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Millennial Speech & Debate Russia Sanctions Release

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Background

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Types of Sanctions

Three types of sanctions – (a) threats; (b) those targeted at individuals; (c) those targeted at the socioeconomic system

Xinhua General News Service, December 18, 2014, Commentary: Double-edged sanctions against Russia hurt both sides, http://news.xinhuanet.com/english/indepth/2014-12/19/c_133865924.htm DOA: 10-25-15

As U.S. President Barack Obama signed into law a bill aiming for tougher sanctions on Russia, the seesaw battle stalemated between Western countries and Russia over the Ukraine crisis is expected to continue. While touching Russia on the raw, the boomerang is most likely to dart back to its throwers -- the United States and its European allies. Since the crisis broke out in Ukraine, the West has adopted a three-step sanction strategy against Russia -- First, threatening with sanctions; second, imposing sanctions against individuals that "endanger the sovereignty and territorial integrity of Ukraine"; and third, directing sanctions at Russia's whole socioeconomic system and its energy,defense and finance sectors in particular .

Ukraine Freedom and Support Act of 2014

Leigh Anderson, Mondaq Business Briefing, January 5, 2015, https://www.highbeam.com/doc/1G1-396197708.html DOA: 11-25-15

This alert follows our previous alerts on the Russia/Ukraine sanctions.U.S. Passes New Sanctions Authorizing Statute - Sends Russia Frigid End of Year MessagePresident Obama: U.S. will "review and calibrate" sanctions in response to Russia's actionsOn December 18, 2014, President Obama signed into law the Ukraine Freedom and Support Act of 2014 ("the Act"), the latest move in a series of sanctions imposed on Russia by the United States and the EU over the past year (full coverage of the Russia sanctions can be found here). While the Act gives the president authority to implement new sanctions against Russia, President Obama has declined to enforce the new provisions at this time. The strategy behind this move is unclear, though it appears to be a "wait and see" approach with the hope that even just the threat of new U.S. sanctions will curb Russia's destabilizing efforts in Ukraine and the wider Eastern Europe and Central Asia regions. It is also believed that the U.S. administration wants to continue to remain in lock-step with the EU and its imposition of sanctions against Russia. The provisions of the Act are wide-reaching, and if he chooses to enforce them, would authorize the president to provide defense articles, services, and training to Ukraine; address humanitarian relief efforts for displaced persons; and encourage increased investment in Ukraine's energy sector with decreased Ukrainian dependence on Russian energy sources. The Act also puts forth several key export controls and sanctions provisions that could be implemented against Russia. Key Sanctions and Export Control Provisions Mandated Sanctions. The Act requires the president to impose three or more enumerated sanctions against Rosoboronexport, Russia's state-owned exporter of defense articles. The Act also requires the president to impose three or more enumerated sanctions against any Russian entity that transfers or brokers the transfer to, or knowingly manufactures or sells defense articles transferred to, Syria, or into the territory of a "specified country" without its government's consent. Those that provide financial, material or technological support to such entities are also subject to the sanctions. The Act defines "specified countries" as including Ukraine, Georgia, Moldova, or any other country of significant concern under the Act, such as Poland, Lithuania, Latvia, Estonia, and the Central Asia republics. Lastly, the Act directs the president to impose specified sanctions on Gazprom (Russian-controlled natural gas extractor) if the president finds that it is withholding significant natural gas supplies from North Atlantic Treaty Organization (NATO) member

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https://www.highbeam.com/doc/1G1-396197708.html


http://news.xinhuanet.com/english/indepth/2014-12/19/c_133865924.htm


countries, or further withholds significant natural gas supplies from countries such as Ukraine, Georgia, or Moldova.Authorized Sanctions. The Act authorizes, but does not require, the president to impose certain sanctions targeting Russia's energy sector. Under the Act, the president is authorized to impose sanctions on investors in Russian crude oil. The investor must have made a significant investment in a special Russian crude oil project to trigger the sanctions. The president is also authorized to impose additional licensing requirements on the export of items for Russia's energy sector, including equipment used for tertiary oil recovery, as enforced by the Bureau of Industry and Security of the Department of Commerce ("BIS"), or the Office of Foreign Assets Control of the Department of the Treasury ("OFAC").Restrictions on Foreign Financial Institutions. Under the Act, the president is authorized to impose a prohibition on opening, and a prohibition or the imposition of strict conditions on maintaining, in the United States, a correspondent account or a payable-through account by a foreign financial institution that knowingly engages in significant transactions involving sanctioned persons; or with respect to the Ukrainian crisis, facilitated a significant financial transaction on behalf of any Russian person included on the list of specially designated nationals and blocked persons maintained by the OFAC.

Looking Ahead: Russian Response to Authorizing Statute and New Sanctions Targeting the Crimea RegionThe Russian response after President Obama's announcement was nothing short of defiant. Russian President Vladimir Putin decried the sanctions, and a Russian ministry statement released December 20 spoke of retaliatory measures. Given Russia's reaction, it seems that enforcement of these sanctions and others may be imminent. Indeed, only one day after signing this bill into law, the President issued an Executive Order "Blocking Property of Certain Persons and Prohibiting Certain Transactions with Respect to the Crimea Region of Ukraine" (the "Crimea-related Executive Order"). In a letter issued by the White House Office of the Press Secretary, President Obama described the Crimea-related Executive Order as prohibiting: New investments by U.S. persons in the Crimea region of UkraineImportation of goods, services, or technology into the United States from the Crimea region of UkraineExportation, reexportation, sale, or supply of goods, services, or technology from the United States or by a U.S. person to the Crimea region of UkraineThe facilitation of any such transactions.The Crimea-related Executive Order expands on three previously issued Ukraine-related orders: Executive Order 13660 of March 6, 2014, Executive Order 13661 of March 16, 2014, and Executive Order 13662 of March 20, 2014. In line with previous Ukraine-related sanctions and sanctions-related executive orders of the modern era, the Crimea-related Executive Order contains an asset-blocking feature. Pursuant to this order, property and interests in property of any person may be blocked if determined by the Secretary of the Treasury, in consultation with the Secretary of State, that the person is: Operating in the Crimea region of UkraineA leader of an entity operating in the Crimea region of UkraineOwned or controlled by, or has acted or purported to have acted for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to the order, orMaterially assisting, sponsoring, or providing financial, material, or technological support for, or goods or services to or in support of, any person whose property and interests in property are blocked pursuant to the orderThe Crimea-related Executive Order also blocks such a designated person's entry into the United States. Relatedly, on December 19, 2014, OFAC issued General License No. 4 "Authorizing the Exportation or Reexportation of Agricultural Commodities, Medicine, Medical Supplies, and Replacement Parts" to Crimea. The general license authorizes such exports from the United States or by a U.S. person, wherever located, to Crimea, or to persons in third countries purchasing specifically for resale to Crimea. Related transactions (e.g., making shipping and cargo inspections, obtaining insurance, receipt of payment, etc.) are also authorized. General License No. 4 is limited to EAR99 items, or items that would otherwise be designated as EAR99 if subject to the Department of Commerce's Commerce Control List.

EU has extended sanctions

Leigh Anderson, Mondaq Business Briefing, January 5, 2015, https://www.highbeam.com/doc/1G1-396197708.html DOA: 11-25-15

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EU extends sanctions against Crimea and SevastopolOn December 18, 2014, the EU extended the restrictive measures in place arising out of the annexation of Crimea and Sevastopol. Council Regulation (EU) No 1351/2014 of December 18, 2014 (the "Regulation") further amends Council Regulation (EU) No 692/2014 (as first amended by Council Regulation (EU) No 825/2014).These new restrictive measures came into effect December 20, 2014.Executive SummaryThe scope of Article 2 of Regulation 692/2014 is significantly expanded by the Regulation. The Article had originally prohibited the import into the European Union of goods originating in Crimea or Sevastopol, and providing financing or financial assistance, as well as insurance and reinsurance related to the import of such goods.In July, Regulation 825/2014 had extended the above to also prohibit investments in key sectors in Crimea and Sevastopol, including transport, telecommunications, energy and the exploitation of natural resources, and an export ban on key equipment and technology related to those sectors.The EU has rounded off 2014 by extending the restrictive measures to provide a ban on all foreign investment in Crimea or Sevastopol; a prohibition on services directly related to the investment ban, as well as services related to tourism activities; and restrictions on goods in the sectors of transport, telecommunications, energy, and exploration of oil, gas and minerals.Restrictions on foreign investmentArticle 2a introduces prohibitions on: Acquiring or extending any existing participation in the ownership of real estate located in Crimea or SevastopolAcquiring or extending any existing participation in the ownership of any entity in Crimea or Sevastopol, including the acquisition in full of such entity or the acquisition of shares and other securities of a participating nature of such entityGranting or being part of an arrangement to grant any loan or credit, or otherwise provide financing - including equity capital - to any entity in Crimea or Sevastopol, or for the documented purpose of financing such entityCreating any joint venture in Crimea or Sevastopol or with an entity in Crimea or SevastopolProviding investment services directly related to the activities referred to aboveThe Regulation provides an exemption for the execution of obligations arising from contracts concluded before December 20, 2014, or ancillary contracts necessary for the execution of such contracts, provided that the competent authority is informed at least five working days in advance.Member State authorities may grant an authorisation for otherwise prohibited activities in very limited circumstances related to consular missions, organisations with international immunity, projects in support of health institutions, or appliances and equipment for medical use.Restrictions on goods for use in the transport, telecommunications and energy sectors, and in the prospection, exploration and production of oil, gas and mineral resourcesArticle 2b prohibits the sale, supply, transfer or export of goods listed in Annex II of the Regulation to any natural or legal person, entity, or body in Crimea or Sevastopol, or where such goods are for use in Crimea or Sevastopol. The preamble to the Regulation gives guidance on how to determine the "place of use."The prohibition extends to the provision of technical assistance, brokering services, financing and financial assistance for the listed goods and technology.Note that these restrictions do not apply where there are no reasonable grounds to determine that the goods and technology or services in question are to be used in Crimea or Sevastopol. This highlights the importance of fully investigating proposed transactions, and obtaining sufficient end-user information.An exemption is provided for the execution until March 21, 2015 of an obligation arising from a contract concluded before December 20, 2014, or by ancillary contracts necessary for the execution of such contracts, provided that the competent authority has been informed at least five working days in advance.Again, Member States may grant an authorisation of otherwise prohibited goods or technologies in the same limited circumstances cited above.Restrictions on involvement in infrastructureArticle 2c prohibits the provision of technical assistance, or brokering, construction or engineering services directly relating to infrastructure in Crimea or Sevastopol, in the transport, telecommunications and energy sectors, and in the prospection, exploration and production of oil, gas and mineral resources. This prohibition is independent of the origin of the goods or technology.An exception applies in the execution until March 21, 2015 of an obligation arising from a contract concluded before December 20, 2014, or by ancillary contracts necessary for the execution of such a contract.

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Restrictions on the provision of services related to tourism activitiesArticle 2d prohibits the provision of services directly related to tourism activities in Crimea or Sevastopol. In particular, any ship providing cruise services is prohibited to enter into or call at any port situated in the Crimean Peninsula and listed in Annex III to the Regulation. The listed ports include Kerch and Sevastopol, the commercial port authorities of which are already designated by the EU as subject to an asset freeze.The prohibition applies to any ship flying the flag of a Member State, any ship owned and under the operational control of an EU owner, or any ship over which an EU operator has assumed overall responsibility for its operation.The prohibition does not apply where a ship enters or calls at any listed port for reasons of maritime safety in cases of emergency. The competent authority must, however, be informed of the entry within five working days.Notwithstanding the above, it is be permissible to execute an obligation arising from a contract or ancillary contract concluded before December 20, 2014, or ancillary contracts necessary for the execution of such contracts, provided that the competent authority has been informed at least five working days in advance.

EU sanctions related to Crimea and Sevastopol

Economist Newswire, December 19, 2014 EU politics: New Crimea sanctions leave EU-Russia position unchanged, http://www.gfs.eiu.com/Article.aspx?articleType=rf&articleId=1102685494&secId=7 DOA: 11-29-15

EU leaders confirmed at a summit on December 18th that the bloc is imposing further sanctions against business with Crimea, to take effect on December 20th. The new measures are aimed at addressing anomalies in-and thus strengthening-the EU's policy of non-recognition of Russia's annexation of the region. As such, they do not signal a change in the EU's position on the separate question of sectoral ("phase three") sanctions against Russia, which the bloc implemented following the downing of a Malaysian passenger plane in July this year. On this issue, EU leaders at the summit held to the bloc's harder line of recent weeks, but continued to exhibit differences of emphasis. Although the call is finely balanced, we continue to expect the EU's sectoral sanctions against Russia to be eased substantially when they come up for renewal in July 2015, owing mainly to the need for unanimity within the bloc for any rollover. The EU has banned imports from Crimea and Sevastopol (including import financing and insurance) since June 2014. Under the bloc's new measures, in Crimea and Sevastopol EU firms and individuals will be banned from investing in companies or property; providing finance; exporting goods and services in the transport, telecommunications, energy, and oil and gas exploration and production sectors; and providing tourism services, including the landing of cruise ships. Provided that the specific item of business does not involve the territory of Crimea, EU entities are not banned from working with companies outside Crimea that may separately have business there.

EU, US, Norway, Japan, Australia, and Canada have sanctions on Russia due to Crimea’s accession to Russia and tension in the Ukraine

Banking and Stock Exchange, Finance, Economics (Russia), November 10, 2015

Today Russia is covered by economic sanctions from the EU, the USA, Norway, Japan, Australia and Canada. The restrictions apply to the banking, oil and defense sectors. International sanctions were imposed following Crimea's accession to Russia and growing geopolitical tension in Ukraine.

EU sanctions were extended in June

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http://www.gfs.eiu.com/Article.aspx?articleType=rf&articleId=1102685494&secId=7


RIA Novosti, June 22, 2015 EU Extends Sanction Policy, Moscow Readies Response, http://sputniknews.com/politics/20150623/1023716941.html DOA: 11-27-15

The European Union (EU) on Monday extended its economic sanctions against Russia imposed over the Ukraine conflict for another half a year.The decision did not come as a surprise for Moscow. Anti-Russia sanctions have been valid for a year and the European Union warned last week about their extension.Commenting on this decision, the Kremlin said it would act on the basis of reciprocity. Russia's government has already submitted a proposal to the presidential administration on extending the food import embargo it introduced in response to Western sanctions, press secretary to the prime minister Natalya Timakova said on Monday.The European Union imposed sanctions against Russia on August 1, 2014, and expanded them in September of the same year. It introduced an embargo on new import and export contracts of arms and dual-purpose equipment. Russian banks and the oil industry were also hit by sanctions.In response, Russia restricted the import of food products from Western countries.

EU sanctions are extended until the end of January 2016

EJ Insight, June 23, 2015, EU extends Russia sanctions until end-Jan 2016, http://www.wsj.com/articles/eu-extends-economic-sanctions-on-russia-until-end-of-january-1434960823 DOA: 11-27-15

The European Union has extended its economic sanctions against Russia until the end of January 2016, keeping up the pressure on Moscow to comply with a ceasefire accord signed with Ukraine. The decision came at a meeting of EU foreign ministers in Luxembourg on Monday, BBC reported.Ministers agreed on the extension of the sanctions due to "Russia's destabilizing role in eastern Ukraine", the EU was quoted as saying.

