Sanctions against Russia in phase 3, but is Vladimir Putin listening?
Russian leader does not appear to feel the pain, leading to questions about the impact of sanctions
The European Union has revealed the details of its broad economic sanctions against Russia, including blocking access to capital markets for five major banks.
The U.S. is adopting the same strictures on Russia's big banks – including Sberbank, Gazprombank, VEB, VTB bank and Rosselkhozbank – which could restrict those banks' access to currency exchange. Canada has indicated it will follow.
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The measures – a reaction to the downing of Malaysian Airlines MH17 over eastern Ukraine – and to Russia's continuing military adventurism in the area, are the third escalation of sanctions this year.
Russian leader Vladimir Putin appears unfazed by the sanctions.
Many in Washington had expected Putin's business friends who were hit by sanctions in March to push him toward de-escalation. Instead, he's taking an even more confrontational and isolationist course, annexing Crimea and fostering insurgents deeper into Ukraine.
Kurt Volker, executive director of the McCain Institute for International Leadership and a former U.S ambassador to NATO, says Putin cares very little about being liked in the West. Instead, he has his own agenda, which is about building a sphere of influence that includes the former Soviet states.
Suppose in return for abandoning the so-called separatists.. [Putin] gets Crimea, he gets a form of federalization and he gets a treaty guaranteeing Ukraine's neutrality? What has he lost?- James Sherr, Chatham House
"I think Putin is about power and money and influence, both for himself and his KGB cronies that run Russia whether through the Kremlin or the state-owned businesses," Volker said in an interview with CBC's The Current.
"He is looking at ways to enhance that power and sense of greatness. He declared when he became president the first time that he wanted to restore Russian greatness ...and he's been going about doing that."
Putin appears to be popular domestically, though there is no independent check of Russian polls.
But he also knows that Europe is dependent on Russian natural gas and will eventually be willing to come to a deal, Volker said.
"He believes he can ride this out. He can see the sanctions and not believe that the West has staying power. As soon as he starts to ratchet down and says he's looking for a deal now, he's fairly confident Europe will be right there with him and even the U.S.," he said.
Putin's energy card
James Sherr, an associate fellow at Chatham House in London, which has advised the British government on international affairs, agrees that Putin holds an energy card he is quite willing to play.
Ukraine has had no Russian gas for several weeks, which is not a crisis in summer, but will be once the weather gets colder, he said.
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Europe might be able to help Ukraine, but the measures will be short-term. And its cash-strapped governments know it will be costly to cultivate other sources of energy.
"Russia is going to remain a significant part of European energy markets for the foreseeable future and there's nothing wrong with that as long as we can diminish dependency to the point where Russia loses political leverage," Sherr said.
He is worried Putin will wait until EU leaders are frightened about gas shortages, and negotiate a deal that gives him Crimea.
London's Independent newspaper was reporting Thursday that German Chancellor Angela Merkel is negotiating just such a deal, secretly.
"Suppose in return for abandoning the so-called separatists, I would say insurgents, he gets Crimea, he gets a form of federalization..., and he gets a treaty guaranteeing Ukraine's neutrality? What has he lost?" Sherr said.
He argues that sanctions are not having much impact on Putin's inner circle.
MH17 a watershed moment
Marta Dyzcok, a University of Western Ontario professor and specialist in international politics, says Ukraine will never agree to give up Crimea.
And she argues the downing of Malaysian Airlines MH17 was a watershed moment for the West, hardening resolve over pushing back against Russia.
"The money and arms and everything that happens in eastern Ukraine is coming from Russia. People have been dying for weeks and it was when the Malaysian flight went down – that's when the world started paying attention," she said.
Negotiations and pressure are the weapons the West has to work with and sanctions are necessary just to get Putin to the bargaining table.
Putin is quite comfortable with being outside the Western orbit – on Chechnya, on South Ossetia, and now supporting Syrian president Bashar al-Assad against the wishes of most of the international community.
"He comes to the table, they sit down, they negotiate an agreement and he disregards it, so the only way to force him is through international sanctions," Dyzcok said.
Volker agrees Putin has joined international clubs like the G8 only as a disruptive force.
"We in the West have to have a kind of long-term strategy as we're going to be pushing back on a kind of constant basis, instead of dealing with one crisis and then turning away as soon as that appears to be resolved," he said.
Volker advocates going beyond sanctions and helping Ukraine militarily.
Thursday's EU package of punitive measures includes an arms embargo and the prohibition to export some oil exploration technology used for deep water drilling, Arctic oil exploration and production, or shale oil projects. They also would block export of so-called dual use goods, which can be used for military and civilian purposes.