Russia Moves to Retaliate for US Sanctions
May 15, 2018
Russian lawmakers Tuesday unanimously approved, in first readings, legislation to retaliate against the United States and other Western countries for last month’s imposition by Washington of sanctions on some of Russia’s biggest companies and business people.
One measure would empower the Kremlin to impose sweeping “counter-sanctions” in response. Another would make it a criminal offense to observe sanctions imposed by the U.S. on Russia or to provide any information or advice on the punitive action.
Refusing to supply services or do business with Russian oligarchs or companies sanctioned by the U.S. would be punishable by up to four years in prison, under the proposed legislation. The proposed measures have prompted investor alarm and opened up the prospect of a tit-for-tat cycle of retaliation.
After the measures secured their first reading, Kremlin official Alexander Sinenko said the Russian government supports the parliamentary response to the sanctions aimed at punishing Moscow for its alleged meddling in the 2016 U.S. presidential election and other “malign activities.” U.S. President Donald Trump ordered the measures last month.
“The U.S. sanctions are of an absolutely unfriendly type,” said Vyacheslav Volodin, speaker of Russia’s lower house of parliament, the State Duma. “They affected over 400 Russian companies and about 200 citizens of our country. We are granting broad powers to our president and government to protect our country, our economy and workplaces.”
Prime Minister Dmitry Medvedev last month pledged that the Kremlin would help companies targeted by U.S. sanctions. The proposed legislation would halt all cooperation with the U.S. in the nuclear, missile and aircraft-building spheres and introduces restrictions on various American imports. The proposed measures also allow Russian companies to produce various goods copyrighted in the West.
Initially, Russian lawmakers said they would impose restrictions on a wide range of specific goods and services from the United States, including medicine and agricultural products; but, in the draft legislation approved Tuesday, language that targeted specific goods to soften the impact on Russian consumers and industries was removed.
Small impact expected
The U.S. is Russia’s fourth-largest trading partner, and imports of American goods totaled $12.7 billion last year. Cars, pharmaceuticals and medical equipment were among the top items. Russian exports to the U.S. totaled $17 billion in 2017.
The Russian retaliation would have negligible impact on the U.S., given trade flows are insignificant as far as America is concerned, but the retaliation envisaged would exacerbate already highly fraught U.S.-Russian relations, which analysts describe as being at their lowest point since the Cold War.
The U.S. sanctions imposed on Russia in April, targeting two dozen Kremlin insiders and oligarchs close to Russian President Vladimir Putin, have proven to have had a greater impact on Russia than had been expected, say analysts. But they’re doing nothing at this stage in turning ordinary Russians against the Kremlin or undermining the Russian leader’s overall popularity, if recent polling data is accurate.
The ruble suffered its worst week in four years in the immediate wake of the April 6 announcement of new sanctions on 24 extremely wealthy Russians and 14 companies.
When the West imposed its first sanctions on Russia, following Moscow’s annexation of Crimea and fomenting separatism in eastern Ukraine, the effect was limited, according to analyst Nigel Gould-Davies of Britain’s Chatham House research group, and Russia found ways to adapt.
“But America’s latest financial sanctions, announced on April 6, are a game-changer,” he argued in a recent commentary, noting the latest sanctions have created bigger uncertainty.
“No one knows who might be targeted next,” he continued. “Russia faces a new systemic risk: expectations about U.S. sanctions are now as important as the oil price for assessing its prospects.”
The British government is starting the process of introducing legislation that will block Russian oligarchs and officials linked to human rights abuses from doing business in the country and buying property in Britain.
As Russian lawmakers debated the retaliatory measures, President Putin opened a controversial bridge linking southern Russia and the Crimean peninsula that Moscow annexed from Ukraine in 2014.
Before driving an orange truck on the 19-kilometer bridge that cost $3.6 billion to build, Putin told construction workers (and reporters): “I want to sincerely congratulate you with this remarkable, festive and, in the full sense of the word, historic day.”
“Even under the Tsar, people were dreaming of building this bridge,” he said, in reference to Russia’s last Tsar, Nicholas II, who had wanted to span a bridge across the Kerch Strait. In the 1930s, Communist autocrat Joseph Stalin also had proposed a Kerch Strait bridge.
Ukraine condemned the opening. “The Russian occupying powers, which have temporarily occupied Crimea, are continuing to act outside international law,” said Ukrainian Prime Minister Volodymyr Groysman.