US won’t withdraw sanctions until the Minsk agreements are fully implemented

RIA Novosti, February 12, 2015 , US to Roll Back Sanctions Once Russia Implements Minsk Agreements - State Department, http://www.state.gov/p/eur/rls/rm/2015/mar/238147.htm DOA: 11-27-15

The United States stands ready to ease sanctions on Russia once the Minsk agreements that have recently been agreed upon are fully implemented, US Department of State Secretary John Kerry said in a statement on Thursday. "The United States is prepared to consider rolling back sanctions on Russia when the Minsk agreements of September 2014, and now this agreement, are fully implemented," Kerry said.Before the United States decides whether to ease sanctions on Russia, Kerry said that the United States would need to see a full ceasefire in Ukraine, the "withdrawal of all foreign troops and equipment from Ukraine," and the "full restoration of Ukrainian control of the international border."Kerry warned that the United States would judge the implementation of the Minsk agreement by actions and not by words.On Thursday, the leaders of Ukraine, Germany, Russia, and France worked out a reconciliation deal including 13 points aimed at ending the military confrontation between Kiev forces and independence supporters in eastern Ukraine.The deal includes an unconditional ceasefire coming into force at midnight on February 15, urges Kiev to undertake constitutional reform with a focus on Ukraine's decentralization, as well as stipulates the withdrawal of all foreign armed groups, equipment and mercenaries from eastern Ukraine under the observation of the OSCE.

US extended the sanctions for a year in March

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http://www.state.gov/p/eur/rls/rm/2015/mar/238147.htm

http://www.wsj.com/articles/eu-extends-economic-sanctions-on-russia-until-end-of-january-1434960823

http://www.wsj.com/articles/eu-extends-economic-sanctions-on-russia-until-end-of-january-1434960823

http://sputniknews.com/politics/20150623/1023716941.html


Galina Dudina, RusData Dialine - Russian Press Digest, March 5, 2015 Obama extends sanctions against Russia for one year more, http://www.themoscowtimes.com/news/article/obama-extends-sanctions-against-russia-citing-threat-to-national-security/516961.html DOA: 11-27-15

U.S. President Barack Obama has issued an order to extend by one year a series of sanctions against Russia over its role in the Ukraine crisis , the White House said Tuesday. In a statement published on the White House website, Obama said he was extending U.S. sanctions imposed on Russia last March and December in light of the continuing "unusual and extraordinary threat to the national security and foreign policy of the United States."The U.S. first imposed sanctions on Russia on March 6, 2014, when Obama signed an executive order imposing travel bans and asset freezes against individuals that had "asserted governmental authority" in the Crimea peninsula without consent from the Ukrainian authorities.Later that month, Obama signed two executive orders that expanded the scope of the sanctions, stating that the "actions and policies of the government of the Russian Federation" had undermined Ukraine's territorial sovereignty.Russia in March last year annexed Crimea following the outcome of a referendum that was denounced by the West as illegitimate and unconstitutional.Additional sanctions imposed in December also prohibited new U.S. investment in Crimea and restricted the country's trade with the region.Tuesday's statement said the extension order would be transmitted to the U.S. Congress.

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http://www.themoscowtimes.com/news/article/obama-extends-sanctions-against-russia-citing-threat-to-national-security/516961.html

http://www.themoscowtimes.com/news/article/obama-extends-sanctions-against-russia-citing-threat-to-national-security/516961.html


Sanctions on Russia Now

Canada has expanded sanctions to target the energy sector

Shawn Neylan, Mondaq Business Briefing, January 8, 2015 Canada: Canada Expands Russia Sanctions, https://www.rt.com/business/270661-russia-canada-economic-sanctions/? DOA: 10-25-15

On December 19, the Canadian government announced expanded economic sanctions against Russia, primarily directed at the Russian energy industry (the "Expanded Russia Sanctions").As we recently discussed, the Expanded Russia Sanctions were imposed by way of an amendment to the pre-existing sanctions under the Special Economic Measures (Russia) Regulations. In addition to adding new designated persons to the existing Regulations against Russia (and also adding new designated persons to the Special Economic Measures (Ukraine) Regulations) the Expanded Russia Sanctions now prohibit any person in Canada and any Canadian outside Canada from exporting, selling, supplying or shipping any specified good, wherever situated, to Russia or to any person in Russia for use in any of (i) offshore oil exploration or production at a depth greater than 500 meters, (ii) oil exploration or production in the Arctic or (iii) shale oil exploration or production (the "Specified Activities"). Activities relating to gas exploration are not specifically covered in the Expanded Russia Sanctions.The specified goods covered by the Expanded Russia Sanctions are as follows: Seamless stainless steel line pipe of a kind used for oil or gas pipelines;Seamless iron or steel line pipe of a kind used for oil or gas pipelines, other than line pipe made of stainless steel or cast iron;Seamless iron or steel drill pipe of a kind used in drilling for oil or gas, other than drill pipe made of cast iron;Seamless iron or steel tubing of a kind used in drilling for oil or gas, other than tubing made of cast iron;Iron or steel line pipe of a kind used for oil or gas pipelines that has circular cross-sections and an external diameter exceeding 406.4 mm;Iron or steel casing of a kind used in drilling for oil or gas that has circular cross-sections and an external diameter exceeding 406.4 mm;Welded iron or steel line pipe of a kind used for oil or gas pipelines that has an external diameter not exceeding 406.4 mm, other than line pipe made of cast iron;Welded casing and tubing of a kind used in drilling for oil or gas that has an external diameter not exceeding 406.4 mm and is made of flat-rolled steel or iron products, other than casing and tubing made of cast iron;Interchangeable rock-drilling or earth-boring tools that have working parts made of sintered metal carbides, cermets, diamond or agglomerated diamond;Power-driven reciprocating positive displacement pumps for liquids, other than pumps with measuring devices, concrete pumps and fuel, lubricating or cooling medium pumps for internal combustion piston engines;Power-driven rotary positive displacement pumps for liquids, other than pumps with measuring devices and fuel, lubricating or cooling medium pumps for internal combustion piston engines;Liquid elevators and their parts, other than pumps;Non-hydraulic or non-self-propelled boring or sinking machinery, and their parts, for boring earth or extracting minerals or ores, other than tunnelling machinery and hand-operated tools;Parts for lifting, handling, loading or unloading machinery;Parts for: derricks, cranes, mobile lifting frames and other lifting machinery;self-propelled bulldozers, scrapers, graders, levellers, shovel loaders and tamping machines; andother moving, grading, scraping, levelling, excavating and extracting machinery; Parts for hydraulic or self-propelled boring or sinking machinery;Mobile drilling derricks;Floating or submersible drilling or production platforms;Fire-floats, lightships and floating docks or cranes, other than dredgers.

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https://www.rt.com/business/270661-russia-canada-economic-sanctions/



EU Will Maintain Sanctions

EU will maintain its sanctions until the cease fire agreement is enforced

Voice of America News, March 19, 2015, EU Likely to Keep Russia Sanctions After Merkel Weighs In, http://www.voanews.com/content/reu-russia-sanctions-merkel/2686808.html DOA: 11-25-15

-The European Union is likely to keep economic sanctions on Russia until the Ukraine cease-fire agreements are fully implemented.

Speaking to reporters before a two-day EU summit in Brussels, EU Council President Donald Tusk said Russia should be pressured through sanctions until a Ukraine cease-fire agreement would be fully observed."One of the best ways of supporting Ukraine will be through upholding the sanctions' pressure on Russia until we witness a full implementation of the Minsk agreement. This must ultimately conclude in Ukraine regaining control of its borders as foreseen in the plan brokered by [French] President [Francois] Hollande and [German] Chancellor [Angela] Merkel," Tusk said.

Chancellor Angela Merkel told Germany's lower house of parliament (Bundestag), before leaving for Brussels, that she would strongly encourage EU leaders to maintain sanctions until Russia comes to terms with Minsk agreements to end the hostilities in eastern-Ukraine."We cannot and will not lift the sanctions that expire in July or September until the demands of the Minsk agreement have been fulfilled. That would be wrong," said Merkel.

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http://www.voanews.com/content/reu-russia-sanctions-merkel/2686808.html


Sanctions Undermine Economy

Sanctions have undermined the economy


Rounds of sanctions, like rolling rocks, have rained down on Russia, and severely wounded the country's economy. On Dec. 16, the Russian ruble nosedived to an all-time low, hitting 80 rubles per U.S. dollar and 100 rubles per euro in Moscow trade. The ruble has lost nearly 50 percent of its value against the U.S. dollar and euro since March despite several currency interventions of the Central Bank, indicating Russia's economy has fallen into trouble. The once stubborn Russian government has finally admitted the country would fall into recession in 2015.

Sanctions undermine Russia’s economy

Xinhua General News Service, December 19, 2014 News Analysis: New U.S. sanctions could add to Russia's economic woes, albeit indirectly, http://news.xinhuanet.com/english/indepth/2014-12/19/c_133866375.htm DOA: 11-27-15

Although a new round of U.S. sanctions against Russia might not have a direct impact, they could increase Russia's sense of panic and ratchet up pressure on the country's embattled economy, experts said. U.S. President Barack Obama on Thursday signed into law a new round of sanctions against Russia, but for now, does not intend to use them, saying the administration is keeping an eye on the situation in Ukraine. "My administration will continue to work closely with allies and partners in Europe and internationally to respond to developments in Ukraine and will continue to review and calibrate our sanctions to respond to Russia's actions," Obama said in a statement, adding that he was prepared to roll back sanctions should Russia take the necessary steps. Russia's economy has for months been flailing amid a falling currency and Western sanctions over the crisis in Ukraine. Energy prices have also fallen, dealing a severe blow to the Russian economy, as oil and gas industry comprises around 50 percent of its revenue. Earlier this week saw the sharpest drop in the ruble in 16 years. While it is unclear whether the new sanctions would have a direct impact on Russia, the anticipation alone is enough to give investors the jitters, and that could in turn lead to even more economic turmoil in the embattled country, experts said. Indeed, the greatest effect of sanctions has not been from the sanctions themselves but rather the broader effect of leaving investors, Russian and foreign, nervous about the Russian economy, leading to capital flight, RAND Corporation Senior International Policy Analyst Olga Oliker told Xinhua. "The limits that the sanctions have placed on Russia's access to capital markets have been very important, but general investor skittishness, over and above the sanctions, has been more important, and stands to last indefinitely," she said. The White House is keeping an eye on the situation, with White House spokesman Josh Earnest saying earlier this week that the administration has "suggested the longer the sanctions regime is in place, the more isolated the Russians would be and the greater the impact it would have on the broader Russian economy." "And every week and month that goes by that the sanctions regime is in place, we see that the toll that is being taken by the Russian economy grows," he said.

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From Russian President Vladimir Putin's annual press conference on Thursday, it is not clear that Russia has a plan for the beleaguered economy. Putin said that it may take a couple of years for Russia's economy to get back on track, which might mean he was betting on a rise in the price of oil, the eventual lifting of sanctions, or both.

Sanctions undermine Russia’s GDP by 5%

RIA Novosti, June 22, 2015 EU Extends Sanction Policy, Moscow Readies Response, http://sputniknews.com/politics/20150623/1023716941.html DOA: 11-27-15

Experts note that Russia will be affected by the extension of Western sanctions. Former Deputy Head of Russia's Central Bank Sergey Aleksashenko told RIA Novosti that Russia will lose about five percent of its GDP in 2015."The effect will be felt because the EU sanctions will prevent Russian banks and companies from getting loans in Europe and they will have to pay the external debt from domestic resources. This is the price that the Russian economy will have to pay," Aleksashenko said.In the meantime, the Ministry of Economic Development, the Central Bank and the Ministry of Finance will continue to proceed from the premise that anti-Russian sanctions will not be lifted in the near future. The Ministry of Economic Development predicts that Russia's GDP will fall by 2.8 percent, the Ministry of Finance predicts a 2-2.5-percent drop and the Central Bank says GDP will decrease by 3.2 percent.

Sanctions will reduce the Russian economy by 9%

Mark Thompson, CNNMoney.com, August 4, 2015 How badly have sanctions hit Russia?

Sanctions imposed on Russia because of its support for separatists in Ukraine could shrink the economy by as much as 9% over time. That's the view of the International Monetary Fund, which published a regular report on Russia this week.Collapsing oil prices and Western sanctions on big banks and energy companies tipped Russia into a financial crisis at the end of 2014. The ruble plunged and inflation soared.Russia jacked up interest rates in response, sold dollars and euros to defend its currency, pumped money into the banks and slashed government spending.The situation has stabilized this year, although the ruble has come under pressure again recently, but the economy is already deep in recession.The IMF expects Russian GDP to shrink by 3.4% this year, as falling real wages, the higher cost of borrowing and shattered confidence hit domestic demand. And western sanctions, and Russia's retaliatory ban on imports of food and agricultural products, could be responsible for nearly half that decline.But longer term, the impact could be even more significant, as the loss of access to foreign finance and technology hurts investment and makes Russia's economy even less efficient."Prolonged sanctions could lead to a cumulative output loss over the medium term of up to 9% of GDP," the IMF said.Russians are feeling the pain. Unemployment has begun to creep up from very low levels, and millions more have fallen into poverty.

Sanctions trigger inflation in Russia and undermine its access to credit

Russia & CIS Military Weekly, June 11, 2015, Corridors of Power, http://rbth.com/news/2015/06/10/russia_to_extend_counter-sanctions_after_g7s_decisions_46806.html DOA: 11-27-15

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http://rbth.com/news/2015/06/10/russia_to_extend_counter-sanctions_after_g7s_decisions_46806.html



Russia to extend counter-sanctions after G7's decisions - Kremlin chief of staffMoscow will not lift its counter-sanctions against Western countries anytime soon, taking into consideration the G7's decision to extend sanctions against Russia, says Russian presidential chief of staff Sergei Ivanov. "As far as we know, a G7 summit has just taken place, which has extended the effect of sanctions against Russia. Therefore, it is absolutely logical to presume that Russia will also extend its sanctions," Ivanov said at the World Congress of Russian Press currently being held in Moscow."When we announced our counter-sanctions, or any sanctions in general - this is a double-edged sword, one of the edges being negative and the other positive. Of course, the sanctions have had a negative impact on us, this is obvious. Access to credit resources has been blocked, and our inflation has accelerated," Ivanov said.

Sanctions have undermined Russia’s oil sector and its economy

Petroleum Economist, August 2015, Russia's oil: squeezed at both ends, Eugene M. Khartukov is professor of economics at Moscow State University for International Relations (MGIMO), CEO of Moscow-based World Energy Analysis & Forecasting Group (Gapmer) and vice-president (for Eurasia) of Petro-Logistics (Geneva), http://www.petroleum-economist.com/Article/3480382/Russias-oil-squeezed-at-both-ends.html DOA: 11-27-15

Russia's oil industry is under pressure from either side: on one hand, there are western sanctions affecting finance and technology; and on the other, lower oil prices are hitting the budget.Production is running at a high rate, but given the size of its contribution to the global supply situation, any threat to its existence needs to be taken seriously.Last year's sanctions against Russia, first over its involvement in Crimea's secession from Ukraine and then in the military conflict in southeastern Ukraine, were put in place by the US and then by sanctions from Canada, the EU, Iceland, Norway, Switzerland, Australia, New Zealand, and Japan.The sanctions banned companies from supplying technology and services that could be used to explore for, or produce, oil and gas from the Arctic, deep sea, shale and other challenging areas. They also limited certain Russian companies' access to western financial markets. The EU managed to keep Gazprom off the list of companies that were hit owing to their with links to the president, Vladimir Putin, but Novatek was on the list, affecting its financing for the Yamal LNG project; as was Rosneft. Other companies affected were LUKoil, Surgutneftegas, Novatek, Gazprom and Transneft.LUKoil had to trim its investment ambitions as the company's net profit in the third quarter of 2014 was half of what it had been the year before "" although this problem is common to companies outside Russia too.And although LUKoil is on a sanctions list, that is only in relation to a specific and very narrow area of activity. For example, in early August this year it managed to secure up to $1bn of finance for its stake in the Shah Deniz expansion.The package includes loans from the Asia Development Bank and the European Bank for Reconstruction and Development, which are each providing direct financing of up to $250mn each.Rosneft has applied for rubles 1.5 trillion ($23.3bn) of financial help just "to sustain the liquidity." Novatek has also approached the government for financial help if its shareholders in Yamal LNG were unable to raise the funds on time "" China is however also a major shareholder "" and Putin has offered government support.Since the imposition of sanctions, the market value of Russia's most powerful oil and gas companies has steadily eroded. Based on trade in over-the-counter shares between September 12, when both Washington and Brussels announced sanctions against Russia's petroleum companies, and December 16 last year when the dollar-ruble rate hit its nadir, Gazprom was down 32.1% in dollar terms; LUKoil was down 17.6%; Gazprom Neft was down 26.6%, and Surgutneftegaz was down 16.6%. In rubles, the world's largest oil pipeline transport company, Transneft, was up 65.8%, but the currency lost 64.8% in that same time frame.During those three months, the ruble, whose exchange rate against the US dollar is highly dependent upon the world oil price, undermined by the lesser value of oil export sales, fell from 37.78 to the dollar to 69.67 on December 16, the lowest level for the currency since the Russian currency market opened in 2000.

