACK OBAMA, President of the United States of America, hereby expand the scope of the national emergency declared in Executive Order 13660 of March 6, 2014, finding that the actions and policies of the Government of the Russian Federation with respect to Ukraine — including the recent deployment of Russian Federation military forces in the Crimea region of Ukraine — undermine democratic processes and institutions in Ukraine; threaten its peace, security, stability, sovereignty, and territorial integrity; and contribute to the misappropriation of its assets, and thereby constitute an unusual and extraordinary threat to the national security and foreign policy of the United States. Accordingly, I hereby order:

Section 1. (a) All property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person (including any foreign branch) of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in:

(i)    the persons listed in the Annex to this order; and

(ii) persons determined by the Secretary of the Treasury, in consultation with the Secretary of State:

(A) to be an official of the Government of the Russian Federation;

(B) to operate in the arms or related materiel sector in the Russian Federation;

(C) to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly:

(1) a senior official of the Government of the Russian Federation; or

March 17, 2014

(2) a person whose property and interests in property are blocked pursuant to this order; or

(D) to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of:

(1) a senior official of the Government of the Russian Federation; or

(2) a person whose property and interests in property are blocked pursuant to this order.

(b) The prohibitions in subsection (a) of this section apply except to the extent provided by statutes, or in regulations, orders, directives, or licenses that may be issued pursuant to this order, and notwithstanding any contract entered into or any license or permit granted prior to the effective date of this order.

Sec. 2. I hereby find that the unrestricted immigrant and nonimmigrant entry into the United States of aliens determined to meet one or more of the criteria in section 1(a) of this order would be detrimental to the interests of the United States, and I hereby suspend entry into the United States, as immigrants or nonimmigrants, of such persons. Such persons shall be treated as persons covered by section 1 of Proclamation 8693 of July 24, 2011 (Suspension of Entry of Aliens Subject to United Nations Security Council Travel Bans and International Emergency Economic Powers Act Sanctions).

Sec. 3. I hereby determine that the making of donations of the type of articles specified in section 203(b)(2) of IEEPA (50 U.S.C. 1702(b)(2)) by, to, or for the benefit of any person whose property and interests in property are blocked pursuant to section 1 of this order would seriously impair my ability to deal with the national emergency declared in Executive Order 13660, and I hereby prohibit such donations as provided by section 1 of this order.

Sec. 4. The prohibitions in section 1 of this order include but are not limited to:

(a) the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any person whose property and interests in property are blocked pursuant to this order; and

(b) the receipt of any contribution or provision of funds, goods, or services from any such person.

Sec. 5. (a) Any transaction that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of the prohibitions set forth in this order is prohibited.

(b) Any conspiracy formed to violate any of the prohibitions set forth in this order is prohibited.

Sec. 6. For the purposes of this order: (a) the term “person” means an individual or entity;

(b) the term “entity” means a partnership, association, trust, joint venture, corporation, group, subgroup, or other organization;

(c) the term “United States person” means any United States citizen, permanent resident alien, entity organized under the laws of the United States or any jurisdiction within the United States (including foreign branches), or any person in the United States; and

(d) the term the “Government of the Russian Federation” means the Government of the Russian Federation, any political subdivision, agency, or instrumentality thereof, including the Central Bank of the Government of the Russian Federation, and any person owned or controlled by, or acting for or on behalf of, the Government of the Russian Federation.

Sec. 7. For those persons whose property and interests in property are blocked pursuant to this order who might have a constitutional presence in the United States, I find that because of the ability to transfer funds or other assets instantaneously, prior notice to such persons of measures to be taken pursuant to this order would render those measures ineffectual. I therefore determine that for these measures to be effective in addressing the national emergency declared in Executive Order 13660, there need be no prior notice of a listing or determination made pursuant to section 1 of this order.

Sec. 8. The Secretary of the Treasury, in consultation with the Secretary of State, is hereby authorized to take such actions, including the promulgation of rules and regulations, and to employ all powers granted to the President by IEEPA, as may be necessary to carry out the purposes of this order. The Secretary of the Treasury may redelegate any of these functions to other officers and agencies of the United States Government consistent with applicable law. All agencies of the United States Government are hereby directed to take all appropriate measures within their authority to carry out the provisions of this order.

Sec. 9. The Secretary of the Treasury, in consultation with the Secretary of State, is hereby authorized to determine that circumstances no longer warrant the blocking of the property and interests in property of a person listed in the Annex to this order, and to take necessary action to give effect to that determination.

Sec. 10. This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

Sec. 11. This order is effective at 12:01 a.m. eastern daylight time on March 17, 2014

THE WHITE HOUSE, March 16, 2014.

BARACK OBAMA

ANNEX

1.    Yelena Mizulina [State Duma Deputy, born December 9, 1954]

2.    Leonid Slutsky [State Duma Deputy, born January 4, 1968]

3.    Andrei Klishas [Chairman of the Russian Federation Council Committee on Constitutional Law, Judicial and Legal Affairs and the Development of Civil Society, born November 9, 1972]

4.    Valentina Ivanovna Matviyenko [Federation Council Speaker, born April 7, 1949]

5.    Dmitry Olegovich Rogozin [Deputy Prime Minister of the Russian Federation, born December 21, 1963]

6.    Vladislav Yurievich Surkov [Presidential Aide to the President of the Russian Federation, born September 21, 1964]

7.    Sergey Glazyev [Presidential Advisor to the President of the Russian Federation, born January 1, 1961]

The White House, March 17, 2014

FACT SHEET: Ukraine-Related Sanctions

President Obama today issued a new Executive Order (E.O.) under the national emergency with respect to Ukraine that finds that the actions and policies of the Russian government with respect to Ukraine -– including through the deployment of Russian military forces in the Crimea region of Ukraine –- undermine democratic processes and institutions in Ukraine; threaten its peace, security, stability, sovereignty, and territorial integrity; and contribute to the misappropriation of its assets.

