U.S. Sanctions Against Russia May Be Recalibrated, But Overhaul Unlikely

File Photo of Joe Biden at Podium in Front of U.S. and State Department Flags, adapted from image at usembassy.gov

(Russia Matters – russiamatters.org – Ingrid Burke – Feb. 19, 2021)

Ingrid Burke is a fellow at Harvard’s Davis Center for Russian and Eurasian Studies.

As President Joe Biden settles into the Oval Office, he has filled the upper echelons of his new administration with officials who have vocally supported sanctions against Russia. While it is difficult to predict specific changes to the existing sanctions regime, now targeting more than 700 Russian individuals and organizations, it is reasonable to assume that Washington will continue using these economic tools to pressure Moscow, even while conducting a review of the measures currently in place. Some high-level pro-sanctions officials in Washington have expressed openness to seeking common ground with Russia in areas where the two countries’ interests converge, so there is room to hope that the new administration may try to assess the sanctions’ effectiveness in advancing U.S. interests. Nonetheless, for now, near-term changes to the U.S. sanctions policy toward Russia seem more likely to be tweaks than overhauls, and they will be shaped by a mix of foreign-policy considerations, domestic political pressures and lessons learned.

The top-ranking proponent of sanctions against Russia in the new administration has been Biden himself, and other senior officials have voiced similar views. Last summer, Biden expressed pride in having “applied costly sanctions to punish Moscow for its aggression” when he served in the Obama administration—and he hinted this month that Russia may be on the receiving end again soon, saying in his first major foreign policy speech that his administration “will not hesitate to raise the cost on Russia” for its “aggressive actions.” Biden’s secretary of state, Anthony Blinken, reportedly told lawmakers last month that sanctions would be “extremely helpful” in imposing “costs and consequences” on Russia. Likewise, Wendy Sherman, tapped to serve as deputy secretary of state, told MSNBC that the U.S. response to the SolarWinds cyberattack, allegedly perpetrated by Russia, could include economic sanctions and asset freezes, among other measures. And Biden’s choice for under secretary of state for political affairs, Victoria Nuland, struck a similar tone last June, writing in Foreign Affairs: “If Russia continues to stall [on Ukraine], sanctions and other forms of political, economic and military pressure should be increased.”

A review of the United States’ sprawling sanctions portfolio is officially in the cards but promises to be more housekeeping than revolution. Speaking before the Senate Finance Committee at her nomination hearing in January, Treasury Secretary Janet Yellen said she planned to thoroughly examine U.S. sanctions “to ensure that they are targeted, effective and minimize unintended consequences.” A month earlier, Bloomberg had reported that the Biden team would focus on making sanctions more multilateral and less confusing—to both allies and adversaries—than under the Trump administration and on filling key posts responsible for overseeing them, left empty after a spate of resignations under the previous president. (Current sanctions reach well beyond Russia to China, Iran, North Korea and Venezuela and encompass targets from banks to oil tankers.)

Which Russia sanctions stay, come or go is a matter of speculation, especially since many of the measures in place do not specify the terms for lifting them. Michael Greenwald, a former Treasury official who played a key role in crafting U.S. sanctions against Russia during the Obama era, told me in a recent interview that the Biden administration has an array of options to consider: full blocking sanctions or strict prohibitions against major Russian banks such as Sberbank and VTB; targeted sectoral sanctions, such as a carefully calculated ban on new investments in the Russian energy sector; and more sweeping sanctions against the defense and intelligence sectors. A key approach Greenwald doesn’t imagine will change is the focus on Russian President Vladimir Putin and his close allies: Under President Barack Obama, he said, “we wanted to continue to maintain pressure on Putin and his cronies for their ongoing aggression, and I think you’ll continue to see support for that.” Indeed, in October, in response to the poisoning of leading Russian opposition figure Alexei Navalny six U.S. senators called for new sanctions against top officials “whom Mr. Navalny has rightly branded as ‘thieves and crooks.’” Long-time Russia watcher Ben Aris, editor-in-chief of bne IntelliNews, predicted that any Navalny sanctions “will be mild and very targeted,” adding that he would not be surprised to see more Russian oligarchs in the crosshairs; he does not, however, expect to see broader targets in the financial sector, such as Russian sovereign debt and OFZ bonds. It is still unclear whether the controversial Nord Stream 2 gas pipeline from Russia to Germany will be slapped with new U.S. sanctions as the Biden administration seeks a balance between its European allies and vocal opponents of the project in Congress. Whomever the administration decides to sanction, however, Greenwald, the former Treasury official, cautioned that it will need to watch out for targets’ creative ways of evading sanctions, keeping its eye on the BRICS bank and efforts to maneuver around the U.S. dollar using digital currencies.