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So the impact of the sanctions was partially offset for Russia by the weaker ruble, as they earned more rubles to spend at home.Still, the sanctions could not but impact Russia's oil production . The deputy head of LUKoil Leonid Fedun told UK daily Financial Times in late November 2014 that sanctions could limit oil output in Russia by 7%, from 2015. And as the sanctions apply to offshore and tight-oil developments, they could in the longer term keep about 2mn b/d underground.Too dependent on oilAs hydrocarbons exports account for over two thirds of Russia's total exports, the country's GDP is very dependent on the world oil price.The same may be said about the Russian state budget. Late last year, when Russia reviewed and adopted this year's budget, the economy ministry and parliament assumed an average oil price of $50/barrel compared with $98/b for 2014.

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Sanctions Don’t Reduce the Threat

Sanctions won’t cause Russia to change its behavior – it adapts and develops new businesses


Yet, the "giant rocks attack" has failed to press Russia to yield. President Vladimir Putin has made clear on various occasions that Russia will stick to its stand and never live with the sanctions. Admitting Western sanctions seriously damaged Russia's economy, Putin told his 10th annual year-end press conference Thursday that the current situation can be used to offer additional conditions for production businesses, which would be a start to diversify the economy. "External conditions would urge us to be more effective and shift to more innovative development ways," he noted.

No way to influence Russia except through sanctions

Ukraine General Newswire, April 1, 2015 Sanctions against Russia will be lifted when it behaves properly - Danish Ambassador, http://en.interfax.com.ua/news/general/258274.html DOA: 11-25-15

Sanctions against Russia will only be lifted when the leaders of the country behave properly, Danish Ambassador to Ukraine Merete Juhl has said. Sanctions are the only instrument to leverage Russia right now. That's why they will only be lifted when Russia behaves properly. That's the logic of imposing sanctions, Juhl said at a press conference in Kharkiv on Wednesday.She also said that Denmark supported sanctions against Russia despite the sanctions causing losses for Danish businesses.Denmark is an EU country that strongly supports sanctions against Russia. In Denmark, we understand that these sanctions won't have an impact at once, but with time they will work. Many Danish companies are losing money because exports to Russia stopped, but Danish businesses have consciously agreed to that. They lose income, because there's no trade with Russia, because they want to influence Russia in such a way and settle the conflict, Juhl said.

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Sanctions Don’t Reduce Russian Weapons Transfers

Sanctions have not reduced Russia’s supply of arms to the rebels

Alwz Kokharov, Jane's Intelligence Weekly, July 8, 2015 Continued ceasefire violations in eastern Ukraine increase likelihood of further Western sanctions against Russia, http://www.janes.com/article/52881/continued-ceasefire-violations-in-eastern-ukraine-increase-likelihood-of-further-western-sanctions-against-russia DOA: 11-27-15

On 8 July 2015 the Organisation for Security and Co-operation in Europe (OSCE) Parliamentary Assembly supported a draft resolution condemning Russia's "clear, gross and uncorrected violations" in Ukraine, effectively acknowledging Russia's military involvement in the conflict. The resolution, jointly introduced by Canada and Ukraine, received 97 "yes" votes and 7 "against", while 32 delegates abstained. The non-binding resolution is an indicator of renewed attempts to apply political pressure on Moscow to withdraw its support to the pro-Russian separatists in Ukraine's Donetsk and Luhansk regions. While the Minsk II ceasefire agreement stabilised the line of contact between Ukrainian and separatist forces at the end of February 2015, shelling and localised fighting continues on a daily basis. The number of ceasefire violations, mostly by the separatist militants, ranges from 80 per day at the end of June to 20 per day in early July, according to the OSCE monitoring mission. After 14 months of fighting, there is no evidence that separatist stocks of weapons and ammunition supplied by Russia have substantially diminished.

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http://www.janes.com/article/52881/continued-ceasefire-violations-in-eastern-ukraine-increase-likelihood-of-further-western-sanctions-against-russia


Sanctions Don’t Reduce Ukraine Aggression

Sanctions have not limited Russian aggression in the Ukraine

Elise Labot, June 12, 2015, U.S., Europe ready new sanctions to deter Putin on Ukraine, CNN, Europe ready new sanctions to deter Putin on Ukraine, DOA: 11-27-15

The sources said that while they prefer not to impose the new sanctions, they hope the knowledge that they are being prepared will deter Putin from taking further action.READ: U.S. ambassador to U.N. visits Ukraine, slams Russian 'aggression'"It is both preparation and also a degree of credible messaging," the European diplomat briefing reporters said. "One is to make very clear that if there are further acts of aggression that we can move quickly. The other is to let it be known we are serious about being ready to do that as a deterrent."The diplomat stressed, "We would rather not to have to do that, but it needs to be clear that if that is the direction Putin's Russia goes in, that we will react."U.S. officials and European diplomats insist the sanctions are taking a toll on the Russian economy, where the ruble has plummeted in value.But they admit the sanctions have done little to prevent Putin from continuing the campaign in Ukraine or curb aggression by separatists in Eastern Ukraine.In total, more than 6,000 people have died in the fighting in Eastern Ukraine since the conflict began last year, according to the United Nations.

Sanctions will not change Russia’s position on the Ukraine

Russia & CIS Diplomatic Panorama, March 4, 2015 Sanctions won't change Russia's principled position on Ukraine, http://sputniknews.com/world/20141019/194288907/Lavrov-Western-Sanctions-Goal-is-to-Change-Russia-Not-to-Settle.html DOA: 11-27-15

It is about time for Washington to understand that no sanctions can affect Russia's position on Ukraine, the Russian Foreign Ministry said in a statement. "No sanctions can change Russia's principled position. It is about time for Washington to understand this," Russian Foreign Ministry spokesman Alexander Lukashevich said in a commentary on the U.S. decision to extend its sanctions against Russia, which is available on the ministry website.

Since Crimea is an historical part of Russia, sanctions won’t force Russia to give it up

States News Service December 20, 2014, Russia has dismissed US sanctions as useless, http://www.huffingtonpost.com/2014/12/20/russia-us-sanctions_n_6359524.html DOA: 11-27-15

The following information was released by Radio Free Europe / Radio Liberty:Russia has dismissed new U.S. sanctions as useless and underscored its historic right to the Crimean Peninsula. The Russian Foreign Ministry said on December 20 that the new sanctions won't push Russia to give up Crimea since it is a "historic and integral part of Russia."The ministry referred to Cuba, where it took the United States half a century to restore diplomatic relations, and said it was prepared to wait as long as necessary for Washington to relent.U.S. President Barack Obama on December 19 called on Russia to end its annexation of Crimea and announced new measures prohibiting U.S. companies and individuals from exporting or importing any goods, services, or technology to or from Crimea.

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Obama also authorized the Treasury Department to impose sanctions on individuals and companies operating in the region.The Treasury Department announced 17 names and seven entities blacklisted under the order.The move comes one day after the European Union banned investment in Crimea.Crimea has been under de facto Russian control since March, after Russian-backed forces took the peninsula from Ukraine.

Sanctions fail for Russia Mufson 14(Steven, Washpost contributor, April 29, 2014, “Why the sanctions against Russia probably won’t work” http://www.washingtonpost.com/blogs/wonkblog/wp/2014/04/29/why-the-sanctions-against-russia-probably-wont-work/)

Correction: An earlier version of this story contained incorrect figures for Russia's daily oil exports and the annual revenue they generated. This version has been corrected. Do economic sanctions work? In Russia, maybe not. Russia is sitting on roughly half a trillion dollars in foreign exchange, and it exports about 7.5 million barrels a day of crude oil bringing in about $300 billion a year — not including its sales of natural gas. It has will as well as means. Russian President Vladi mir Putin seems content to suffer some economic damage for the sake of correcting what he sees as a historical wrong and bringing Crimea and perhaps more of Ukraine back into the Russian fold. “The whole idea that we are going to defeat Russians by imposing hardship on them boggles my mind,” said Clifford Gaddy, a Russia expert at the Brookings Institution, noting that the Russian economy contracted 40 percent after the fall of the Soviet Union. “It’s not a matter of how much pain you can impose, but how much they can tolerate. And how much they can tolerate depends on the motivation for behavior,” he said, adding that Russia’s dispute with the United States and Europe was a “matter of national interest and survival” and not just greed. This is bad news for foreign companies operating in Russia for whom the gradual tightening of sanctions on Monday by the United States and Europe is worrisome. So far the Obama administration has tried to zero in on top officials and advisers to Putin. And trade with Russia outside the energy sector is relatively small; U.S. trade with Russia accounts for less than 1 percent of U.S. overall trade. Still, some international companies have big stakes there. The biggest U.S. investor in Russia is Exxon Mobil, which has an oil and gas production facility off Sakhalin Island in northeastern Russia and which has joined with Russian oil giant Rosneft to explore the country’s Arctic region. It also has an operation extracting natural gas from complex geological formations. Russia accounts for about 6 percent of Exxon Mobil’s global production, according to oil analyst Pavel Molchanov at the investment firm Raymond James. London-based oil giant BP is even more exposed to Russia. It owns a 19.75 percent stake in Rosneft, whose chief executive Igor Sechin was just added to the U.S. sanctions list. The stake is valued at about $13 billion, about 9 percent of BP’s total market capitalization. The Rosneft holding also accounts for about 30 percent of BP’s production, 36 percent of its reserves and contributes about 15 percent to the firm’s net income, Molchanov says. Royal Dutch Shell has a stake in a Gazprom oil and gas field in Siberia and is a partner in Sakhalin 2, which has a liquefied natural gas terminal that in 2012 supplied a tenth of Japan’s gas needs. The company’s chief executive, Ben van Beurden, in Russia for the 20th anniversary of the project, met Putin on April 18 to discuss expanding the facility. “We also know that this is going to be a project that will need strong support to succeed,” he said, according to Russian media. “So one of my purposes of meeting with you, Mr. President, is to also secure support for the way forward on this project.” Weatherford, a U.S. oil services company, is also deeply involved in Russia. As of March 2014, Weatherford had 346 rigs, 74 percent of its international rig count, operating in Russia, Molchanov said. Outside the energy sector, international companies with investments in Russia range from those selling luxury consumer goods to those investing in other natural resources. Putin, like other countries’ leaders, has insisted that automakers have certain levels of domestic content if they are selling in Russia. Ford and General Motors both have plants in Russia. But so far, the United States and European Union have targeted Russian individuals and companies. The intention is to make clear to Russians that the target is Putin and his close allies, not the Russian people overall. Gaddy doubts that will work either. “We are targeting the very best of Russia, the part that’s most modern, most eager to integrate into the global economy, most progressive,” he said. “Sanctions will tend to hurt them.” Russia joins a long list of countries that have been subjected to international sanctions, and the track record is mixed, at best. Even where effective, they work slowly. The U.S. embargo of Cuba has lasted more than half a century, and the Castros still rule there. The embargo of North Korea has inflicted suffering and starvation on the populace, but the Kim family remains in power. Both countries received oil and economic support from Russia and China respectively. The U.S. Congress imposed sanctions on South Africa over President Ronald Reagan’s veto in October 1986, prompting many U.S. companies, such as General Motors and Mobil Oil, to withdraw. The sanctions contributed to ending apartheid, but domestic foes of apartheid had already shaken the country for two years with demonstrations, consumer boycotts and strikes, sparking a flight of capital, no-shows for military service and a reassessment by influential members of the ruling National Party. The United States and European nations are currently negotiating with Iran, which is widely seen to have been brought to the bargaining table by tight sanctions on oil exports and transactions by Iran’s central bank. But the United States imposed sanctions on Iran after the 1979 hostage-taking, and other countries added sanctions after Iran resumed its uranium-enrichment program in 2005. Sanctions were tightened again in 2012, leading to a sharp drop in Iranian oil exports that provide the bulk of government revenue. But Molchanov argues that Russia is different.

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“Even if Russia were to cross the border into eastern Ukraine , it would be hard to imagine a full embargo on Russian exports because the world needs the oil,” he said. Iran at its peak was exporting about 2.5 million barrels a day, and the embargo eventually cut that to about 1 to 1.5 million barrels a day. “The world can lose a million barrels a day from Iran, and it’s not especially painful,” Molchanov added. “But if it lost 9 million barrels a day from Russia, there is no supply elsewhere that could fully compensate for that loss immediately. If Russian exports went to zero tomorrow, there would be a global oil crisis.” One argument in favor of imposing economic sanctions on Russia is the theory that Putin has made a bargain with the Russian people (similar to the implicit bargain made by China’s Communist Party): The Russian people give him power, and he will give them better living standards. But Russian living standards weren’t that great before the Ukraine crisis. Moreover, many Russia experts think that is the wrong way to look at Russia. Gaddy says that Russians want a better standard of living, but not if it means they aren’t treated as a great power. He said that given a choice of being Sweden or Russia, most Russians would sacrifice Sweden’s comforts and choose Russia for its great-power status. Mark Medish, a National Security Council adviser on Russia and Ukraine under President Bill Clinton, believes Putin’s behavior has been reckless, but he also doubts the effectiveness of economic sanctions. “Sanctions may cause economic inconvenience and reputational pain for the targets, and imposing sanctions may also make us feel correct, that we have done the right thing,” he said. But he warned that “the stated objective of sanctions is to get Russia to change its behavior, and this is unlikely to work. Sanctions are more likely to galvanize the will of the other side.” He added that “great powers, especially nuclear superpowers, do not allow themselves to be extorted.”

