Are New Russian Sanctions a Lost Cause?

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US President Barack Obama (L) holds a bilateral meeting with Russian President Vladimir Putin during the G8 summit at the Lough Erne resort near Enniskillen in Northern Ireland, on June 17, 2013.
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There's another round of confrontation between the West and Russia over territory of Ukraine.

After a week-old diplomatic initiative to deescalate the crises between the two nations failed, President Barack Obama announced new sanctions against Russian politicians and companies close to President Vladimir Putin.

The apparent strategy is to exploit Russia's ties to the international banking system by making President Putin's political allies feel the financial pain of sanctions.

Thomas Graham served on the National Security Council from 2004-2007 as the senior director for Russia, and now is a senior fellow at the Jackson Institute for Global Affairs at Yale University. Graham argued in The Financial Times that sanctions against Russia are largely misguided. He says that it’s a miscalculation to assume that money is what drives Putin.

“This is a man who for the past 14 years has focused on rebuilding Russia, reasserting its role in world affairs,” he says. “Ukraine is important because of the national security implications for that. This is a man that’s prepared to accept some economic pain to achieve a greater goal for Russia.”

Russia has the sixth largest economy in the world, so economically isolating the nation is a difficult challenge. According to Graham, Putin sees China, India, Brazil, and other countries as options to turn away from the West and alleviate any economic pain caused by the United States and European Union.

“Russia sends a lot of its gas to Europe, but one of the things that they’ve been trying to do over the past several years, which they will focus on in the future, is delivering a lot of that gas into Asia, a rapidly growing market,” he says. “China has an insatiable desire for energy.”

In terms of what Putin can do to demonstrate that the sting of the sanctions is not as significant as the U.S. would hope, Graham says it comes down to Europe’s dependence on gas.

“Europe depends on Russia for about a quarter of its gas, some countries a hundred percent, and Germany about a third of its gas,” he says. “Russia can threaten to cut that off or delay the delivery in some way.”

According to Graham, this isn’t going to end anytime soon.

“This is a confrontation over the future of Ukraine, but very important for Russia,” he says. “They believe for historical reasons that having a friendly Ukraine is critical to their own security. They are willing to pay a high price.”

As Graham sees it, the United States has two goals in the current situation: To stabilize eastern Ukraine, and to defend the rules of European order, which Russia violated by seizing Crimea.

“What I’ve argued for is what I would call a combination of focus resistance plus consider accommodation of Russian interests,” he says.

Graham says that in the current debate over sanctions, the West has lost sight of the problem in Ukraine.

“Ukraine is broken, the state is collapsed, there’s not national unity, the economy is teetering on the brink of ruin,” he says.

But even though Ukraine needs to rebuild and repair, it won’t be easy.

“The hard truth is we can’t do that without Russia,” Graham says. “Russia provides an overwhelming bulk of Ukraine’s oil and gas, it’s an important market for Ukraine…It has a lot of personal ties and historical ties that give it leverage over what happens inside Ukraine.”

The challenge for the U.S. and the European Union, according to Graham, is to find a way to negotiate the issues as a way to accommodate some of Russia’s interests. But Graham doesn’t think that territory would be on the table in these negotiations.

“The key for Putin is really the geopolitical orientation of Ukraine,” he says. “What he’s trying to do in my mind is use the rebellion in eastern Ukraine as a way of gaining leverage over the structure of the Ukrainian state, the formation of the government, so that he has a Ukraine that is not hostile to Russia.”

Over time, Graham says Putin hopes to bring a unified Ukraine into a Eurasian Union.