Signs of helplessness

May 02, 2014 12:11 am | Updated November 17, 2021 04:41 am IST

As Ukraine slides steadily towards civil war, the sanctions announced by the United States and the European Union go further than previous attempts but show no results on the ground. On April 28, Washington announced measures against companies, officials, and wealthy businesspeople with ties to Russian President Vladimir Putin’s government, and the following day the European Union announced sanctions against 15 Russian and Ukrainian officials including General Valery Gerasimov, Russia’s chief of military staff, and Deputy Prime Minister Dmitry Kozak, who is tasked with developing Crimea, the Ukrainian province annexed by Moscow on March 1. Among the Ukrainians named, presumably for asset freezes and travel bans, are the pro-Russian Igor Strelkov, an adviser to Crimean Prime Minister Sergei Aksyonov, and Sergei Tsyplakov, reportedly the head of the People’s Militia in Ukraine’s Donbass region. The U.S. sanctions are wider than the European ones, targeting businesses and individuals; 17 companies are involved, mainly in oil and gas, construction and finance. The most notable target is Igor Sechin, president of the Russian state-owned oil giant Rosneft; the financial services firm Visa will have to suspend credit card services to Bank Rossiya and other banks.

The sanctions, however, are less severe than they look, and could cause problems for western firms, which may be able to keep shares in Russian companies whose senior personnel are under sanctions but may be banned from contact with such executives. This could hit BP, which owns 19.75 per cent of Rosneft and has faced huge costs since its 2010 Deepwater Horizon disaster in the Gulf of Mexico; its first-quarter profits are down by 24 per cent. Other firms with Russian interests include Chevron, ExxonMobil, and Shell; in addition, the Russian quasi-state conglomerate Rostec, whose head Sergei Chemezov is under sanctions, manufactures components for Boeing, and a Russian regional airline is set to buy Boeing jets. As for Visa, cardholders will be able to withdraw money. The U.S. and the EU may want to block Mr. Putin’s apparent plan to redraw Ukraine’s eastern border, but Moscow could retaliate with its own sanctions, particularly in oil and gas transactions. Secondly, events in eastern Ukraine are now out of Kiev’s control. On April 28, the pro-Kiev Mayor of Kharkiv, Gennady Kernes, was shot and severely wounded; separatists have occupied regional administration buildings in Luhansk, and the government airbase at Kramatorsk has been repeatedly attacked. The western bloc may so far have avoided stating preferred solutions, but its own impotence over Ukraine is increasingly obvious.

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