Sanction fail and drive Russia to China Aris 14(Ben, Business News Europe, May 6, 2014, “Why western sanctions will fail” http://russialist.org/why-western-sanctions-will-fail/)

With the violence in eastern Ukraine escalating by the day, the West’s policy of imposing sanctions on Russia is bound to fail. All this policy has done is to paint both the Kremlin and Washington into their respective corners, making the chances of military confrontation look increasingly likely. As the German foreign minister, Frank-Walter Steinmeier, warned in interviews published in four European newspapers on May 6, “The bloody pictures from Odessa have shown us that we are just a few steps away from a military confrontation.” Thus the time for both Washington and Moscow to cut their losses and agree to meet to thrash out a compromise is now. Each day that passes will see the body count rise and drive the proxies that are actually doing the fighting at the behest of the two Great Game players become more and more invested in the violent cycle of anger and revenge, so that if the overlords try to pull the plug they might find it is too late. Indeed, this point may already have passed with the death of over 40 pro-Russian activists in Odessa. German Chancellor Angela Merkel and US President Barack Obama warned Russia the West would scale up to phase III sanctions, those that target sectors like banking and energy, if Russia interferes in any way with the upcoming Ukrainian presidential poll, slated for May 25. But with the situation in eastern Ukraine clearly spinning out of control, it will be impossible to hold what the international community considers to be a “free and fair election”. Having drawn a line in the sand, the West will be forced to take the nuclear option of doing real economic damage to the Russian economy and so force the Russians to retaliate in kind. We will be lucky if both sides hold themselves to just attacking on the economic front and not the military one as well. The irony is the Germans have tied themselves to a policy that they clearly don’t want, or can ill afford. Of all the European countries, Germany’s economy is the most closely bound to Russia. Germany depends heavily on Russian oil and gas, which accounts for the bulk of the €40bn it imported from the country in 2012. In the other direction, German exports to Russia totalled €38bn in 2012, which was 31% of all European exports to Russia. Therefore, doing real and significant damage to the Russian economy will do similar damage to Germany’s nascent economic recovery. The idea that sanctions, especially the pathetically weak ones that have been imposed so far, will have any impact on the Kremlin’s “calculus” is to totally misjudge the situation. “The whole idea that we are going to defeat the Russians by imposing hardship on them boggles my mind,” says Clifford Gaddy, a Russia expert at the Brookings Institution and the author of the “virtual economy” meme that dominated the 1990s discussion of Russia’s problems. “It’s not a matter of how much pain you can impose, but how much they can tolerate. And how much can they tolerate depends on the motivation for their behaviour. For Russia it is a question of national interest and survival. It is not just about greed.” Gaddy’s voice is one of a growing chorus questioning the wisdom of the sanctions policy. Europe is clearly split on the issue, but the US holds the trump card: if Washington imposes financial sanctions on a major Russian firm, due to the integration of the global financial system these sanctions will effectively lock the Russian company out of the international capital and banking markets. “What is less clear, however, is what these sanctions will actually achieve,” says Dmitri Trenin, the highly respected director of the Carnegie Moscow Center. “Making Putin back down and concede defeat in Ukraine is improbable. Driving wedges between the Russian leader and his

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close associates is equally hopeless. The Russian liberal opposition, already marginalized, will hardly get a shot in the arm thanks to the sanctions. As to the bulk of the Russian people, their instinctive reaction to massive outside pressure against their country is more likely to be a patriotic surge rather than a regime change. The Russian government will now have an excellent reason to explain away the coming economic hardships: US sanctions.” Backfire In reality, the sanctions have so far had precisely the opposite effect to what was intended. Designed to undermine Putin’s support, they have actually lifted the president’s approval rating to an all-time high of 82% – exactly at the time when his popularity was becoming vulnerable due to the woeful state of Russia’s economy – while the popularity of Obama is now at a record low of 42%. Likewise, his inner circle, which has been hardest hit by the current “sanctions-lite”, has closed ranks and mocked their effectiveness. The boost in Putin’s popularity has also handed him shiny new armour against the slings and arrows of Russia’s young opposition movement, at one of the very few junctures where it actually had a chance of finding a flaw in the president’s defences. Domestically, the Ukrainian crisis has killed the nascent opposition dead for the time being. At the same time, other polls show that public approval of the government actions is rising and Russians now regard the country as being on “the right path.” Finally, Putin is clearly digging in his heels and the transparent divisions in European support for the US line on tougher sanctions is child’s play to exploit. Not only was Putin not prepared to back down in the face of western threats, now he is reaping huge domestic political capital from his tough-talking defiance – exactly the capital he needs to weather the disapproval that was bound to follow the first fall in the standard of living in Russia since he took over 2000. The West will truly have to destroy the Russian economy before they can persuade the people that Putin is the wrong man for the job. And that nuclear blitz option would do just as much damage to the European recovery. Indeed the only country that is truly committed to imposing tougher sanctions on Russia is the US, which has virtually no economic interests in the country; those American companies there are in Russia are for the most part multinationals, which are notorious for their lack of interest in politics. “There is palpable resistance on the part of various Western business interests – from German manufacturers to US big oil – against ratcheting up sanctions. The Obama administration’s effort to talk Russia down is countered by the Kremlin’s outreach to the CEOs of the companies that are doing well in Russia,” Trenin concludes. Perhaps the biggest irony of the sanctions policy is that it is driving Moscow into Beijing’s arms. China has been one of the very few emerging market powers to openly condemn the sanctions policy. Beijing’s ambassador to Moscow told reporters on May 2 that China “strongly opposes unilateral sanctions against Russia.” “We are against imposing unilateral sanctions on Russia. They are not a way out,” Chinese Ambassador Li Hui said the day after Washington released a new sanctions list singling out Putin’s friends and other officials on April 28. If Washington’s policy is one of containment, then facilitating a closer alliance between Moscow and Beijing is clearly counter productive. If Russia is cut off from the west, the only place Moscow can go is into the open arms of the and commodity-hungry east. China is already siding with Russia and said on May 5 that it would help finance and build a bridge over Kerch Strait to permanently link the recently annexed Crimean peninsula to Russia. Boris Titov, Russia’s business ombudsman and head of the Sino-Russia business council for the last decade, has said exports of liquefied natural gas (LNG), ecologically clean food, timber and wine to China will more than compensate for any losses Russia incurs if relations with the EU worsen.

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Economic Downturn Won’t Produce a Behavior Change

Economic downturn won’t force Russia to change its behavior

Economist Newswire, December 19, 2014 EU politics: New Crimea sanctions leave EU-Russia position unchanged, http://www.gfs.eiu.com/Article.aspx?articleType=rf&articleId=1102685494&secId=7 DOA: 11-29-15

The divergence between the two positions partly reflects different 'stick or carrot' assumptions about the most effective way of encouraging Russian compliance with Western demands and its commitments under the Minsk agreement. Although a full-blown financial crisis in Russia might alter the call, we do not currently expect Russia to shift fundamentally its position on eastern Ukraine, despite its worsening economic outlook: rather than abandoning the region's pro-Russian rebels and implementing the Minsk agreement, we continue to expect Russia to try to win relief from EU sanctions in July 2015 by maintaining the conflict in eastern Ukraine at a low intensity, relying-correctly, in our view-on the EU's divisions, and the scope for ambiguity in the bloc's conditions for sanctions relief.

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Russian Economic Downturn Triggers AggressionEconomic decline is the largest internal link to Russian aggression. Peters 8 (Ralph, Retired United States Army Lieutenant Colonel and Degree in International Relations from St. Mary’s University, Bankrupt Rogues: Beware Failing Foes, NY Post, November 29th, http://www.nypost.com/p/news/opinion/opedcolumnists/item_Sq6rxuaQjf2dV655mfdh9M)

FEELING gleeful at the misfortunes of others is an ugly-but-common human characteristic. The world delighted in our crashing economy, then we got our own back as Euro-bankers and Russian billionaires proved at least as greedy as our own money-thugs. Of all the pleasures to be found in the pain of others, though, none seems more justified than smugness over the panic in Moscow, Caracas and Tehran as oil prices plummet. We may need to be careful what we wish for. Successful states may generate trouble, but failures produce catastrophes : Nazi Germany erupted from the bankrupt Weimar Republic; Soviet Communism 's economic disasters swelled the Gulag; a feckless state with unpaid armies enabled Mao's rise. Economic competition killed a million Tutsis in Rwanda. The deadliest conflict of our time, the multi-sided civil war in Congo, exploded into the power vacuum left by a bankrupt government. A resource-starved Japan attacked Pearl Harbor. The crucial point: The more a state has to lose, the less likely it is to risk losing it. "Dizzy with success," Russia's Vladimir Putin may have dismembered Georgia, but Russian tanks stopped short of Tbilisi as he calculated exactly how much he could get away with. But now, while our retirement plans have suffered a setback, Russia's stock market has crashed to a fifth of its value last May. Foreign investment has begun to shun Russia as though the ship of state has plague aboard. The murk of Russia's economy is ultimately impenetrable, but analysts take Moscow's word that it entered this crisis with over $500 billion in foreign-exchange reserves. At least $200 billion of that is now gone, while Russian markets still hemorrhage. And the price of oil - Russia's lifeblood - has fallen by nearly two-thirds. If oil climbs to $70 a barrel, the Russian economy may eke by. But the Kremlin can kiss off its military-modernization plans. Urgent infrastructure upgrades won't happen, either. And the population trapped outside the few garish city centers will continue to live lives that are nasty, brutish and short - on a good day. Should oil prices and shares keep tumbling , Russia will slip into polni bardak mode - politely translated as "resembling a dockside brothel on the skids." And that assumes that other aspects of the economy hold up - a fragile hope, given Russia's overleveraged concentration of wealth, fudged numbers and state lawlessness. Should we rejoice if the ruble continues to drop? Perhaps. But what incentive would Czar Vladimir have to halt his tanks short of Kiev, if his economy were a basket case shunned by the rest of the world? Leaders with failures in their laps like the distraction wars provide. (If religion is the opium of the people, nationalism is their methamphetamine.) The least we might expect would be an increased willingness on Moscow's part to sell advanced weapons to fellow rogue regimes. Of course, those rogues would need money to pay for the weapons (or for nuclear secrets sold by grasping officials). A positive side of the global downturn is that mischief-makers such as Iran and Venezuela are going to have a great deal less money with which to annoy civilization.

Economic weakness will cause Russia to engage in local diversionary warsSmith ’11 – Director of the Potomac Institute Cyber Center(David J., former Ambassador and Senior Fellow at the Potomac Institute, “Vladimir Vladimirovich Putin:¶ The Once and Future Czar”, Georgian Security Analysis Center, Potomac Institute for Policy Studies, 10/3/2011, http://www.potomacinstitute.org/attachments/1073_Tabula_10_03_11_Putin.pdf)

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How Putin—with his man, Medvedev—manages the Russian economy will be a major determinant in the ¶ success or failure of his second presidency .¶ The other—and not unrelated—challenge is growing unrest in the North Caucasus. If the Second Chechen ¶ War of 1999-2000 consolidated Putin‟s power in Russia, what effect will a third, broader North Caucasus ¶ war have? And recall that any analysis of this question must take into account the looming 2014 Winter ¶ Olympics in nearby Sochi.¶ The danger for Russia‟s neighbors is that if the Russian economy sours, Putin could follow the time-honored ¶ Russian tradition of lash ing out at imagined enemies such as Georgia or the Baltic countries. And a conflict ¶ in the North Caucasus could easily spill—accidentally or purposefully—into Georgia.¶ Nor should the west discount the possibility of diversionary Russian obstreperousness in the Middle East or¶ polemics with NATO. Moscow is skillfully setting the stage for either.¶ Regrettably, aggression will likely be Putin‟s default instinct

Russian econ decline outweighs – Econ decline causes political upheaval which causes loose nukes and preemption

And- It’s most likely scenario for nuclear war and causes US draw inSteven David, Professor of Political Science, Johns Hopkins University, “Saving America From the Coming Civil Wars,” FOREIGN AFFAIRS, v 78 n 1, Jan/Feb 1999, LN.Only three countries, in fact, meet both criteria: Mexico, Saudi Arabia, and Russia. Civil conflict in Mexico

would produce waves of disorder that would spill into the United States , endangering the lives of hundreds of thousands of Americans, destroying a valuable export market, and sending a torrent of refugees northward. A rebellion in Saudi Arabia could destroy its ability to export oil, the oil on which the industrialized world depends. And

internal war in Russia could devastate Europe and trigger the use of nuclear weapons. Of course, civil war in a cluster of other states could seriously harm American interests. These countries include Indonesia, Venezuela, the Philippines, Egypt, Turkey, Israel, and

China. In none , however, are the stakes as high or the threat of war as imminent . Russian instability leads to nuclear conflictSchorr, NPR Senior News Analyst, 4[Daniel, an American journalist who covered world news for more than 60 years. He was most recently a Senior News Analyst for National Public Radio (NPR). Schorr won three Emmy Awards for his television journalism, September 10, The Christian Science Monitor, “Loose nukes, Russian instability,” http://www.csmonitor.com/2004/0910/p09s03-cods.html, accessed July 12, 2014, EK]

WASHINGTON — One thing that hasn't changed much in Russia since Soviet days is the tendency of high officials to cover up when disaster strikes.So it was with Soviet President Mikhail Gorbachev and the Chernobyl nuclear accident in 1986. So it was with President Vladimir Putin and the loss of the submarine Kursk in 2000. So it was in the first days after the schoolhouse massacre in southern Russia.While Russian television was told to go easy on the grim footage from Beslan, officials were understating the death toll and overstating the effectiveness of the special forces deployed to end the confrontation.When President Putin finally came out of his shell on Saturday to deal with rapidly growing popular anger, he went on television to say, "This crime of the terrorists, inhuman, unprecedented in terms of its cruelty" represents the "direct intervention of international terrorism against Russia."He did not acknowledge that the hostage-takers had demanded an end to the war in

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Chechnya. It was clearly in Putin's interest to represent the assault as connected with international terrorism rather than a homegrown liberation movement.With his regime as close to destabilization as it has been in his five years in office, Putin was reaching out to the West, and especially the United States, for support in his crisis. In his television speech, Putin alluded to fears abroad of a Russian nuclear threat that "must be removed."The US has reason to worry about an unstable Russia . According to Harvard professor Graham Allison in a new book, "Nuclear Terrorism: The Ultimate Preventable Catastrophe," 90 percent of all fissile material outside the US is stored in the former Soviet Union. And, because of its huge supplies, its shaky safeguards, and its extensive corruption, Russia poses the greatest threat of loose nukes.The Nunn-Lugar program designed to help finance the removal of Russian nuclear weapons has not been faring well under the Bush administration. But Bush officials might want to have another look at the danger of Russia's loose nukes in an unstable country.

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Sanctions Don’t Rally Opposition to the Government

Sanctions enable the Russians to blame the West for their economic problems

Associated Press International, April 1, 2015 American farmer among the winners in sanctions-hit Russia, http://news.yahoo.com/american-farmer-among-winners-sanctions-hit-russia-063447186--finance.html DOA: 11-27-15

Sanctions are routinely cited in state media as the cause of most current economic problems. These include woes more properly blamed on over-dependence on oil revenue, Gontmakher said.The government has managed "to shift the responsibility for it onto the West, and not our own systems and institutions," he said. "In that sense, the initiators of the sanctions have really lost out."Despite a year of sanctions, President Vladimir Putin's approval rating has hovered well over 80 percent in recent months."Sanctions without popular dissent will hardly work" in weakening the government, said Shevtsova.

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More Pressure Won’t Change Russia’s Behavior

Russia has already absorbed the impact of the sanctions

Russia & CIS General Newswire November 10, 2015 Russia not planning to retaliate if EU sanctions extended

Economic Development Minister Alexei Ulyukayev does not see any sense in taking any additional retaliatory action in the event EU sanctions against Russia are extended. "Why do we need retaliatory measures? This is the status quo. The longer the sanctions regime is in place, the less effect it will have. As a matter of fact, the adaptation to it in the economy is a done deal. Therefore, there will be no retaliatory measures," Ulyukayev told journalists in Beijing on Tuesday, when asked how Russia would respond to an extension of sanctions.On Monday, the German newspaper Handelsblatt reported that the leaders of the EU countries planned to extend sanctions against Russia for another six months at their summit in December.The sanctions will only be eased in the event the Minsk Agreements are upheld and after international observers have been deployed along the Russian-Ukrainian border, Handelsblatt reported, citing unnamed German government and EU officials.

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Energy Sanctions Useless

Russia would have reduced energy production anyhow due to falling oil prices

Shawn Neylan, Mondaq Business Briefing, January 8, 2015 Canada: Canada Expands Russia Sanctions, https://www.rt.com/business/270661-russia-canada-economic-sanctions/? DOA: 10-25-15

The intent behind the Expanded Russia Sanctions is apparently to apply more pressure to Russia in relation to its activities in the Ukraine by limiting its ability to explore for future resources and to maintain production. The effect on overall Russian production is not likely to be immediate. Further, in light of the current collapse of global oil prices, it could well be that Russian oil companies would have been reducing exploration activities in any event, much as oil producers around the world are already doing.

