Russia sanctions strengthen Putin says former State official

Russian President Vladimir Putin
Russian President Vladimir Putin AP

WASHINGTON The Obama administration’s successive round of sanctions against Russia are hurting U.S. companies while doing only limited damage to the Russian economy, the head of the US-Russia Business Council said Thursday.

Speaking to reporters at the headquarters of the National Foreign Trade Council, Daniel Russell suggested the White House is exaggerating the impact of sanctions imposed on some Russian state banks and portions of the energy sector.

“They’ve got a policy in place and they way to (portray) it as a success,” said Russell, who recently returned from a trip to Moscow and meetings with business leaders.

The White House has pointed to a sagging Russian economy and troubling inflation as a sign that U.S. and European sanctions are extracting a price on Russia for that nation’s border fight with neighboring Ukraine. Treasury Secretary Jacob Lew earlier this month touted the fact that Russian growth “has fallen to near zero … and Russian financial markets continue to deteriorate.”

But Russell said Russia’s economy is suffering from challenges that preceded the sanctions and that the tactics taken by Washington have simply served to rally the Russian people around Vladimir Putin and fomented nationalism, hardly the intended effect of sanctions.

“Most Russians think U.S. policy is directed at regime change,” he said, repeating a view he heard repeatedly from Russians across the political spectrum.

Russell’s view carries weight. Until 2013, he was a deputy assistant secretary of state and during the first Obama term helped forge the “reset” of relations that sought to boost trade with and invest in Russia.

Among the U.S. companies impacted by the sanctions and the tit-for-tat response from Russia, said Russell, are civilian aircraft companies such as Boeing Co. and United Technologies Corp., exporters of farm equipment such as Deere & Co., and credit card companies such as Visa and MasterCard.

There are more than 400 McDonald’s restaurants in Russia but only a handful so far have been closed_ ostensibly for sanitary reasons_ and the Canadian founder of McDonald’s in Canada is also the founder of McDonald’s in Russia, Russell said.

The Obama administration has been careful on targeting Russia’s energy sector, he said, only impacting projects that were several years off and not existing drilling and exploration.

“It wasn’t so long ago that the U.S. government was encouraging companies to invest in and do business with Russia,” Russell noted, expecting the bilateral relationship, one very much focused on developing Russia’s massive natural resources, to eventually get back on track.