That said, while the new administration clearly supports sanctions, it has signaled a willingness to engage Russia in cooperation it sees as mutually beneficial. This month’s five-year extension of the New START arms control treaty is one such sign. Moreover, Blinken noted in August that the United States could incentivize Russia to revive a constructive dialogue, in part by appealing to Moscow’s interest in relieving its increasing dependence on China—an interest, some analysts argue, that Washington should consider mutual. Sherman herself took part in lengthy, intricate talks with Russia as a top negotiator on the 2016 Iran nuclear deal, which was also in both countries’ interest; she has said the U.S. “will work with Russia where we can,” despite confronting and challenging it “when we must.” Even Nuland, whose relations with her Russian counterparts have hit some considerable bumps in the road, has written of the need to provide “incentives for Moscow to cooperate.”

It remains unclear, however, how any of these incentives might be integrated into the sanctions against Russia, whose precise effects scholars and pundits have long debated. Several experts have argued that sanctions would have a greater chance of incentivizing behavior more favorable to U.S. interests if they had a sharper focus. Tufts University historian Chris Miller, who specializes in Soviet and Russian economic developments, suggested that recent sanctions’ open-endedness was problematic: Unlike the Western sanctions of 2014, which were clearly tied to the conflict in eastern Ukraine and the annexation of the Crimea peninsula, “the 2018 CAATSA sanctions have not been explicitly linked to a political goal that could produce negotiations with Russia and potential changes in the Russian government’s actions,” he told me. This means they “are not going to produce leverage in negotiations.” Aris, the business journalist, has likewise criticized the U.S. sanctions as too broad and “all stick, no carrot.” He cautioned against unrealistic demands like telling Moscow to give up Crimea and noted Russia’s “economic resilience” amid financial crises, including the “veritable fiscal fortress” Russia has built in recent years. “The way forward is to engage Russia, not to batter it,” he said during a recent interview, arguing that the U.S. strategy needs to leverage Russia’s long-term foreign policy goals, such as the one noted by Blinken—reducing Moscow’s growing dependence on China.

Whatever changes the Biden administration will want to make to Russia sanctions, whether to weaken or enhance them, will inevitably involve U.S. domestic politics. For the past four years, Democratic lawmakers have pilloried former President Donald Trump for his softball approach to Putin, but congressional skepticism toward Moscow has long been a constant among Democrats and Republicans alike. The group of senators demanding Navalny sanctions, for example, was bipartisan. Public opinion, too, could play a role in the new administration’s decisions: One U.S.-Russian study in 2017 showed that 77 percent of U.S. respondents supported maintaining or increasing sanctions against Russia. A more recent Reuters/IPSOS poll, in July 2020, revealed that more than half of respondents wanted Washington to hit Moscow with new economic sanctions, this time in response to as-yet unproven reports of Russian bounties on the heads of U.S. soldiers in Afghanistan.

In the coming months, we can expect Biden to unveil his own brand of sanctions. While the measures will likely be more streamlined than Trump’s, and crafted to protect U.S. financial interests, the question of their potential effectiveness remains wide open. As David Sanger wrote this month in the New York Times, more than six years since Washington started punishing Moscow for its actions in Ukraine, “that sanctions regimen has failed in its one goal: to force Mr. Putin to reverse course, remove his forces and cease harassing a sovereign former Soviet state.” Now, as the treatment of Navalny stirs calls for new sanctions, there is a recognition among Biden’s top aides, Sanger writes, “that, in the words of one of them, when it comes to the Kremlin, ‘We’re pretty sanctioned out.’”


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