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Sanctions Only Hurt the Poor

Sanctions hurt the poor, not wealthy Russian individuals


Sanctions aimed at individuals failed to change Kremlin behavior and the broader economic punishment introduced later is mostly hurting ordinary people this year, according to Evgeny Gontmakher, an economics professor and former deputy minister of social affairs.Government estimates say inflation could hit 12 percent this year, hurting workers whose jobs are already under pressure."If the sanctions continue, they mostly hit the ordinary population, not the elite," he said. "Inflation is a tax on the poor, most of all."He said the oligarchs have not yet become restive."Among the business elite, there's a certain discontent, because the channels for economic cooperation with the West are blocked now, that's clear. But there's absolutely no sign yet of any open discontent or pressure on the president."

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Sanctions Undermine Russia-US Relations

Sanctions undermine relations with Russia

Agence France Presse, December 19, New US sanctions law could undermine relations with Russia: Lavrov, http://www.hurriyetdailynews.com/new-us-sanctions-law-could-undermine-relations-with-russia-lavrov.aspx?pageID=238&nID=75818&NewsCatID=359 DOA: 11-27-15

New US legislation authorising sanctions on Russia over the Ukraine crisis could undermine relations between Moscow and Washington for a long time, Russian Foreign Minister Sergei Lavrov was quoted as saying on Friday. In a phone call with US Secretary of State John Kerry, Lavrov said that the new legislation "threatening new sanctions against Russia could undermine the possibility of normal cooperation between our countries for a long time," said a foreign ministry statement.President Barack Obama on Thursday signed a law giving him the authority to impose new sanctions on Russia over Ukraine. He said he was not about to change the sanctions regime on Russia, which is experiencing a dire economic crisis, but that his administration would "continue to review and calibrate our sanctions to respond to Russia's actions."The United States is calling for Russia to pull out of Crimea, Ukraine's Black Sea peninsula that it annexed in March, and to stop aiding pro-Russian separatists in eastern Ukraine. Russia says it has the historic right to Crimea and that its troops are not in eastern Ukraine.President Vladimir Putin at his end-of-year news conference on Thursday made it clear he was not willing to compromise on Russia's position on Ukraine.

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http://www.hurriyetdailynews.com/new-us-sanctions-law-could-undermine-relations-with-russia-lavrov.aspx?pageID=238&nID=75818&NewsCatID=359


Undermining Russia-US Relations Increases the Threat from Russia

US-Russian relations key to prevent Iran proliferation, nuclear war, nuclear terrorismAllison, Former Secretary of Defense, and Blackwill, Council on Foreign Relations Senior Fellow, 11[Graham, director of the Belfer Center for Science and International Affairs at Harvard’s Kennedy School and a former assistant secretary of defense in the Clinton administration, Robert D., is Henry A. Kissinger senior fellow for U.S. foreign policy at the Council on Foreign Relations and served as U.S. ambassador to India and as deputy national security adviser for strategic planning in the Bush administration. They are co-chairmen of the Task Force on Russia and U.S. National Interests, co-sponsored by the Belfer Center and the Center for the National Interest, October 30, PoliticoPro, “10 reasons why Russia still matters,” http://www.politico.com/news/stories/1011/67178_Page2.html#ixzz36pGyCdhv, accessed July 7, 2014, EK]That central point is that Russia matters a great deal to a U.S. government seeking to defend and advance its national interests. Prime Minister Vladimir Putin’s decision to return next year as president makes it all the more critical for Washington to manage its relationship with Russia through coherent, realistic policies.No one denies that Russia is a dangerous, difficult, often disappointing state to do business with. We should not overlook its many human rights and legal failures. Nonetheless, Russia is a player whose choices affect our vital interests in nuclear security and energy. It is key to supplying 100,000 U.S. troops fighting in Afghanistan and preventing Iran from acquiring nuclear weapons.Ten realities require U.S. policymakers to advance our nation’s interests by engaging and working with Moscow.First, Russia remains the only nation that can erase the United States from the map in 30 minutes. As every president since John F. Kennedy has recognized, Russia’s cooperation is critical to averting nuclear war.Second, Russia is our most consequential partner in preventing nuclear terrorism. Through a combination of more than $11 billion in U.S. aid, provided through the Nunn-Lugar Cooperative Threat Reduction program, and impressive Russian professionalism, two decades after the collapse of the “evil empire,” not one nuclear weapon has been found loose.Third, Russia plays an essential role in preventing the proliferation of nuclear weapons and missile-delivery systems. As Washington seeks to stop Iran’s drive toward nuclear weapons, Russian choices to sell or withhold sensitive technologies are the difference between failure and the possibility of success.Fourth, Russian support in sharing intelligence and cooperating in operations remains essential to the U.S. war to destroy Al Qaeda and combat other transnational terrorist groups. Fifth, Russia provides a vital supply line to 100,000 U.S. troops fighting in Afghanistan. As U.S. relations with Pakistan have deteriorated, the Russian lifeline has grown ever more important and now accounts for half all daily deliveries.Lack of cooperation between US-Russia leads to an arms raceWittner, SUNY History Professor, 7/6/14

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[Lawrence S., A former president of the Council on Peace Research in History (now the Peace History Society), an affiliate of the American Historical Association, Professor Wittner also chaired the Peace History Commission of the International Peace Research Association.He has received major fellowships or grants from the American Council of Learned Societies, the Aspen Institute, the John D. and Catherine T. MacArthur Foundation, the National Endowment for the Humanities, and the United States Institute of Peace., George Mason History News Network, “Do We Really Want a New Generation of Nuclear-Armed Submarines?,” http://hnn.us/article/156221, accessed July 6, 2014, EK]

In arguing for the new Trident submarine fleet, U.S. military leaders have pointed to the fact that other nations are maintaining or building nuclear-armed submarines. And they are correct about that. France and Britain are maintaining their current fleets, although Britain is on the verge of beginning the construction of a new one with U.S. assistance; Israel reportedly possesses one; China is apparently ready to launch one in 2014; India is set to launch its own in 2015; and Pakistan might be working to develop one. Meanwhile, Russia is modernizing its own submarine ballistic missile fleet.Even so, the current U.S. nuclear-armed submarine fleet is considerably larger than any developed or being developed by other nations. Also, the U.S. government’s new Trident fleet, now on the drawing boards, is slated to be 50 percent larger than the new, modernized Russian fleet and, in addition, far superior technologically. Indeed, other nations currently turning out nuclear-armed submarines – like China and Russia -- are reportedly launching clunkers.In this context, there is an obvious alternative to the current race to deploy the world’s deadliest weapons in the ocean depths. The nuclear powers could halt their building of nuclear-armed submarines and eliminate their present nuclear-armed submarine fleets. This action would not only honor their professed commitment to a nuclear weapons-free world, but would save their nations from making enormous expenditures and from the possibility of experiencing a catastrophe of unparalleled magnitude.

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Sanctions Russia-China Axis

Sanctions fail to change leaders behavior and drive Russia into an alliance with China

States News Service, December 3, 2014, Barry Bosworth on the Effect of Sanctions on Russia’s Economic Slide, http://www.brookings.edu/blogs/brookings-now/posts/2014/12/bosworth-effect-sanctions-russia-economic-slide DOA: 11-27-15

The following information was released by the Brookings Institution:Russian officials are saying that falling energy prices will push their nation's economy into recession in 2015. Russian President Vladimir Putin, who earlier this week canceled a new natural gas pipeline to Europe, is expected to unveil his economic agenda later this week. These developments occur in the context of continued Western sanctions against some areas of the Russian economy. Brookings Senior Fellow Barry Bosworth, the Robert V. Roosa Chair in International Economics, gave the following comment to ABC about the effects of the sanctions on Russia, Europe, and the U.S.:The sanctions have no economic effect on the United States because we do not trade with Russia to any significant degree. Thus, they are a painless, feel-good action for the United States. They are, however, a bigger issue for Europe because of extensive trade relationshipsenergy, agriculture, and a wide range of consumer goods that Europe exports to Russia. Plus, a lot of [Russian] oligarchs have residences and money in Europe. It is more disruptive for Europe. Still, Germany has been very tough on Russia because of the invasion of Ukraine.The sanctions do have a big impact on Russia, largely through its financial system. The United States exercises a great deal of control over international finance, and has disrupted Russian bank finances. Plus, foreign direct investment from Europe is very important to Russia, both because of the money and the technical know how.The sanctions do have a negative effect, but the bigger short-run impact is from the collapse of oil prices. The energy price declines are more important than the sanctions for the immediate future, but the long-run costs of both to Russia are considerable.I think sanctions have a significant economic impact, but they seldom if ever lead political leaders to change course. In that sense, they do not work, and their economic impact is gradually eroded as countries find ways around them. For example, the sanctions are a big plus for China, which will be an energy market of greater interest to Russia going forward. That, bilateral relationship makes a lot of sense for everyone.

Sanctions strengthen Russia-Asia ties

RIA Novosti, April 15, 2015 , Anti-Russia Sanctions Unjust, Should Be Eliminated - US Investor Rogers, http://sputniknews.com/russia/20150415/1020923526.html DOA: 11-27-15

Anti-Russia sanctions over Moscow's alleged involvement in the Ukraine conflict should be removed because they are unfair, legendary US investor Jim Rogers told Sputnik. "The sanctions are unjust and an injustice," Rogers said in an interview. "Russia should not have been affected by sanctions at all because it was America that started that coup and then turned around and blamed it on Russia."He added that economic sanctions currently in place against Russia hurt common people more than the government.The veteran US investor stressed that US companies are not as affected as European firms, because the United States is not as economically tied to Russia as is Europe.The investor said that anti- Russia sanctions will lead to closer ties between Moscow and Asian countries.

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http://www.brookings.edu/blogs/brookings-now/posts/2014/12/bosworth-effect-sanctions-russia-economic-slide


"It is forcing Russia and Asia closer and closer together, which is going to hurt America and Europe in the long term. It is going to be good for Russia and for Asia," Rogers concluded.Jim Rogers is a prominent investor and international financial commentator. In the 1970s he founded the Quantum Fund with billionaire George Soros. Currently based in Singapore, he is the chairman of Rogers Holdings and Beeland Interests, Inc.

Sanctions drive Russia to cooperate with Brazil, India, China, and South Africa

RIA Novosti, July 10, 2015 BRICS Countries Not to Impose Sanctions Against Russia - Chinese Official, http://sputniknews.com/politics/20150710/1024444224.html DOA: 11-27-15

UFA, July 10 (Sputnik) - BRICS member states will not join unilateral Western sanctions imposed against Russia, the director general at the Department of International Economic Cooperation of China's Ministry of Foreign Affairs said Friday. "Unilateral sanctions imposed against Russia do not apply to other BRICS countries ," Zhang Jun told journalists in Ufa when asked whether anti-Russian sanctions would hamper business and trade ties between Russia and China.He said that all of the leaders in BRICS had reached a consensus in regard to sanctions against Russia."The opposition to the unilateral sanctions is the consensus reached by the leaders of the BRICS countries in the Ufa Declaration and it represents their political stance," Zhang said.The West has imposed several rounds of sanctions against Russia since 2014 over Moscow's alleged participation in the military conflict in eastern Ukraine. Moscow has denied the accusations, calling the language of sanctions counterproductive.Following the deterioration of relations with the West, Moscow enhanced cooperation with Arab, Latin American and Asian countries, including with its BRICS partners - Brazil, India, China and South Africa.

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Sanctions Destroy the Economy, Triggering Aggression

Sanctions undermine Russia’s global economic integration and wreck its economy, triggering aggression

Samuel Charap & Bernard Sucher, March 6, 2015, The New York Times, Why Sanctions on Russia Will Backfire, Samuel Charap is senior fellow for Russia and Eurasia at the International Institute for Strategic Studies.Bernard Sucher is a member of the board of UFG Asset Management. http://www.nytimes.com/2015/03/06/opinion/why- sanctions -on- russia -will-backfire.html DOA: 11-20-15

The American government tends to see sanctions against Russia as a low-cost policy that will eventually force Vladimir Putin to change course in Ukraine.But this conventional wisdom obscures significant costs. Just as using drones to target suspected terrorists in Pakistan may have created more converts to Islamic militancy than it has eliminated, sanctions advocates haven't reckoned with the unintended consequences of the policy -- consequences that could prove far more damaging to American interests than the Kremlin's aggression in Ukraine. First, by employing commercial and financial sanctions on Russia for its actions in Ukraine, the United States -- the architect and largest beneficiary of the globalized system of trade and finance -- is exploiting post-Soviet Russia's integration into that system. Years of mutually beneficial progress that brought 140 million Russians into the orbit of global economic governance are now in doubt. Even if sanctions succeed in changing the Kremlin's behavior and are then lifted, the American objective of integrating Russia into the global economy has been fundamentally undermined. Second, the use of sanctions broadcasts to others the strategic hazard of integrating into the American-led global financial system. Whatever the outcome of Russia's intervention in Ukraine and whatever Mr. Putin's ultimate fate, other non-allies of the United States have now learned the lesson that hard-won institutional integration can be turned against those states that achieve it. Third, while there is no question that sanctions have inflicted real costs on the leading state-owned and state-affiliated companies and harmed Mr. Putin's cronies, the collateral damage to independent, private enterprise in Russia is incomparably worse. Businesses without political protection will see atrophied sales, no access to finance and an indefinite postponement of investment. Those enterprises that put the greatest store on Russia's integration with the European Union and the United States are being hit hardest. (One of us is an American investor and entrepreneur who has long been active in Russia and is witnessing this first-hand.) The most daring Westernizers among Russia's small entrepreneurial class now find themselves without protection while state banks and energy companies continue to be shielded by their access to government credit obtained on favorable terms. Fourth, by imposing sanctions on Russia when it was already falling into a downward economic spiral, Washington has given Mr. Putin a powerful political instrument to deflect blame for the consequences of his own baleful decisions in Ukraine. The Kremlin's model of ''state capitalism'' was already struggling and its performance would have been poor without the geopolitical upheaval that Mr. Putin has created. American sanctions arrived with perfect timing, providing him an alibi that he has skillfully used to confuse the Russian people about the cause of their economic woes. Fifth, even if sanctions are carefully crafted to punish specific actors, ordinary Russians perceive the West's sanctions to be directed against them and it is they who are being forced to bear the real costs of soaring inflation, the ruble's collapse and slowing growth. Russians' sense that they are under attack has generated an understandable ''rallying around the flag'' phenomenon. Mr. Putin's all-time-high approval ratings are one result; the other is the near-complete marginalization of dissenting voices. Sadly, Sunday's march to memorialize the slain opposition leader, Boris Nemtsov, will not change this. If Russia faces greater economic turbulence in the coming months and years, America could face far more intractable problems than those that exist today. Russia is likely to become more belligerent if externally inflicted economic blows deepen the country's crisis. Moreover, a deeper downturn in Russia would worsen the economic woes of the European Union, with potential knock-on effects

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globally.

More sanctions undermine Russia’s economic integration

Samuel Charap & Bernard Sucher, March 6, 2015, The New York Times, Why Sanctions on Russia Will Backfire, Samuel Charap is senior fellow for Russia and Eurasia at the International Institute for Strategic Studies.Bernard Sucher is a member of the board of UFG Asset Management. http://www.nytimes.com/2015/03/06/opinion/why- sanctions -on- russia -will-backfire.html DOA: 11-20-15

The alternative would be open-ended sanctions that escalate conflict between Washington and Moscow while influencing Russia's economy and politics in ways that contradict American interests. Mr. Putin would gain greater control over the economy and rally the public around him, and Russia's evolution as a modern, globally integrated country would be halted. Recognizing these risks is not an endorsement of Russia's aggressive behavior. Just as opposing drone strikes doesn't imply support for terrorism, highlighting the strategic costs of sanctions is about crafting an effective policy, not appeasing Mr. Putin. It is worth recalling that after the dissolution of the Soviet Union, the United States faced a nightmare scenario of Russia in chaos. The government was bankrupt, and its ability to control its territory and large nuclear arsenal was threatened. At that time, Washington concluded that such a weak Russia would pose a grave threat to American national security. Why should that calculation be any different today?

