Are tougher penalties against Russia to come?

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Associated Press

Posted on March 22, 2014 at 4:36 AM

Updated Saturday, Mar 22 at 10:05 AM

WASHINGTON (AP) — U.S. penalties against a Russian bank and the Kremlin's inner circle have pinched Moscow, but their effectiveness is in doubt if the goal is to get President Vladimir Putin to roll back his forces from Crimea or prevent more land grabs.

Putin has mocked the punitive steps President Barack Obama has taken so far.

He made jokes of Obama's decision to freeze the assets of businessmen with close ties to Putin, as well as Bank Rossiya, which provides them support. Putin retaliated with travel restrictions on nine U.S. officials and lawmakers, including Sen. John McCain. "I guess this means my spring break in Siberia is off," said McCain, R-Ariz.

For now, Putin says there is no need for further Russian moves, even as his Foreign Ministry said Moscow would "respond harshly."

Putin claims to have no plans for further incursions into Ukraine or elsewhere in the region. But he's not planning to reverse Russia's annexation of Crimea, either.

The U.S. and Europe are left to consider the possibility of tougher measures on Russia's energy and banking sectors. That could backfire if Moscow seized American or other foreign assets or cut exports of natural gas to Europe, which is heavily dependent on Russia for energy.

"If Russia doesn't do anything other than what they've done so far with Crimea, I think the Obama administration will probably stand pat with the sanctions that it has already imposed," said Richard Fontaine, president of the Washington-based Center for a New American Security.

"I think they are waiting to see if this is the end of the Russian adventurism, or if there is more to come, and then they will react with more sanctions accordingly."

By taking a step-by-step approach, the U.S. is giving Russia a chance to resolve the crisis, Fontaine said. "The problem with that is that Putin has shown absolutely no appetite to take any off-ramp," he said.

Just the threat of harsher penalties has dimmed the outlook for the fragile Russian economy. Russian stocks were under pressure Friday as a second credit rating agency put the country on notice of a possible downgrade. Visa and MasterCard stopped serving two Russian banks, including Bank Rossiya.

The Russian stock market has lost more than 10 percent this month.

Also Friday, Russia said it might scrap plans to tap international markets for money this year.

The European Union imposed penalties against 12 more people Friday, bringing its list of those facing visa bans and asset freezes to more than 30. They include one of Russia's deputy prime ministers, two Putin advisers and the speakers of both houses of parliament.

But it still is short of the top-tier list of Putin associates punished by the United States, and evidence that Europe is not as eager to punish its energy supplier and trade partner.

Sen. Dick Durbin, D-Ill., who went to Ukraine with McCain last week, urged Obama to rally U.S. allies. "To do it alone is very limited. To do it with our allies can have some impact on Putin," he said.

McCain also said cracking down on Russian lawmakers and Putin's inner circle won't get Putin's attention. He said the U.S. should provide financial aid to Ukraine, immediately send defensive weapons to the country, resume work on the missile defense system in Poland and develop a long-term plan to get energy to Europe and Ukraine.

"The higher price that Putin thinks he has to pay for further aggression, the more likely that he doesn't act," said McCain.

Fifty former U.S. government officials and foreign policy experts wrote Obama on Friday urging him to strengthen Ukraine's democratic transition and impose "real costs" on Putin.

They said Obama should go after Putin, and expand the sanctions to isolate Russian financial institutions and businesses that are complicit in Russia's incursion into Crimea or support Syrian President Bashar al-Assad.

The group praised the deployment of U.S. fighter aircraft to Poland and the Baltic states but said the U.S. should send additional ground forces, missile defenses or other assets to former Warsaw Pact members of NATO, work to reduce Europe's dependence on Russian natural gas and expand U.S. military rotations to Georgia, which is seeking membership in NATO.

Experts on Russia and Europe caution against looking at the Crimea problem too narrowly. Putin's move into Crimea can be seen as part of a broader strategy of stopping NATO enlargement, or at least keeping neighboring countries off balance so they can't be further integrated into the alliance or have closer ties with the West.

"We don't have anything against cooperation with NATO, nothing at all," Putin said in a speech earlier this week. "We are against having the (NATO) military alliance ... behaving as the master of the house outside our fence, next to our home or on our historical territory."

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Associated Press writers Donna Cassata in Washington and Lynn Berry in Moscow contributed to this report.

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