Why aren't Western sanctions stopping Putin?

Vladimir Putin at his campaign headquarters in Moscow. (Photo: Yuri Kadobnov/Pool Photo via AP)

Donald Trump’s support from his base has been unshakeable, but nothing like Vladimir Putin’s.

Facing international condemnation and new punitive measures over disrupting Western democracies and suspected of ordering the murder of a defector living in the U.K., Putin nonetheless coasted to a fourth presidential term, earning a congratulatory phone call and an offer of a summit meeting from President Trump. Not only did he win, he beat his own record. The Moscow Times crowed that Putin garnered “the most [votes] that any candidate has received in the seven presidential campaigns since the fall of the Soviet Union,” never mind that Putin was the only viable candidate in four of those elections.

Putin has effectively overseen an authoritarian system that controls the domestic media and quashes meaningful dissent, and any election under that system is by nature undemocratic. But he also has genuine support. Despite anemic economic growth, an increasingly messy entanglement in Syria and international sanctions, it appears Putin is still popular at home.

Before the Levada Center shut itself down ahead of the recent presidential election, the independent polling center showed Putin’s approval rating consistently above 80 percent. It shot up to that level after the annexation of Crimea in 2014, and remained steady even after tough sanctions were imposed by the U.S. and the European Union. One can parse the authenticity of his overall domestic support, but the fact remains that Putin has not only survived the sanctions, but arguably has been boosted by them.

The site where ex-spy Sergei Skripal and his daughter were found critically wounded in Salisbury, England. (Photo: Matt Cardy/Getty Images)

Russia may not have annexed any more territory from neighboring countries recently, but four years after the Russian incursion into Ukraine, Putin’s antics have arguably affected a much wider swath of the globe. Russian hackers have shown the ability to infiltrate the U.S. power grid, and the evidence of Russian meddling in the 2016 presidential election is so incontrovertible that even the Trump administration is grudgingly imposing new sanctions. The fact that two weeks before the election, a former double agent now living in Britain was poisoned, along with his daughter, by a nerve gas traced to Russia shows how little sanctions have achieved in forcing Putin to adhere to post-Cold War norms of international behavior. British Foreign Secretary Boris Johnson said it was “overwhelmingly likely” that Putin himself ordered the attack. Moscow, of course, denies everything.

Despite debate over the efficacy of sanctions to have an impact on Putin’s behavior, economic penalties on specific Russian individuals appear to be Washington’s tool of choice.

Days before the Russian election, the U.S. Treasury Department issued fresh sanctions — targeting Russia’s “troll factory” and Putin’s personal chef, among others — although analysts consider them a largely symbolic step. U.S. lawmakers in both parties worry that the measures will not be enough to deter Russia from meddling in the midterm elections later this year, and actually aren’t even new.

“Nearly all the entities and individuals who were sanctioned … were either previously under sanction during the Obama administration or had already been charged with federal crimes by the special counsel,” Sen. John Warner, D-Va., said after the sanctions were announced.

According to Daniel Fried, a former diplomat who designed the State Department sanctions against Russian individuals and companies in 2014, the new measures amount to moving existing sanctions from one authority to another.

“I don’t think it was a particularly powerful symbol of resolve. No, I do not think last week’s sanctions were sufficient, given what Russia has done,” Fried said.

Not only have sanctions failed to stop Putin, the individuals directly targeted seem entirely undeterred. Yevgeny Prigozhin, allegedly the chief funder of the troll farm in St. Petersburg, Russia, known as the Internet Research Agency, who was sanctioned when Barack Obama was president and is named again on the Treasury’s Department’s new list, said he “couldn’t care less” and that he would “stop going to McDonald’s.”

Russian billionaire Yevgeny Prigozhin. (Photo: Mikhail Svetlov/Getty Images)

The Treasury Department has a classified list of Russian oligarchs with ties to the Kremlin that Fried says they have yet to go after. Reports that such a list existed came out late last year, sending shockwaves throughout Russia’s powerful oligarchy, but sanctions were never issued. Fried says the potential to target Putin’s inner circle hasn’t been fully tapped, and that the U.K. poisoning case might increase the appetite for the U.S. and its allies to do more.