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Sanctions Undermine Global Energy Security

Undermining the Russian oil industry undermines oil production and global energy security

Energy Monitor Worldwide, February 16, 2015, West bans on Iran, Russia endangering world energy: Rosneft, http://www.presstv.com/Detail/2015/02/16/397801/Bans-on-Iran-Russia-endanger-world-oil DOA: 11-27-15

The head of Rosneft, the world's biggest publicly traded oil company, says the sanctions the West has imposed on Russia jeopardizes Europe's energy security and the world oil supplies. In recent months, Western states have imposed bans on Moscow's financial and energy sectors along with a number of Russian nationals close to President Vladimir Putin."In the long term, sanctions against Russia endanger Europe's security of supply," Igor Sechin wrote in an article published by Financial Times on February 15.

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A2: Need Sanctions to Enforce the Minsk Agreement

Sanctions have not led to the implementation of the Minsk agreement

Handelsblatt Global Edition, November 10, 2015 Ukraine Crisis; Russia Can Handle Sanctions, Minister Says, https://global.handelsblatt.com/edition/303/ressort/politics/article/russia-can-handle-sanctions-minister-says DOA: 11-27-15

When it comes to the European Union's planned extension of economic sanctions against his country, Russian Trade Minister Denis Manturov is demonstratively relaxed, saying that while they amount to "moral discrimination," Russia will not retaliate with new countermeasures."This is a situation we're used to by now and we'll manage," Mr. Manturov, 46, told Handelsblatt in an interview on the sidelines of a German-Russian economic conference in Berlin on Monday. "If that's of any use to the E.U., then please go ahead, but actually European business should decide," he added.As previously reported by Handelsblatt, the European Commission and the German government plan to decide at an E.U. summit in December to extend the sanctions for a further six months.The sanctions were imposed on Moscow after it annexed Crimea from Ukraine in March 2014, and are due to expire on Jan. 31, 2016. They include limiting the access to E.U. capital markets for five top Russian banks, three major Russian energy firms and three defense companies.Mr. Manturov said the European Commission was "too far removed from the real economy" and even claimed that a decision to extend sanctions would be advantageous to Russia."E.U. nations have agreed that economic sanctions on Russia will stay in place until a ceasefire deal in Ukraine is fully implemented."When challenged with the conclusion that the sanctions had cut Russia's economy off from the international financial markets and that real wages were falling significantly for the first time since President Vladimir Putin came to power in 2000, he conceded that the measures "of course don't make us happy."But he added that Russia won't expand its countermeasures. "We aren't suicidal," he said. "We don't want to ban buying modern technology abroad." He wants more foreign investment in Russia, as well as an increased technology transfer.Russia has responded to the sanctions by banning the import of food from the E.U. and U.S.Meanwhile, pressure is building from German business leaders to end the sanctions. At Monday's conference, Siegfried Russwurm, management board member of German industrial group Siemens, which has a big presence in Russia, said the company remained committed to its presence in Russia."We're standing by Russia," Mr. Russwurm said. "We will do everything to persuade politicians that some of the measures don't serve anyone." It would be "dishonest to say that the sanctions aren't a hindrance," he added.Former German Chancellor Gerhard Schrˆder, an executive for the pipeline consortium Nord Stream, a joint venture in which Russia's Gazprom holds a 51 percent stake, said: "We Europeans should deepen economic and political ties with Russia."The E.U.'s sanctions weren't in Europe's interest, said Mr. Schrˆder, a personal friend of Mr. Putin. He said the U.S. had expanded its trade with Russia while E.U. exports there had fallen by around 30 percent.Mr. Schrˆder was speaking at an event hosted by Austrian energy group OMV, which wants to expand its Russian operations and is taking part in the planned construction of the planned second Baltic pipeline, Nord Stream II, alongside companies including German energy giant Eon, gas group Wintershall and Shell.Volker Treier, deputy managing director of Germany's chamber of commerce and industry, said: "We want to reach out to our long-standing partner Russia," adding that he hoped the sanctions would end soon.But according to sources in Brussels and Berlin, that's unlikely to happen. E.U. nations have agreed that economic sanctions on Russia will stay in place until a ceasefire deal in Ukraine is fully implemented.

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The Minsk agreement signed in the Belarus capital in February between the leaders of Ukraine, Russia, France, and Germany set a deadline for Ukraine to regain full control over its eastern border by the end of 2015. But sources in the German government said there's no sign that steps are being taken toward full implementation of the agreement.And that means Mr. Manturov and German businesses eager to resume their work in Russia will have to be patient.

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A2: Russia Arctic Drilling Bad

Russia sees the Arctic as critical to protection of its sphere of influence.

Federation of American Scientists, 97[No author (approved by Decree #11 of the President of the Russian Federation), January 11, Federation of American Scientists, “THE WORLD OCEAN CONCEPT of the Purpose-Oriented Federal Program I. General,” http://fas.org/nuke/guide/russia/doctrine/CDONEW22.htm, accessed July 7, 2014, EK]

The World Ocean is a very promising region for economic activity on one side, and the most important factor in geopolitics, as well as a region of inevitable rivalry and potential division into spheres of influence.Traditionally, Russia is considered to be one of the great maritime powers that play an important role in the exploration and use of the World Ocean. For the economic and social life of Russia, the World Ocean , and the seas surrounding the country in the first instance, is of paramount importance . There are objective considerations for that: the length of the sea border of Russia is 38800 km (the length of the land border is 14500 km); the shelf area is 4.2 million square kilometers, of which 3.9 million square kilometers are prospective for hydrocarbons (at least 80% of Russia's oil and gas reserves are in the shelf of its northern seas); the vital activity of Russia, especially of its coastal regions, depends on uninterrupted operation of the sea transport and the proper support of cargo and passenger traffic.Currently Russia is in a completely new situation in terms of the establishment of the bases for sea policy as well as the realisation and protection of its interests in the World Ocean. The crisis in the national economy has seriously deteriorated the opportunities for Russia to keep its presence in the World Ocean at its former level. Forced curtailment of activities in the World Ocean goes without any order, which aggravates the negative consequences of this process, and decreases the efficiency of the use of allocated resources. Restoration of Russia's position in the World Ocean is a task of national importance. Activities of state, economic, scientific and defense-oriented organizations in exploration and use of the World Ocean shall be performed as an essential part of the integrated national policy in the economy, finance, defense, ecology, science and technology, international relations and utilization of natural resources.

Loss of Russia’s sphere of influence means war

Yuferov, MGIMO University's School of Political Science Graduate, 2013 [Ivan, Nov 28, 2013, Russian Direct, “Is a real cold war possible in the Arctic?,” http://www.russia-direct.org/content/real-cold-war-possible-arctic, accessed 7-12-14, J.J.]

Military conflict can be provoked because of significant economic and

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strategic stakes in an area where boundaries of maritime jurisdiction remain

to be settled. Diplomatic gridlock may lead the region to erupt in an armed mad dash for its resources . There are a number of driving factors of this scenario: growing military activity, inflammatory rhetoric, and closer security coordination among the Western powers. Moreover, the Arctic countries are likely to grab territory unilaterally and exert sovereign control over sea lanes by arming icebreakers and military troops to guard their claims. This scenario of a real cold war is substantiated by some recent facts. The Russians recently ordered strategic bomber flights over the Arctic Ocean for the first time

since the Cold War . Moreover, Russian armed forces have regularly tested air and sea defenses of NATO in the region. Finally, the NATO alliance often organizes military exercises with warships and strategic bombers, supported by tankers, reconnaissance aircraft and escort fighters.US Encroachment on Russian Sphere of Influence collapses relationsMerry, American Foreign Policy Council, 9[E. Wayne, E. Wayne Merry is Senior Fellow for Europe and Eurasia at the American Foreign Policy Council in Washington, DC. He is widely published and a frequent speaker on topics relating to Russia, Central Asia and the Caucasus, the Balkans, European security and trans-Atlantic relations. In twenty-six years in the United States Foreign Service, he worked as a diplomat and political analyst specializing in Soviet and post-Soviet political issues, including six years at the American Embassy in Moscow, where he was in charge of political analysis on the breakup of the Soviet Union and the early years of post-Soviet Russia. He also served at the embassies in Tunis, East Berlin, and Athens and at the US Mission to the United Nations in New York. In Washington he served in the Treasury, State, and Defense Departments. In the Pentagon he was Regional Director for Russia, Ukraine and Eurasia during the mid-Nineties. He also served at the Headquarters of the US Marine Corps and on Capitol Hill with the staff of the US Commission for Security and Cooperation in Europe. He was later a program director at the Atlantic Council of the United States., May 22, New York Times, “A ‘Reset’ Is Not Enough,” http://www.nytimes.com/2009/05/23/opinion/23iht-edmerry.html?_r=0, accessed July 7, 2014, EK]

A reset seeks to restore a previous relationship, which for former officials of the Clinton administration now back in office means the Yeltsin years. This will fail because Moscow views that period as emblematic of Russian weakness and exploitation by the West, and especially by the United States.Relations with Moscow deteriorated under both Bill Clinton and George W. Bush. The U.S. neo-liberal project of the ’90s not only failed but deeply alienated Russians. The bilateral nadir was the Kosovo war, a worse episode than last year’s Georgia conflict. A new opportunity after 9/11 was frankly squandered.Washington regarded Russia as a loser and treated it as such. It forgot that Russia would not be weak forever, and would remember.Two structural problems limit the relationship and its improvement. First, it is very narrow, with few automatic stabilizers. Unlike Russian-European or U.S.-Chinese relations, the scant economic and human ties between the U.S. and Russia provide inadequate ballast when problems arise. Relations are highly vulnerable to outside events and defined more by disputes than

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cooperation. When malice is added to the mix, the result is dangerous.Second, for Moscow the relationship is largely zero sum , in that Russian diplomacy succeeds where America’s fails, as in Iran and Venezuela. This is the consequence both of the huge asymmetry in real power and influence of the two countries and an asymmetry of geography in that almost anything the United States does in Eurasia affects Russia’s interests, often adversely. Thus Moscow worries that a successful Obama presidency will come at their expense with other countries. Russian commentators especially fear this may be the case with Iran, seeing the potential for a shift comparable to Mao’s China or Sadat’s Egypt.The current Russian leadership bears a disproportionate share of the blame for our poisonous relations. But Washington needs to adopt new rules of engagement to not repeat mistakes of the previous 16 years:One, minimize deliberate challenges to Russian interests and know that none will come free . If we push NATO, they will push back. When we sponsored an independent Kosovo, Moscow declared it would do the same in Abkhazia and South Ossetia. Reciprocity is real.Infringement on Russia’s Sphere of Influence will result in nuclear warKeck, Diplomat Associate Editor, 14[Zachary, Zachary Keck is Managing Editor of The Diplomat where he authors The Pacific Realist blog. He also writes a monthly column for The National Interest. Previously, he worked as Deputy Editor of e-International Relations and has interned at the Center for a New American Security and in the U.S. Congress, where he worked on defense issues, July 11, The Diplomat, “Russia Threatens Nuclear Strikes Over Crimea,” http://thediplomat.com/2014/07/russia-threatens-nuclear-strikes-over-crimea/, accessed July 12, 2014, EK]

When asked about these comments at a press conference on Wednesday, Russian Foreign Minister Sergey Lavrov responded, “If it comes to aggression against Russian territory, which Crimea and Sevastopol are parts of, I would not advise anyone to do this.” He then added, “We have the doctrine of national security, and it very clearly regulates the actions, which will be taken in this case.”This is a not-so-subtle threat to use nuclear weapons to retain Crimea. Since the collapse of the Soviet Union, Russia’s conventional military capabilities have deteriorated significantly. As a result, it has come to be increasingly reliant on nuclear weapons to protect its national security. This has been reflected in its post-Cold War military doctrines, particularly the ones since 2000. These military doctrines have greatly reduced the threshold that would needed to be crossed before Russia would resort to the use of nuclear weapons.Most notably, Russia’s military doctrines starting in 2000 introduced the concept of de-escalation, which is “a strategy envisioning the threat of a limited nuclear strike that would force an opponent to accept a return to the status quo ante.” In other words, Russian military doctrines have said that Moscow will use limited nuclear strikes in response to conventional military attacks against it. The most recent military doctrine issued in 2010, for example, states:“The Russian Federation reserves the right to utilize nuclear weapons in response to the utilization of nuclear and other types of weapons of mass destruction against it and (or) its allies, and also in the event of aggression against the Russian Federation involving the use of conventional weapons when the very existence of the state is under

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threat.”It was this military doctrine that Lavrov was referring to at the press conference this week. As quoted above, Lavrov began by emphasizing that Moscow sees Crimea as an integral part of Russian territory. He then stated that Moscow has a military doctrine that “very clearly” outlines how Moscow would respond to threats to its territorial integrity. The military doctrine “very clearly” states that the “Russian Federation reserves the right to utilize nuclear weapons” in these situations.This is not the first time a Russian official has issued a nuclear threat against its neighboring states. For example, as tensions rose between Russian and several former Soviet Union and Warsaw states in 2011, General Staff Chief Gen. Nikolai Makarov warned a Russian legislative body that:“The possibility of local armed conflicts virtually along the entire perimeter of the border has grown dramatically. I cannot rule out that, in certain circumstances, l ocal and regional armed conflicts could grow into a large-scale

war, possibly even with nuclear weapons.”

- US-Russia only see the Artic as grounds to cooperate on climate change.McCormack, Florida International University International Relations Ph.D, 2013[Michael, November 16, “The Arctic can defrost icy U.S.-Russia relations.” Russia Direct. from http://www.russia-direct.org/content/arctic-can-defrost-icy-us-russia-relations, Retrieved July 14, 2014, WZ]At present, Alaska’s geographic location gives the United States a direct stake in the issue of climate change in the Arctic Ocean, an issue in which Russian territory is also directly affected. While public attention toward this issue has focused on the perceived rivalry between countries in seeking out the Arctic’s potentially vast natural resources—an implication that largely grew from a 2007 incident in which Russian researchers planted a Russian flag on the North Pole seabed—the Arctic may actually prove to be a vehicle for positive cooperation between Russia and the United States.As Russia and the United States remain at odds over many other global issues of note, there is reason to be optimistic that the two countries can find common ground in developing a positive response to Arctic climate change.Aside from the Arctic’s potential natural resource wealth, another pressing issue is the impact of melting ice on global shipping routes: As the general amount of ice in the Arctic Ocean has gradually decreased over the past few decades, the viability of using the Arctic Ocean for marine shipping is expected to increase tremendously in the coming years. Along with Canada, Denmark, and Norway, the U.S. and Russia (collectively known as the “Arctic Five”) have increased their attention to Arctic issues through institutions such as the Arctic Council. Given the expected increase in marine traffic in the Arctic Ocean in the next two decades, Arctic states have considered upgrading port facilities to handle larger ships that will have gained the ability to operate in the region.Another significant concern along these lines is the ability of search-and-rescue forces to respond to increased activity. In January 2013, the Arctic Search and Rescue Agreement—which was signed by Arctic Council members in May 2011—came into force. This was a significant step toward establishing concrete measures in which Arctic states can collaborate and remain positively engaged on issues of mutual interest in the Arctic Ocean.

