Tighter US trade sanctions rain on Putin’s parade
From Moscow to Washington to capitals in between, the past few days have showcased the way President Vladimir Putin of Russia nimbly exploits differences between the United States and its allies.
Yet recent events have also highlighted the downside to Mr Putin’s geopolitical escapades and accentuated where he falls short on matters of vital importance to both himself, and ordinary Russians.
President Donald Trump had barely finished catapulting a belligerent tweet and new sanctions at Turkey on Friday before Mr Putin was working the phone with his Turkish counterpart, President Recep Tayyip Erdogan. It was vintage Mr Putin, showcasing his seizure of any opportunity to divide the West.
But at the same time, the Western sanctions he hoped to get lifted have only been tightened this past week, pushing the ruble down to its lowest levels in years.
At home, Mr Putin’s standing with Russians is suffering as a result.
For all the strategic success Mr Putin has had — including diminishing Nato and the European Union by bolstering populist governments in Europe as well as Middle East autocrats — he has failed to persuade or pressure the West to lift successive waves of US and European economic sanctions imposed on Russia since its 2014 annexation of Crimea. In fact, the State Department threatened last week to enact yet another round of such measures, just days after the US Senate brandished its own.
The European Union, some of whose members had signalled in the past few years that they were ready to consider granting Moscow some relief, has held tough on sanctions, especially in the wake of the British government’s finding that Russia was responsible for an attempted assassination on British soil using a banned nerve agent.
Mr Putin could certainly claim a tactical victory after his call to Turkey. Mr Erdogan, whose country is a Nato member, soon crowed that Turkey’s growing economic and military relations with Russia “make us stronger”, while he fulminated against the “economic war” waged by Washington.
But the failure to make progress in freeing the Russian economy from the sanctions is a setback for Mr Putin both domestically and globally.
In Mr Trump, Mr Putin and some in the Kremlin thought they had a get-outof-sanctions-free card. Despite the lack of concrete agreements, the first summit between the two leaders, in Helsinki last month, reinforced Russian expectations that the US president would fulfill his campaign promise to mend ties.
“Many hoped that the Helsinki summit would reset US-Russia relations, and if not help lift the existing sanctions, then at least avoid further rounds,” Maria Snegovaya, a US-based Russia analyst and columnist for the newspaper Vedomosti, wrote in an email.
Much to the Kremlin’s dismay, however, the Trump administration has developed into a kind of pushmi-pullyu of the diplomatic world, acting toward Russia something like the two-headed llama of Dr Doolittle fame. One head, in the form of Mr Trump, repeatedly promises improved ties with Moscow, while the other, representing senior officials in his own administration and bipartisan sentiment in Congress, growls about new sanctions and other chastisements.
In Moscow, the policy zigzags prompted both confusion and anger as the Kremlin floundered to respond.
“People are bewildered because they keep getting very mixed signals about the state of relations,” said Andrei V Kortunov, director-general of the Russian International Affairs Council, a research group
that advises the Kremlin.
The Kremlin’s standard response since the Crimea annexation has been to rally Russians around the flag, depicting the country as a besieged fortress. After four years, however, ordinary Russians find that formula tiresome, analysts said, and Mr Putin’s declining popularity can be attributed partly to his inability to mend fences with the West.
“People are saying, ‘ Please maintain Russia as a great power, but not at the expense of our income,’” said Lev D Gudkov, director of the Levada Centre, an independent polling organisation. “When they started to sense that Putin’s foreign policy became too expensive, the attitude began to change and the sense of irritation is growing.”
After the Helsinki summit, 42% of Russians in one poll said they held a favourable view of both the US and Europe. That is the highest level since Moscow claimed Crimea.
Mr Gudkov, the Levada pollster, cited several reasons for the suddenly more favourable view of the West.
First, hundreds of thousands of lively foreigners flooded Russia in June and July for the World Cup. State television, a virtual monopoly, dropped its habitual xenophobic attacks during those weeks, which came just before the July 16 summit between Mr Putin and Mr Trump.
More important, the changing view of the West reflects a general exasperation with domestic problems including plans to overhaul pensions, higher taxes and several years of rising prices in tandem with decreasing incomes, Mr Gudkov said.
“It is a way for people to say it is time to end this confrontation,” he said.
Initially, it seemed that the Helsinki talks opened the door for lower-level diplomats, military officers, intelligence agents and other experts to begin discussions about cooperation between Russia and the United States on at least a few issues, including the wars in Syria and Ukraine, international terrorism and nuclear proliferation.
“We would slowly start moving out of this hole that we have dug for ourselves,” Mr Kortunov said. Instead, Mr Trump’s cozy attitude toward Mr Putin backfired at home and the confrontation deepened.
First, the United States arrested a Russian citizen, Maria Butina, on charges of acting as an unregistered foreign agent.
Then a bipartisan group of senators, dismayed that Mr Trump had not publicly confronted Mr Putin over Russia’s election meddling, released draft legislation that would limit the operations in the United States of Russian state-owned banks and that would impede their use of the dollar. Passage of such a bill would impose some of the most damaging sanctions yet.
Last Wednesday, the State Department said it would impose new sanctions by the end of August in response to the attempted assassination in March of a former Russian spy living in Britain, Sergei V Skripal, and his daughter, Yulia Skripal. US law mandates such sanctions, with a second stage possible later this year, after any attack using chemical weapons.
The August sanctions, targeting goods related to national security, are expected to have little effect because such trade is so low anyway.
The banking sanctions threatened by the Senate are far more serious. Some Russian analysts see the lighter sanctions emerging from the State Department as an attempt by the Trump White House to head off a new, more damaging round, and to make Mr Trump look tough on Russia before the November midterm elections.
In either case, Russia has only limited means to respond without bruising its own economy — existing sanctions, including those imposed by Europe, have already damaged economic growth.
Last Thursday, the prospect of new sanctions pounded the ruble, which dropped to its lowest level against the dollar in two years. Share prices in Moscow also plunged. The market turmoil prompted sensational headlines in the Russian news media like “The Ruble Drowned in a Wave of Sanctions.”
Dmitry Medvedev, the unpopular prime minister, suggested an economic war was brewing and threatened retaliation. “It would be necessary to react to this war economically, politically or, if needed, by other means,” he said.
The Kremlin and the Russian Foreign Ministry responded in more measured tones, saying that the new, “unfriendly” measures contradicted at least the spirit of the Helsinki meeting.
“You can expect anything from Washington now, it is a very unpredictable international actor,” said Dmitri Peskov, Mr Putin’s spokesman.
The immediate problem for the Kremlin is how to respond. It denies any involvement in the actions outside Russia’s borders that prompted the move, like the hacking of Democratic Party emails or the poisoning of the Skripals.
Russia has largely skirted the fallout from previous sanctions, and it has the example of countries like Iran, which survived such measures for decades.
Yet each new round feeds the concern that they will be harder to escape, said Alexander Morozov, co-director of the Boris Nemtsov Academic Centre for the Study of Russia in Prague.
“Now they are in a diplomatic vacuum,” he said. “It is not clear where and how even minimal contacts can be moved.”