Fried says it would also help if officials knew “where Putin himself keeps his money.” Putin is believed to have a fortune in the tens of billions. And while the release of the 2016 Panama Papers exposed the wealth havens of tycoons close to him, Putin himself was never named. His private fortune is believed to be hidden behind an extensive network of proxies, including offshore laundering operations, and the oligarchs that benefit from their ties to him have reason to continue protecting him. As a result of this clandestine arrangement, a legal smoking gun has never been found.

“He’s built this system over time. It’s relatively robust,” says Elise Giuliano, a lecturer on Russian politics at Columbia University’s Harriman Institute. “There are multiple sources of the money coming into Putin’s government. The sanctions haven’t affected the elite the way they’re designed to.”

According to a recent report from Bloomberg, a group of Russia’s wealthiest billionaires expanded their fortunes during Putin’s last presidential term. They initially took a hit when sanctions were introduced, but rebounded when commodity prices and equity markets boomed in 2016, and are wealthier than ever.

“If they could put pressure on Putin, why do so if their wealth has been increasing?” says Simon Saradzhyan, director of the Russia Matters Project at the Belfer Center at Harvard University’s Kennedy School of Government.

And Saradzhyan points out that oligarchs who may fall under sanctions may not wield as much political influence as Western experts believe.

“If there’s pressure, that pressure has failed to sway Putin,” Saradzhyan wrote in an email to Yahoo News. “Unlike his predecessor Boris Yeltsin, Putin has managed to limit political influence of oligarchs.

Instead of undercutting Putin, the most recent sanctions and retaliatory moves, including the expulsion of Russian diplomats from the U.K., may have played into Putin’s us-against-them narrative, uniting Russians against a West they feel threatens their national pride and sovereignty.

Britain’s Prime Minister Theresa May reacts to the poisoning of former Russian intelligence officer Sergei Skripal and his daughter Yulia, March 14, 2018. (Photo: Parliament TV handout via Reuters)

“Overall, you could say the sanctions feed into Putin’s message that Russia is besieged by enemy states,” says Giuliano, who adds that Putin has even been able to convince citizens that the counter-sanctions he imposed on European food imports, and that hit low-income Russians the hardest, are also the West’s fault.

There’s no question that the Russia economy is in a stagnant period — ordinary Russians’ living standards have fallen by 20 percent since 2014, and there were 20 million Russians living below the poverty line in 2016 — up to 13 percent of the population — compared to 16 million in 2014. Some experts say sanctions have been an insignificant factor in the economic decline. Structural problems, a lack of market reforms, and falling oil prices are larger drivers. But unlike the political ramifications that would be expected if the American economy took a dive, the Russian public by and large either doesn’t blame Putin for it, or has no democratic means to express dissent. Putin has effectively spun the sanctions that punished him for his aggressions into propaganda that Russians are the ones being oppressed.

“There could be cracks among Putin’s elites and cronies that we don’t see yet. Ordinary people are suffering and the overall pie is shrinking.”

But short of hoping for internal regime change, what other leverage does the U.S. have to oppose Russian meddling in its elections, in the Mideast and in Europe? Fried says there are “asymetric options” that the U.S. should be exploring.

In an article for The Atlantic, Fried wrote that besides sanctions against Putin, his inner circle and “even against the entire Russian cyber sector,” other efforts should include “a campaign to expose dark Russian money coming into the United States — similar to America’s post-9/11 efforts against terrorist finance.”

After the 9/11 terror attacks, a coordinated global effort froze $140 million in terrorists’ assets across some 1,400 banks worldwide. Terrorists eventually found workarounds to get financing, in some ways have mimicked what Putin is believed to have been doing for decades — setting up shell companies and other proxies to hide money.

Besides, more aggressive steps would require a real coordinated effort to punish Putin from the top. When asked point blank whether he thought President Trump — whose business ties to Russians have been widely reported — really wanted to punish Putin, Fried said without hesitation, “No, I don’t.”

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