This new authority expands upon E.O. 13660, which the President signed less than two weeks ago, by authorizing the Secretary of the Treasury, in consultation with the Secretary of State, to impose sanctions on named officials of the Russian government, any individual or entity that operates in the Russian arms industry, and any designated individual or entity that acts on behalf of, or that provides material or other support to, any senior Russian government official.  We have fashioned these sanctions to impose costs on named individuals who wield influence in the Russian government and those responsible for the deteriorating situation in Ukraine.  We stand ready to use these authorities in a direct and targeted fashion as events warrant.

In response to the Russian government’s actions contributing to the crisis in Ukraine, this new E.O. lists seven Russian government officials who are being designated for sanctions.  These individuals are Vladislav Surkov, Sergey Glazyev, Leonid Slutsky, Andrei Klishas, Valentina Matviyenko, Dmitry Rogozin, and Yelena Mizulina.

The United States also will seek to hold accountable individuals who use their resources or influence to support or act on behalf of senior Russian government officials.  We recognize that the Russian leadership derives significant support from, and takes action through, individuals who do not themselves serve in any official capacity.  Our current focus is to identify these individuals and target their personal assets, but not companies that they may manage on behalf of the Russian state.

In addition to the new E.O., the Treasury Department today has imposed sanctions on four other individuals under E.O. 13660, issued on March 6, for their actions or policies that threaten the peace, security, stability, sovereignty, or territorial integrity of Ukraine and in undermining the Government of Ukraine.  They are Crimea-based separatist leaders Sergey Aksyonov and Vladimir Konstantinov; former Ukrainian presidential chief of staff Viktor Medvedchuk; and former President of Ukraine Viktor Yanukovych.

Today’s actions send a strong message to the Russian government that there are consequences for their actions that violate the sovereignty and territorial integrity of Ukraine, including their actions supporting the illegal referendum for Crimean separation.  The United States, together with international partners, will continue to stand by the Ukrainian government to ensure that costs are imposed on Crimean separatists and their Russian backers.  Today’s actions also serve as notice to Russia that unless it abides by its international obligations and returns its military forces to their original bases and respects Ukraine’s sovereignty and territorial integrity, the United States is prepared to take additional steps to impose further political and economic costs.

Vladislav Surkov:  Surkov is being sanctioned for his status as a Presidential Aide to Russian President Vladimir Putin.

Sergey Glazyev:  Glazyev is being sanctioned for his status as a Presidential Adviser to Russian President Vladimir Putin.

Leonid Slutsky:  Slutsky is being sanctioned for his status as a State Duma deputy, where he is Chairman of the Duma Committee on CIS Affairs, Eurasian Integration, and Relations with Compatriots.

Andrei Klishas:  Klishas is being sanctioned for his status as a Member of the Council of Federation of the Federal Assembly of the Russian Federation and as Chairman of the Federation Council Committee of Constitutional Law, Judicial, and Legal Affairs, and the Development of Civil Society.

Valentina Matviyenko:  Matviyenko is being sanctioned for her status as Head of the Federation Council

Dmitry Rogozin:  Rogozin is being sanctioned for his status as the Deputy Prime Minister of the Russian Federation.

Yelena Mizulina:  Mizulina is being sanctioned for her status as a State Duma Deputy.

Sergey Aksyonov:  Aksyonov is being designated for threatening the peace, security, stability, sovereignty, or territorial integrity of Ukraine, and for undermining Ukraine’s democratic institutions and processes.  Aksyonov claims to be the Prime Minister of Crimea and has rejected the authority of the legitimate government in Kyiv.

Vladimir Konstantinov:  Konstantinov is being designated for threatening the peace, security, stability, sovereignty, or territorial integrity of Ukraine, and for undermining Ukraine’s democratic institutions and processes.  Konstantinov is the speaker of the Crimean parliament, which on March 11, 2014, declared independence from Ukraine.

Viktor Medvedchuk:  Medvedchuk, leader of Ukrainian Choice, is being designated for threatening the peace, security, stability, sovereignty, or territorial integrity of Ukraine, and for undermining Ukraine’s democratic institutions and processes.  He is also being designated because he has materially assisted, sponsored, or provided financial, material, or technological support to Yanukovych and because he is a leader of an entity that has, or whose members have, engaged in actions or policies that undermine democratic processes or institutions in Ukraine and actions or policies that threaten the peace, security, stability, sovereignty, or territorial integrity of Ukraine.

Viktor Yanukovych:  Former Ukrainian President Yanukovych is being designated for threatening the peace, security, stability, sovereignty, or territorial integrity of Ukraine, and for undermining Ukraine’s democratic institutions and processes.  After abandoning Kyiv and ultimately fleeing to Russia, Viktor Yanukovych called upon Russian President Vladimir Putin to send Russian troops into Ukraine.


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