Tags: russia | crimea | sanctions | Putin

Obama Should Know Better: Economic Sanctions Won't Stop Putin

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Wednesday, 26 March 2014 07:05 AM Current | Bio | Archive

A few months ago, most Americans had never heard of Crimea. Now the little Black Sea peninsula’s ownership is a global issue. Ukraine questions are dominated President Barack Obama’s foreign trip this week.

I wondered in this space three weeks ago why Obama was bailing out Vladimir Putin’s energy empire. I said then — and still believe now — that Putin’s primary goal is to generate tension and keep oil and natural gas prices elevated. Obama’s feckless saber rattling is still playing right into Putin’s hand.

The hard, uncomfortable reality is that Ukraine, and particularly Crimea, is far more important to Russia than it is to the United States. The United States and the European Union will not risk nuclear war to defend it. Years of Middle East wear and tear mean NATO is in no position to defend Crimea conventionally, either.

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Russia supplies one-third of Western Europe’s natural gas supply. He can stop the flow any time. So the sad fact is that Putin wins this one. He will win again if the United States and EU impose even deeper economic sanctions on Russia.

Sanctions will not deter Putin one minute from doing whatever he wants. They will simply punish innocent bystanders who did not invade or attack anyone. Vladimir Putin is a wealthy man. Economic sanctions won’t make Putin miss any meals.

However, restricting trade with Russia will cost Russian jobs, American jobs, European jobs, and even Ukrainian jobs. American companies with Russian exposure like ExxonMobil (XOM), Coca-Cola (KO) and Boeing (BA) will lay off employees and/or lose share value to replace the missing Russian revenue.

Meanwhile, people in Russia who would love to buy American goods will buy something else, simply so our president can score a political point. On what planet would this make sense? I don’t know, but it isn’t Earth.

We must “isolate” Russia, they say. I am sorry, but isolating Russia enough to bend Putin’s will is possible only if China cooperates. Beijing doesn’t want to play. If anything, China could buy the Russian oil and gas that used to go through Ukraine’s pipelines to Western Europe.

Now, if you really want to deter Putin from future aggression, the best way is to force down energy prices. That is how Ronald Reagan and Margaret Thatcher toppled the Soviet Union.

Putin will fold is crude oil falls to $70 and stays there a year or two. He is already losing money at today’s $100 prices. That’s why he wants to keep the world guessing.

As far as I can tell, no such plan is anywhere on the Obama administration’s agenda. The empty threats and sanction talk are simply giving Putin what he wants. Obama must know this.

So why is he doing it?

Your guess is as good as mine is. My personal theory is that renewing the Cold War will enhance the wealth of politically powerful Americans and Europeans — the kind of folks we would call “oligarchs” or “kleptocrats” if they were Russian.

Sadly, the greatest threats to peace and prosperity aren’t Russian at all. They are right here under our noses — and they’re about to score another win.

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PatrickWatson
A few months ago, most Americans had never heard of Crimea. Now the little Black Sea peninsula's ownership is a global issue. Ukraine questions are dominated President Obama's foreign trip this week.
russia,crimea,sanctions,Putin
544
2014-05-26
Wednesday, 26 March 2014 07:05 AM
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