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West Threatens New Russia Sanctions – Unclear What Moscow Action Would Prompt Them

West preparing to slap on additional sanctions on Russia for the sin of being Russian. All is fair when politicians need to be seen as 'doing something'

This article originally appeared at Foreign Policy

US and European leaders are threatening further sanctions against Moscow over Ukraine, but it’s unclear what measures are on the table and what Russian actions would prompt further restrictions.

Assistant Secretary of State Victoria Nuland said Wednesday that U.S. policymakers started “intensive consultations” this week with European leaders on sanctions “should Russia continue fueling the fire in the east of Ukraine or in other parts of the country,” fail to implement a recent cease-fire, or grab more land.

“We have shown through our sanctions on investment that, if you bite off a piece of another country, it will dry up in your mouth,” Nuland said at a House Foreign Affairs Committee hearing. Nuland said State Department and Treasury Department sanctions officials are still in Europe for meetings on the new measures. “Our unity with Europe remains the core of our policy toward this crisis.”

But it’s still unclear exactly what might prompt a new sanctions push. While Nuland said sanctions could come down on Russia for continuing to aggravate the Ukrainian conflict, European leaders said a “serious” violation of the cease-fire between Ukraine and Russia-backed separatists negotiated in Minsk, Belarus, on Feb. 12 would prompt the next wave of measures.

German Chancellor Angela Merkel said the so-called Minsk agreement was “fragile,” but put the bar for further sanctions higher than just failure to implement the agreement.

“If the Minsk agreement is seriously violated, European leaders and the [European] Commission stand ready to prepare and impose further sanctions,” Merkel said in Brussels Wednesday, according to Reuters.

Merkel’s comments came after a Wednesday call on Ukraine with President Barack Obama, U.K. Prime Minister David Cameron, French President François Hollande, Italian Prime Minister Matteo Renzi, and European Council President Donald Tusk. Obama is set to meet Tusk at the White House on March 9 to discuss Ukraine, among other things.

“The leaders are united in the view that any serious violation of the cease-fire by the Russian-backed separatists should result in severe additional sanctions,” a spokesman for U.K. Prime Minister Cameron said Wednesday, after the call.

In general terms, U.S. officials have for months said that they could “broaden and deepen” the existing sanctions on Russia, which target the energy, financial, and defense sectors. Big energy firms such as Gazprom and Rosneft have seen their access to international capital markets strictly curtailed by the sanctions, which has made it harder for them to raise the cash needed for ambitious new energy projects.

Sanctions have also limited Russian energy firms’ ability to get their hands on Western technology needed for exotic energy development, including tapping shale deposits or searching for oil in the Arctic offshore. One possibility for fresh sanctions would be to further tighten those restrictions; they could be extended to bar foreign subsidiaries of U.S. energy firms from doing business with Russia, for example, thus closing a loophole that todayremains open.

Another possibility for the next round of sanctions would be to extend existing restrictions to a wider universe of other Russian energy firms.

Drastic sanctions are unlikely, despite increased calls this week for additional punitive measures on Moscow and increased support in the U.S. defense community for arming Ukraine. A potential effort, for example, raised by U.S. and European officials, to lock Russia out of the international financial system has worried Moscow. But that would represent an explosive and provocative step, former U.S. officials said.

The same holds true for the kinds of sanctions that have crippled Iran’s oil industry and helped bring that country to the negotiating table by limiting its ability to export crude. Russia is one of the world’s biggest oil producers and exporters — including to Europe — and officials and experts believe that it is very unlikely that the United States and Europe would try to curtail Russia’s oil exports in any meaningful way.

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