Artículo World Politics Review, 05.02.2021 Candace Rondeaux, académica y profesora (Center on the Future of War-New America/Arizona State University)
During his 21 years in power, President Vladimir Putin has made a number of strategic missteps, but few will prove more consequential for him, his inner circle or indeed Russia itself than the jailing this week of anti-corruption crusader Alexei Navalny. As evidenced by wave after wave of protests across Russia since Navalny’s arrest upon his return to Moscow last month, the Kremlin’s harsh response has only provoked more Russians to take to the streets. It has also united the United States and its NATO allies after years of policy disarray on dealing with Moscow. Yet even now that minds in Washington and Brussels appear to be focused on imposing new costs on Russia, government officials and experts on both sides of the Atlantic are having trouble identifying pain points that will effectively put the squeeze on Putin’s autocracy.
There is little doubt that more sanctions are in the offing. But can they bring about a change in the Kremlin’s behavior? Navalny, and his team at the courageous Anti-Corruption Foundation in Moscow, last week proffered a new set of potential sanctions targets, naming 35 individuals who aid and abet Putin’s regime. Several sharp American observers and European analysts agree that, at a minimum, sanctions against Russia should be expanded, and most importantly applied to those implicated in Navalny’s poisoning last August with the chemical nerve agent Novichok. There is also debate about a so-called “nuclear option”—U.S. sanctions that would bar Western financial institutions from trading or holding Russia’s ruble-denominated government bonds.
But solutions to the complex calculus surrounding a more effective sanctions regime depend, in part, on other questions that few have either asked or answered with any satisfaction to date. The first one is what it will take for President Joe Biden and his team to convince leaders in Europe, but especially Germany, to finally walk away from Nord Stream 2—a major expansion of the existing pipeline under the Baltic Sea bringing Russian gas directly to Germany, which has already been delayed by U.S. sanctions on Gazprom, the Russian energy giant that is leading the pipeline’s development. The second question is whether there are other ways to target Russian wealth and currency reserves, beyond that “nuclear option,” which could carry other costs throughout the global financial system. The third is what kind of guardrails can be put in place to ensure that sanctions can be lifted if and when Moscow shows signs of positive change in its behavior. And the last and most difficult question, perhaps, is what options are available to the EU and the U.S. to manage the potential political and economic fallout at home from new Russia sanctions, as well as covert Russian retribution that will inevitably ensue with Putin in power.
The U.S. has two clear mechanisms for levying new sanctions on Russia in response to Navalny’s case, as well as to the brutal suppression of democratic protests and other nefarious activities, such as the massive SolarWinds hack. The Global Magnitsky Act, passed in 2016, allows Washington to sanction individuals or entities implicated in human rights violations or corruption. A raft of Russian companies and individuals have already been sanctioned under the 2017 law known as the Countering America’s Adversaries Through Sanctions Act, or CAATSA, including several linked to Nord Stream 2.
The opening gambit is convincing Germany and European companies to fully pull out of the $11-billion Nord Stream 2 deal. The U.S. has progressively increased pressure on German, Dutch, Austrian and Swiss companies involved in supporting financing, construction and operation of the pipeline, following congressional action late last year. In early January, the State Department subsequently pressed several companies reportedly linked to the project for more information about their dealings with Gazprom, including on a $13-billion sister project, known as TurkStream, to bring Russian gas to southern Europe through Turkey.
But the EU’s dependency on Russia for gas is a structural obstacle, and before protests broke out across Russia last week, there was some speculation that Biden might be preparing to loosen sanctions against German companies linked to Nord Stream 2. So it may be that a little more carrot is needed to go with the stick, and a shift to a different playbook for the long game. The most viable patch-up for the problem of the EU’s dependency on Russian gas may lie in greater American investment and collaboration with Europe to expand renewable energy. Washington could bulk up its support for efforts like the Three Seas Initiative, a 12-country pact between European neighbors on the Baltic and Black Seas, which could see major growth in wind energy. More renewables equal less gas and oil, and more leverage against Putin’s regime.
Whether the U.S. should deploy the “nuclear option” to blow up the market for Russian bonds will likely be debated for some time. The argument against such a move is that it could shake global markets severely and might have unforeseen economic consequences. Given the poor state of the pandemic-depressed global economy, that hardly seems an attractive option. Targeting Russian currency and sovereign wealth, meanwhile, would likely invite outcries from American and European plutocrats and place more pressure on the White House than it’s worth.
There are, however, other potential ways of targeting the Russian oligarchy that backs Putin. Navalny’s film “Putin’s Palace”—which details an opulent Black Sea mansion that it claims cost more than $1.3 billion to build for Putin, using illicit funds—hints at other soft targets that could be sanctioned. Top among them is Russia’s leading high-risk insurer, Sogaz, and the Russian state-owned shipping giant Sovcomflot. Targeted sanctions against both companies and a number of their subsidiaries would deal a major blow to virtually all of Putin’s primary piggy banks, in Gazprom, Rosneft, Tatneft and the state-run energy construction company Stroytransgaz, or STG. They would also send an important signal to Russia’s traditional partners in the multibillion dollar reinsurance and shipping sectors.
A former Gazprom subsidiary led by members of Putin’s inner circle, Sogaz is the go-to guarantor for the delivery of energy-related goods and services under STG’s purview, as well as weapons sold by state-run Rostec to countries like Libya and Syria. Not coincidentally, Sogaz is listed as one of the leading partners of the Moran Security Group, a chief purveyor of Russian mercenaries that also owns its own ships, which operate as “floating armories,” as noted by C4ADS, a Washington-based think tank. Sovcomflot, meanwhile, is the primary transport partner of choice for virtually every state-run enterprise in Russia, including STG, Gazprom, Rosneft, Transneft and Rostec.
The devil, of course, would be in the details. But with careful analysis of potential second- and third-order effects, targeting Russia’s shipping and insurance industry could cause Putin’s inner circle to think twice about doing any further harm to Navalny or the thousands of brave Russians who have taken to the streets.
Any and all these moves could trigger sharp and potentially dangerous responses from Putin, which Biden and his EU counterparts must anticipate and plan for in whatever move they make. Retaliation by Russian proxies in cyberspace—and potentially in the real world—are not outside the realm of possibility. As with any threat assessment, the White House will have to figure out what it most needs to protect and how to protect it. The only option not on the table this time is another Russian “reset.”