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The Russia Sanctions: Diplomatic Symbolism Trumps Economic Severity

by Evan R. Mehta, Columbia University

Former President Obama’s fresh sanctions in response to Russian state hacking will likely have little effect on Russian or American businesses and the world economy. The penalties levied by the White House, which include the expulsion of 35 Russian diplomats, termination of two Russian diplomatic compounds in New York and Maryland, and sanctions imposed against Russian intelligence agencies and individuals, primarily serve as a symbolic act accomplishing three important goals—to attribute hostility to the Russian state, support the interests of American allies, and curb President Trump’s pro-Russia pivot.

Previous sanctions, imposed on Russia during the Ukrainian crisis, had penalized key Russian factories, banks, and corporations. Embargoes on arms, oil, industrial equipment and financial transactions with the global community engendered a significant shift in the world economy: as the Russian Ruble buckled under international pressures, transnational businesses and financial institutions operating through Russia faltered, causing over €100 billion in losses in the European Union alone.

The crucial element of the latest sanctions introduced by the previous administration is the focus on individual security agencies and officials rather than fundamental economic instruments of the Russian state. Because the American government is not targeting key Russian factories, banks, and corporations, U.S. businesses and the greater global economy will remain unaffected. In fact, the high officials sanctioned by the American government do not have sizeable assets in the United States that the Treasury can freeze. Furthermore, the Russian intelligence agencies targeted by the sanctions—the FSB (equivalent to the CIA) and the GRU (military intelligence)—are unlikely to experience an overwhelming decline in operational capabilities. Thus in all economic aspects, the sanctions are, for the most part, ineffectual.

The true intended consequences of these penalties are of a symbolic and diplomatic nature. By identifying top-level Russian government officials and military channels as wrong-doers, the White House implies that the hacking efforts were a Russian military act. While it is not clear whether this will precipitate any immediate effect, there are certainly long-term consequences. The first is that the U.S. is willing to attribute these attacks directly to the Russian state. This sends a distinct message to U.S. allies, including France and Germany, who are fearful that their nations will experience similar tampering in their own elections. Essentially, the United States is calling on its allies to maintain vigilance while touting its own commitment to the interests of the non-Russian world.

Another aftereffect of the sanctions will be its impact on President Donald Trump’s foreign policy. The limited scope of the sanctions, in that the action exclusively targets intelligence officials, effectively complicates President Trump’s proposed pivot towards Russian appeasement. Given that Trump faces formidable leaders from his own party in the House and Senate who find Russia threatening and, if anything, want to increase sanctions, there’s no reasonable way for him to suggest undoing these new measures.

These powerful figures—namely, Speaker Paul Ryan, Sen. Lindsay Graham and Sen. John McCain—will oppose leniency towards Russian intelligence officials at all costs, especially when the sanctions have no impact on U.S. businesses. In all likelihood, the measures introduced by Former President Obama will be preserved for this reason, further problematizing an incoming Trump administration’s efforts to change course in Russia.

These new sanctions are generally ineffective economically but make a whole lot of political sense. However, how this measure affects the interplay between Putin and Trump, who have expressed convincing support for tente, will be crucial. In the first few days of the new administration, we have already seen Trump’s surefire de-escalation policy with Russia devolve into an “engage but beware” approach.

As always, shifts in international actors and institutions engender economic consequences. The resulting interaction between Russia, the United States, and the international community in reaction to the Obama sanctions—and the economic impact of palpably rising global tensions—will certainly be something to monitor over the course of the next four years.

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