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A2: Russia Military Modernization Bad

Resource problems and corruption kill modernizationChase et al., senior political scientist at RAND, a professor at the Pardee RAND Graduate School, and an adjunct professor in the China Studies and Strategic Studies Departments at Johns Hopkins University's School of Advanced International Studies, and, ‘15(Michael S., Jeffrey Engstrom specializes in Asia-Pacific security issues and foreign policy, Tai Ming Cheung, director of the Institute on Global Conflict and Cooperation (IGCC) located at UC San Diego, Kristen A. Gunness, China advisor for the Department of the Navy, Scott Warren Harold, Deputy Director, Center for Asia Pacific Policy; Political Scientist at the RAND Corporation, Susan Puska, former U.S. Army Attache. works for Defense Group, Inc., and, Samuel K. Berkowitz, China analyst based in Washington, D.C., “China’s Incomplete Military Transformation,” http://www.rand.org/pubs/research_reports/RR893.html)

The PLA also faces shortfalls in terms of its combat capabilities. Many Chinese strategists identify the inability to conduct integrated joint operations at the desired level of competence as the central problem China faces as it aspires to project combat power beyond its land borders. Indeed, Chinese sources highlight several problems that contribute to the PLA’s shortcomings in the area of joint operations and suggest that there is still a large gap between China and developed countries’ militaries, especially the United States. PLA publications also highlight continuing shortfalls in training, despite years of effort to make training more realistic and more valuable in terms of addressing shortcomings and improving the PLA’s operational capabilities. In addition, the publications point to persistent challenges in combat support and combat service support functions and forces, as reflected by frequent discussions of shortcomings in logistics and maintenance capabilities that appear in PLA newspaper reports and journal articles. Many shortfalls specific to China’s naval and air forces remain despite major advances in their capabilities in recent years. While the People’s Liberation Army Navy’s (PLAN’s) new surface combatants and submarines boast impressive capabilities comparable with those of a modern world-class navy, the PLAN still faces a number of challenges. These exist in such areas as the integration of increasingly complex modern weapons and

equipment platforms; the training of PLAN personnel, who currently are not fully equipped to operate or maintain them; and the mastery of such capabilities as antisubmarine warfare and amphibious operations. The People’s Liberation Army Air Force has similarly made enormous strides but must still cope with such challenges as a large force comprising multiple generations of aircraft, a shortage of key special-mission aircraft, unrealistic training, and insufficient strategic transport capability.The PLA also faces potential weaknesses in its ability to protect Chinese interests in space and the electromagnetic spectrum and to operate successfully in these areas to support military campaigns requiring information dominance. Indeed, as China places more and more satellites in orbit, the PLA is becoming more dependent on space capabilities for such important functions as intelligence, surveillance, and reconnaissance; navigation and positioning; and communications. Chinese military publications suggest that the PLA still sees itself as less dependent on space than the U.S. military but also appear to recognize, albeit largely implicitly, that increasing reliance on space brings

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greater vulnerability. China also sees itself as potentially vulnerable in the electromagnetic spectrum. One area in which this concern has been particularly pronounced is Chinese concern about cybersecurity weaknesses. Indeed, the PLA clearly views itself as occupying a relatively disadvantageous position due to its perceived inferiority in the key aspects of “network military struggle.” This problem may become more pressing as the PLA increases its reliance on technology that is potentially vulnerable to disruption, thus creating a weakness an adversary could exploit.Although China’s defense industry has made tremendous progress in terms of its ability to deliver advanced weaponry and equipment to the PLA

over the past two decades, it also suffers from a number of problems that have yet to be resolved. Indeed, China’s defense industry is still in transition from central planning to a more market-oriented system, and many major obstacles remain to be tackled. The main problems the defense industry faces include widespread corruption, lack of competition, entrenched monopolies , delays and cost

overruns, quality control problems, bureaucratic fragmentation , an outdated

acquisition system, and restricted access to external sources of technology and expertise.

Equipment and funding problems kill modernization RAND, “China's Military Modernization Efforts Fall Short; Significant Weaknesses Remain,” February 16, 2015, http://www.rand.org/news/press/2015/02/16.html Although the drive by the People's Republic of China to modernize its military has been underway for more than two decades, significant weaknesses remain, according to a new RAND Corporation report.

In the 1980s and 1990s, the People's Liberation Army was saddled with outdated equipment and poorly trained personnel, as well as the distraction and corruption associated with its involvement in an array of commercial activities. China reacted by pouring money into its military, resulting in double-digit increases in military spending in most years, but many issues remain unresolved. “Our research found that China's weaknesses fall in two broad categories: institutional and combat capabilities,” said Michael Chase, co-lead author of the study and a senior political scientist at RAND, a nonprofit research organization. “The army faces shortcomings from outdated command structures, quality of personnel, professionalism and corruption .”

In terms of combat capabilities, China has problems with logistical weaknesses , insufficient strategic airlift capabilities, limited numbers of special mission aircraft and deficiencies in fleet air defense and anti-submarine warfare, said Jeffrey Engstrom, co-lead author of the report and a RAND senior project associate.

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Sanctions Generally Fail

Coercive economic diplomacy generally fails

Ka Zeng, Assistant Professor, Department of Political Science, University of Arkansas, 2004(Trade Threats, Trade Wars: Bargaining, Retaliation, & American Coercive Diplomacy, p. 2-3)

The record of these commercial rivalries presents us with two puzzles. First, even though the United States has always been the country with greater aggregate power and bargaining resources in bilateral trade disputes, it has had uneven success in extracting concessions from its trading partners through the use of coercive strategies. As my survey in chapter 3 of Washington's attempt to unilaterally open foreign markets under Section 301 of U.S. trade law indicates, the degree to which the target countries yield to American demands often varies in ways that cannot be neatly explained by their dependence on the American export market. For instance, although Japan is less dependent on the American market for exports than many U.S. trading partners, it has given in most frequently to U.S. pressure.2 Interestingly, countries that are more heavily dependent on the U.S. export market (such as China, Brazil, and India) have turned out to be more resistant to American demands.3 Despite having fewer power resources, they have frequently been able to negotiate better dispute settlements than gross measures of power would predict. Clearly, traditional realist the ory , with its emphasis on nations' underlying raw power balances, can not explain why , on average, American coercive diplomacy works less well with countries whose raw material power should have put them in a more disadvantaged position vis-a-vis the United States . It seems necessary for us to look at factors other than raw power to understand the variations in the effectiveness of America's pressure tactics.

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Sanctions Unethical

Sanctions fail all ethical frameworks – responsibility to subject them to rigorous ethical analysis before endorsement

William Seuffert, Grad Student @ School of International Service, 2000, The Morality of UN Economic Sanctions: Emerging from the Shadow of Iraq, http://www.american.edu/academic.depts/sis/sword/Current_Issue/6.pdf., p. 86

Economic sanctions must bear some moral accountability to maintain their political legitimacy. In response to questions concerning the ethics of military force, frameworks were established to determine when force is acceptable. This theory of “just war” established conditions that would justify involvement in a war and the appropriate actions within that war. Economic sanctions must go through a similar ethical evaluation to determine when this coercive tool may be used justly. If economic sanctions are to be justified during peacetime under a preventive pretense, they must retain the moral high ground to ensure adherence to international norms. This ethical analysis should attempt to stay within the perspective of economic sanctions as a preventive tool. An ethical analysis must first refute the claim that economic sanctions are a nonviolent alternative to military force and therefore always ethically acceptable as an act of coercion. Experience from the “sanctions decade” proves the disastrous results of economic warfare. The humanitarian consequences can often evoke greater suffering on a population than military force, and they are often felt for a much greater period of time. The lack of military violence does not exonerate the sanctioning country of moral responsibility for the effects of economic sanctions. Jay Gordon argues that from the ethical perspective of just-war-doctrine, Kantianism and utilitarianism, economic sanctions are ultimately immoral: ”Sanctions are inconsistent with the principle of discrimination from just-war doctrine; sanctions reduce individuals to nothing more than means to an end by using the suffering of innocents as a means of persuasion, themselves’; and sanctions are unacceptable from a utilitarian perspective because their economic effectiveness necessarily entails considerable human damage, while their likelihood of achieving political objectives is low.”

Sanctions unethical – impose suffering on individuals to punish their government

William Seuffert, Grad Student @ School of International Service, 2000, The Morality of UN Economic Sanctions: Emerging from the Shadow of Iraq, http://www.american.edu/academic.depts/sis/sword/Current_Issue/6.pdf., p. 79

Economic sanctions are typically employed to coerce governments to comply with the demands of the issuing entity. While sanctions lack the direct violence of military coercion, they often result in situations of expanded and heightened suffering through indirect and unintended means. While the sanctions target governments, they typically victimize civil society and civil society and can often strengthen the regime. This apparent incongruence of intention and results requires a re-evaluation. The ethical and legal limitations of economic sanctions, supplemented by their tarnished history threaten their legitimacy and viability as a political tool. However, economic sanctions, as part of a

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greater framework of economic diplomacy, offer promise in the field of preventive diplomacy.

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Sanctions Generally Fail (Not Russia Specific)

Sanctions fail – historical examples prove. Ken Blackwell, 10-15-2012, cnsnews.com, “Sanctions Don't Work Because Despots Don't Care,” http://cnsnews.com/blog/ken-blackwell/sanctions-dont-work-because-despots-dont-care During last week's vice presidential debate, the candidates clashed over whose team would be better able to impose "crippling" sanctions on Iran. The problem with sanctions is an old one. President Jefferson tried to impose a trade embargo on Britain in 1807 to stop the Royal

Navy from seizing our sailors on the high seas. This Embargo was an attempt to use peaceful coercion to bring about a change in policy by the British. It failed. It was Jefferson's greatest failure as president. We have a Bicentennial Walking Tour of the War of 1812 at the U.S. Naval Academy. I'd be happy to take you on that tour. The War of 1812 was the direct result of the failure of Jefferson's sanctions to make Britain changer

her behavior. At the outset of the Civil War, Confederate President Jefferson Davis imposed a cotton embargo. Millions of bales of cotton were left to rot on Southern wharves because Davis and his Cabinet were

convinced they could force Britain to break the Union blockade of Southern ports. The British, so this reasoning went, would become so desperate for cotton for their textile mills that they would have use force against the U.S. Navy and enter the war as a belligerent on the side of the Confederacy. Britain was unwilling to risk war with the Yankees and, besides, they found other sources of cheaper cotton--

in Egypt, in India. Jeff Davis's cotton embargo failed--spectacularly. Prior to World War II, the U.S. imposed an oil embargo on Japan. The theory was that the Japanese military rulers, lacking any domestic sources of petroleum, would cease their aggression against China and be forced by economic sanctions to come to the

negotiating table. You've heard of Pearl Harbor. That was the Japanese Imperialists' answer to the U.S.

economic sanctions. The rulers of these countries, especially if they are dictatorships, always have enough stuff. The gaudy and glittering gangster palaces of the late unlamented Saddam Hussein and Muammar Khaddafi attest to the fact that despots always take care of their own creature comforts. These two got all the Western stuff--even pornography

and Viagra--that they wanted. And yet, we are assured that sanctions will work with the Iranian

mullahs. Why do we think this? These are men who willingly sent thousands of

ten-year old boys through Iraqi minefields during the 10-year war between the mullahs and Saddam Hussein. These despots get all the stuff they want. And they don't care if their people suffer from crippling sanctions.

Economic sanctions fail – bad actors perceive them as weak.Carla A. Robbins, 5-23-2013, is an adjunct senior fellow at the Council on Foreign Relations, Bloomberg Businessweek, “Why Economic Sanctions Rarely Work,” http://www.businessweek.com/articles/2013-05-23/why-economic-sanctions-rarely-work Sanctions, particularly economic sanctions, have long been a tool of U.S. foreign policy, and few presidents have leaned on them as much as Barack Obama or been as successful at rallying others to do the same. To thwart Iran’s nuclear ambitions, the U.S. has cajoled and bullied much of the world to slash imports of Iranian oil and freeze out Iranian banks. Most of the world has similarly choked off trade with North Korea. And for almost two years after the outbreak of Syria’s civil war, the U.S., Europe, and the Arab League hoped that asset freezes, banking and visa sanctions, and a Western ban on

Syrian oil purchases would pressure Bashar al-Assad to step down or persuade his cronies to oust him. In a world bristling with bad actors, and especially at a time when the country is wary of another war, sanctions have an obvious appeal—and limited impact. Sanctions have failed to dissuade Iran from continuing to enrich uranium. They haven’t dislodged North Korea’s repressive and erratic leaders or forced a rollback of their nuclear and missile programs. For all the international pressure on Syria’s Assad, the regime is getting more ruthless, not less, and the policy debate in

Washington has moved on to how much military support to provide the rebels. That record hasn’t stopped Congress from seeking to pile even more sanctions on the U.S.’s adversaries. In the House, more than 300 members from both parties are pushing a bill that would target Iran’s commercial trade and punish countries that buy even reduced amounts of oil from Iran. Several senators have proposed bills intended to choke off Iran’s access to foreign reserves

and trade. Lawmakers are working on similar legislation to tighten the economic noose around North Korea. It’s an open question

whether more punishment will actually change the behavior of Iran and North Korea—or instead make their leaders

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more defiant. Veteran U.S. diplomat Thomas Pickering says policymakers must understand that sanctions are only a tool and not a strategy. In the case of Iran, the U.S. has “spent a huge amount of time and attention developing a sanctions regime and far less on trying to work out a negotiating approach to take advantage” of that pressure, he says. “There has to be a rebalancing.” The U.S. has punishing restrictions on a half-dozen countries, including Cuba, Iran, North Korea, Sudan, and Syria. A U.S. Department of the Treasury list of sanctioned individuals, businesses, and government programs worldwide runs to more than 550 pages. Daniel Drezner, a professor at Tufts University’s Fletcher School, says sanctions “tend to work when the demand is incredibly well-defined,” like resolving a trade dispute, “and there is some sort of decent relationship with the target state.” Those governments can compromise without worrying that the country imposing sanctions will keep demanding more. Drezner says

that broad sanctions targeted at adversaries have far lower odds of success.

“Put yourself in Iran’s shoes or North Korea’s shoes, when administration after administration has imposed sanctions”—they question whether what Washington is really pushing for is regime change.

Dictators only respond to military force – economic action is weak. Jacob Weisberg, 8-2-2006, is chairman and editor-in-chief of the Slate Group and author of The Bush Tragedy, Slate, “Thanks for the Sanctions,” http://www.slate.com/articles/news_and_politics/the_big_idea/2006/08/thanks_for_the_sanctions.htmlTrade prompts economic growth and human interaction, which raises a society's expectations, which in turn prompts political dissatisfaction and opposition. Trade, tourism, cultural exchange, and participation in international institutions all serve to erode the legitimacy of repressive regimes. Though each is a separate case, these forces contributed greatly to undermining dictatorships and fostering democracy in the Philippines, South Korea, Argentina, Chile, and

Eastern Europe in the 1980s. The same process is arguably under way in China. Contact also makes us less clueless about the countries we want to change. It is hard to imagine we would have misunderstood the religious and ethnic conflicts in Iraq the way we have if our embassy had been open and American companies had been doing business there for the past 15 years As another illustration, take Iran, which is currently the focus of a huge how-do-we-get-them-to-change conversation. Despite decades of sanctions, Iran is full of young people who are culturally attuned to the United

States. One day, social discontent there will lead to the reform or overthrow of the ruling theocracy. But there is little reason to think that more sanctions will bring that day any closer. The more likely effect of a comprehensive sanctions regime is that it will push dissatisfied and potentially rebellious Iranians back into the arms of the nuke-building mullahs. The counterexample always cited is South Africa, where economic and cultural sanctions do seem to have contributed not only to the fall of a

terrible regime but to a successful democratic transition. In his new book The J Curve, Ian Bremmer argues that South Africa was unusually amenable to this kind of pressure because it retained a functioning multiparty democracy and because, unlike many other pariah states, it didn't actually like being a pariah. Even so, sanctions took a very long time to have any impact. It was nearly three decades from the passage of the first U.N. resolution urging sanctions in 1962 to Nelson Mandela's release from prison in 1990. If they are so rarely effective, why are Western governments pressing for sanctions more and more often? In a world of trouble, it is partly an exercise in frustration. We often have no good options and need to feel that we're doing something. Sanctions are a palatable alternative to military action and

often serve to appease domestic constituencies as well. But we need to learn that tyrants respond more to a deep survival instinct than to economic incentives. To understand their behavior, you can't just read Adam Smith. You need Charles Darwin.

