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Why Russia Sanctions Won't End in 2016

Kerry may have mellowed oh so slightly, but there are just enough hardcore Russia-haters left to ensure Minsk II doesn't go anywhere

Throw your hands in the air, Putin haters; sanctions against Russian energy and financial firms probably won’t end this year after all. There are more moving parts than we thought, and varying motives even among some players on the same team.

“We expect Russia to face continued U.S. and E.U. sanctions for the rest of the year, which will add to the challenges it faces from depressed oil prices,” Bretton Woods Research president Vladimir Signorelli wrote in his 11 page global outlook report for clients on Friday.

Signorelli had originally forecast European sanctions to lift by July.

In October, a poll of Russian, American and European investors attending a panel hosted by CNN broadcaster Richards Quest at VTB Capital’s Russia Calling conference, most said U.S. sanctions would last indefinitely. They were not asked about European sanctions, which have a greater impact on the Russian economy.

Last week, Victoria Nuland, Washington’s chief diplomat in charge of European Affairs met Vladimir Putin’s foreign affairs specialist on Ukraine, Vladislav Surkov to discuss the Minsk II Agreement. That is the deal that outlines the requirements for peace in the Donbass region and other east Ukrainian regions marred by over a year and a half of fighting between pro-Moscow and pro-Kyiv fighters. Once adhered to, Russian sanctions are to be removed.

But Nuland is as much a partisan as Putin. In Russia’s eyes, she is seen as the ring leader who helped bring Arseniy “Yats” Yatsenyuk to power in February 2014. Unless opposites really do attract, Nuland is married to Robert Kagan, one of the brains behind the Project for a New American Century, the regime change think tank that brought democracy to the Middle East…

Nuland’s view of Russia in Ukraine may be at odds with Secretary of State John Kerry, who met with his counterpart, Sergei Lavrov, in Zurich on Jan. 20 and seems sincere about working with the Kremlin on this and other issues.

Both have move closer together with regards to Syria. That bodes well for Russia, the U.S. and Europe to hammer out a peace deal, at long last, in Ukraine.

A trade agreement in Europe, however, could irk the Russians enough to keep Ukraine frozen in conflict for a long time. This might be just fine for those of the mind that war gives life meaning, or at least butters the bread.

The Kremlin’s new envoy to the Minsk peace negotiations, Boris Gryzlov, was shuttled to Kyiv for a late night one-on-one with the Ukrainian president, Petro Poroshenko before the World Economic Forum in Davos. Kerry has been sending conciliatory signals too, but resolution of the conflict requires difficult actions from Kyiv and Moscow-friendly warlords in the Donbass. Reintegrating the separatist-held eastern territories will be hard. Some have already switched to the ruble and a vote in Ukraine’s parliament to allow for east Ukraine independent will surely be blocked unless Poroshenko can work some magic, a magic that he does not appear to possess at all.

Lavrov seems to have a close relationship with his president. And if he and Kerry to agree on Syria, the next stop on the Project for a New American Century’s regime change tour, then they can probably do the same in Ukraine. But so long as there is division in the ranks — those in favor of keeping Russia close versus those willing to push Russia away — then Minsk II success is unlikely. 


Source: Forbes
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