Sanctions are just used to score political points – no real enforcement mechanism. Haider Rizvi, 5-21-2013, is an award-winning journalist who is based at the UN in New York, GLOBAL TIMES, “US sanctions policy hurts ordinary people on all sides of dispute,” http://www.globaltimes.cn/content/783255.shtml Nadeem Mirza is not from Iran, nor does he have anything to do with Tehran's alleged plans to develop a nuclear bomb. But he is suffering a huge financial loss due to US sanctions. "Oriental rugs have been in the US for more than 100 years," says Mirza, 51, a Pakistani businessman who specializes in repairing antique Central Asian rugs for affluent Americans. Last year, he lost hundreds of thousands of dollars because the US authorities refused to release the shipment of old carpets that he had repaired in Pakistan for his clients in northeastern US. "It took me 20 years to build credibility in this business, but it seems I am going to be one more addition to the 27 million unemployed US citizens," Mirza told me in a tone filled with frustration and anger. Mirza says he has suffered a lot from sanctions. But he is not the only one. In fact, there are tens of thousands of small business owners in and outside Iran who have lost

their livelihood as a result of US trade embargo. The US sanctions are meant to press Tehran to halt its nuclear program

suspected of nuclear weapon manufacturing, but they have failed to bring about any change in Tehran's policy. Iran, for its part, has consistently held that, as a signatory to the United Nations Treaty on the Non-Proliferation of

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Nuclear Weapons (NPT), it has a legitimate right to produce nuclear energy and thus it would not abandon its nuclear projects. Like Iran, North Korea is also facing a tough regime of sanctions aimed at reversing its nuclear program. Though condemned by the international community in recent weeks for conducting nuclear weapon tests, North Korea seems to be in no mood to bow down to the US and its allies. Why? North Korea has a long history of struggle against foreign occupation. So does Iran, a nation which abhors foreign dictates and takes pride in being one of the cradles of world civilization. In both cases, it should be no surprise that these

nations are obsessed with what some scholars of world history might describe as "national pride" and "collective self-esteem." It seems that Washington is either unwilling or unable to understand that it need not take punitive measures against these countries and its other perceived adversaries, but instead rely on diplomatic means to settle disputes. Nevertheless, those obsessed with the notion that sanctions could subdue other nations don't seem to understand that

history and memory in many parts of the world play a significant role in shaping a political mind-set that might be more focused on collective self-esteem than economic concerns. If Iran is trying to develop a nuclear bomb for real, it must be condemned. But the US has never imposed sanctions against India, Pakistan, and Israel, which remain outside the fold of the NPT while possessing dozens, or perhaps hundreds, of nuclear weapons. These three countries have no fear of sanctions because they are close economic and military partners of the US. And Cuba, a small island nation that has no nuclear weapons, has had sanctions imposed by

the US for well over half a century to no effect. On the other hand, many in the US believe the sanction policy is simply absurd because it hurts working people at home and abroad. "There is little empirical evidence that sanctions can achieve ambitious foreign policy goals," argues Robert Pape, a US

political scientist who has done extensive research on the impact of sanctions. He thinks that in most cases sanctions are used by policymakers "to rescue their own prestige or their state's international reputation and rhetoric to […] demonize the target regime." He calls it the "American way of war," which "democratic leaders may sometimes adopt in order to give peace a chance and thus disarm criticism of the use of force later." Mirza cannot stomach any more. "What is going on? Who is going to benefit from this kind of policy?" he asks. The Iranian rugs he took from the US and brought back from Pakistan were confiscated by the authorities for months. "It's just going to hit the US citizens. We are just shooting our own feet without aiming properly," he says.

Economic sanctions don’t workHenderson 98 (“Why Economic Sanctions Don’t Work”, David R. Henderson http://www.hoover.org/publications/hoover-digest/article/7311, David R. Henderson is a research fellow with the Hoover Institution. He is also an associate professor of economics at the Naval Postgraduate School in Monterey, California. He wrote this article for the Hoover Institution at Stanford University)Congress has gotten in the habit of imposing economic sanctions in order to punish foreign governments. It is a habit Congress should break. By Hoover fellow David R. Henderson. When I was a kid, the boy next door once played a nasty trick on my brother Paul: our neighbor held his cat in his arms, brought it within a few inches of Paul’s face, and pulled its tail. The suddenly angry cat bit Paul’s face. My brother and I were upset; the cat, we thought, should have bitten the perpetrator’s face. I think of that incident whenever I hear people call

for economic sanctions against a whole country. When governments impose sanctions, the officials implementing the policy want to harm the dictator or bad guy heading the other country’s government. That’s the goal. What they do to achieve it is intentionally harm many innocent people in those countries by cutting them off —if the sanctions are effective—from food, medicine, and other goods that they need or value . The sanctions almost always work in a limited sense:

they impose some harm on innocent people in the target country. But that’s not the goal. Nor is the goal to cut off the dictator from food, medicine, et cetera. You can be sure that Saddam Hussein and Fidel Castro are not hurting for antibiotics or high-quality food. No. The harm that the advocates of sanctions want to inflict on the bad guys is indirect. They are yanking innocent people’s tails so that those people, like our neighbor’s cat, will lash out at whoever’s face is right in front of them. They want those people to see their own government as the enemy and to try to overthrow it. But people are smarter than cats. When people suddenly find food, clothing, medicine, and other goods in short supply, when they find themselves a lot poorer and focusing desperately on day-to-day survival, they will take the time

to find out who is responsible. And guess what? They do find out. Although governments in embargoed countries like Iran, Iraq, and Cuba strictly control what newspapers, radio, and television report, one piece of information that is sure not to be censored is the role of outside governments in the country’s economic distress. Of course, those governments will exaggerate the harm done by the sanctions. Although socialism is what’s killing poor people in Cuba, for example, Fidel Castro has, for almost forty years, blamed Cuba’s economic problems on the “blockade,” his word for the embargo imposed by the U.S. government in the early 1960s. But he can plausibly make this claim because the embargo exists. Likewise, although much of the Iraqis’ pain is caused by Saddam Hussein’s diversion of resources to his war machine, the pain caused by economic sanctions is quite real.What do people in embargoed countries do when they find out that foreign governments threaten their survival? They want to do what the cat wouldn’t do: bite the hand or face of the perpetrator. In fact, I

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can think of no case in history where as a result of sanctions imposed by government A on people in country B, country B’s people

overthrew their own government. It’s the stuff of novels, and not very good novels. To understand how people in embargoed countries feel, you will have to use your imagination. Picture yourself back in 1974. President Nixon’s popularity has hit bottom. Many Americans want him out, but he holds on. Now imagine that the head of a freer country—say, Switzerland—thinks Nixon is a vicious leader and imposes sanctions on us. Because of these sanctions, we can’t get medicine and we can’t feed our families adequately. We spend our days scraping for the basics we need to survive. (Of course this is implausible in the United States, which is why I said you would have to use your imagination.) Now ask yourself: Is your first thought that you should organize and try to overthrow the president? You can be sure that Saddam Hussein and Fidel Castro are not hurting for antibiotics or high-quality food.

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Pro

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Sanctions Prevent Further Russian Aggression in the Ukraine

Sanctions deterring Putin from further Russian aggression in the Ukraine

O’Hanlon 3/3/14Michael Edward O'Hanlon is a senior fellow at The Brookings Institution, specializing in defense and foreign policy issues. He began his career as a budget analyst in the defense field.http://blogs.reuters.com/great-debate/2014/03/03/the-power-of-sanctions-against-putin-on-ukraine/

The main reason for my relative lack of anxiety derives from the fundamentals of the situation in Ukraine. It is serious, to be sure. But it does not look likely to become catastrophic. As coercive as Russian President Vladimir Putin has been in this crisis, there have been limits. He hasn’t killed people (so far at least, as of this writing on Monday, March 3). He is apparently trying to make a show of force in a way that gets a specific task done. He wants to protect his military bases in Crimea, where the Russian Black Sea Fleet (historically one of Russia’s big four) is based. He also wants to assert certain prerogatives in a former Soviet republic. He wants, he says, to protect fellow ethnic Russians and Russian speakers — of whom there are many in Crimea and eastern Ukraine. There is nothing to admire about how Putin has proceeded. His approach is indeed 19th century-ish, as Secretary of State John Kerry said on Face the Nation Sunday. But it’s not totally surprising for the way great powers behave. Even in this century. For example, the main distinction to draw between what Putin has just done in Crimea and what Washington did in Panama in 1989 — when a dictatorial government started to mistreat its own people badly and jeopardize our bases and access to the Panama Canal — is that we were more patient, and more justified, in making the decision to invade. In fact, we went further in that crisis than Putin is likely to do here. But Putin saw a government in Ukraine that he believed illegitimate. From a certain perspective, it had violated the February 21 deal that would have led to early elections, almost as soon as it was reached. He also saw the Ukrainian parliament last week look to degrade the status of the Russian language within Ukraine — an understandable reaction by angry Ukrainians at one level, to be sure, but also a provocation and a pointless one. I am hardly defending Putin. But I doubt very much that he is seeking to forcibly annex part of Ukraine. Part of his worldview may desire that, to be sure. But we have a pretty strong set of potential economic sanctions and Putin knows it. The West has gotten a lot better at applying sanctions — largely because of the Iran experience, and also our dealings with North Korea, and before that Serbia. The international community now knows how to do this — how to go after the banking sector, the individual wealth of top Russian leaders, their visa travel rights, and so on. We can try to help Europe gain new sources of energy as well, a point Danielle Pletka of the American Enterprise Institute wisely made when we appeared together Sunday on Face the Nation. Russia cannot thrive if the Western world collectively seeks to punish Putin and to do so for a considerable period. Were the current crisis to escalate to a bad situation — which it hasn’t yet — and Ukraine to face civil warfare and an invasion by Russia to back up one side, then I think these kinds of tools would be applied. They’d be

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http://blogs.reuters.com/great-debate/2014/03/03/the-power-of-sanctions-against-putin-on-ukraine/

http://blogs.reuters.com/great-debate/2014/03/03/the-power-of-sanctions-against-putin-on-ukraine/


effective and Putin knows it. So I’m relatively confident he won’t take this gamble, provided we are clear in our communications about how we would respond.

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Sanctions Needed to Support Minsk Agreement

Sanctions needed to support the Minsk agreement

RIA Novosti, June 7, 2015, West Needs to Maintain Sanctions on Russia - European Council President, http://sputniknews.com/world/20150607/1023048966.html DOA: 11-27-15

GARMISCH-PARTENKIRCHEN, June 7 (Sputnik) - Anti- Russia sanctions should remain in place, as there is a clear violation of the Minsk agreements on Ukraine reconciliation, European Council President Donald Tusk said Sunday adding that the decision will be taken before the upcoming EU summit. "If it comes to Russia and the sanctions, obviously I think it is the most important thing today, because we need to maintain sanctions against Russia, because of the clear violation of Minsk agreements," Tusk said ahead of an annual Group of Seven (G7) summit in Bavaria, Germany."The European council wants to have Russia as a partner, and not an enemy ... but I think that this European decision ... on maintaining [sanctions], which we decided in March, this is something more grave, but also consistent," he stressed adding that the decision would be taken "before our European Council meets."West imposed several rounds of economic sanctions on Russia in 2014 over its alleged involvement in the conflict in eastern Ukraine, a claim which Moscow has firmly denied.The EU leaders agreed in March 2015 that anti-Russia sanctions, which expire in July, will stay in place if the peace agreement reached in February in Minsk would not be fully implemented. The Minsk deal stipulates a ceasefire and withdrawal of heavy weapons from the line of contact in Donbas.The final decision on prolongation of sanctions against Russia is expected to be announced during the EU summit, due to be held June 25-26 in Brussels.

Sanctions have not altered Russia’s foreign policy


U.S. and EU sanctions were meant to force Russia to back down in the Ukraine crisis - first over Crimea, then over its support for separatist rebels in eastern Ukraine.That has not happened."The sanctions did not produce a change in Putin's foreign policy," said Brookings Institute fellow Lilia Shevtsova, although she added that the threat of further sanctions may have prevented open Russian military intervention in Ukraine.

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http://sputniknews.com/world/20150607/1023048966.html


Supporting Minsk Critical to US Leadership

Failure to protect Ukraine causes global prolif cascade by invalidating Budapest Memorandum – japan, Taiwan, Saudi Arabia Boyes 3/6/14http://www.theaustralian.com.au/news/world/the-lesson-hang-on-to-your-nukes-if-putins-on-the-prowl/story-fnb64oi6-1226846228761#Editorial writer, the Times

Twenty years ago Ukraine had the third-largest strategic nuclear weapons stock in the world after the US and Russia, having inherited its share of the Soviet arsenal. It gave up those stocks in return for Western cash and a piece of paper, the 1994 Budapest memorandum that was meant to guarantee its territorial integrity. Today, it seems that Kiev made a bad deal. The agreement, signed by the US, Britain and Russia, has done nothing to shield Ukrainians. Had Ukraine stayed nuclear Russia would have thought twice about snatching Crimea. The invasion is thus not just about the regional manipulation of power and Russian President Vladimir Putin’s effective threat to foment a European civil war unless Ukraine stays in his orbit. It is about the

new international order and about nuclear security’s role in it. How safe do non-nuclear Japan and

Taiwan feel at the moment? How much are their security agreements with the US worth if Washington is powerless to deter a Russian land-grab in a country that borders four NATO members? How credible as world policemen are the five leading nuclear powers - the US, Russia, China, Britain and France - as the permanent members of the UN Security Council? In the 1990s it was briefly possible to believe in the merits of unilateral disarmament and the dream of global non-proliferation. South Africa admitted to having had secret nuclear plans and promptly dropped them. The threat of Soviet encroachment had evaporated. So, too, had the Soviet Union. Ukraine, Kazakhstan and Belarus had more pressing economic problems than keeping their nukes in working order. Ukraine in 1991 boasted inter-continental ballistic missiles, almost two dozen strategic bombers, more than 1000 long-range cruise missiles and several hundred tactical nuclear weapons. To turn that into a purely Ukrainian force, to target it on Moscow rather than NATO, would have meant an investment of $US30 billion to replace Russian-owned early warning systems and communication centres. Some in Kiev argue it would have been worth the effort. “If we had hung on to even a fraction of that force it would have been like hanging a gun on the wall of your living room,” said one Ukrainian politician. “Maybe the gun has no bullets but when the neighbour comes round for dinner, he’s afraid of it.” Neither the West nor Russia bought into the idea of a Ukrainian deterrent. The US did not trust the 90s Ukrainian leadership to keep tight control of the weapons. It paid Ukrainians to load their nuclear kit on to 100 trains and send it to Russia. In 1996 Ukraine officially became a non-nuclear nation - and soon afterwards the Kremlin piled pressure on Kiev to pay more for its gas. Unilateral disarmament doesn’t pay. It only results in nuclear weapons becoming the sole property of those nations that do not renounce them. The quest for nuclear advantage can poison the politics of the whole region . Iran is pushing its nuclear program not only to “balance” Israel’s undeclared weapons but also to win a pivotal role in the Middle East. That prods Saudi Arabia towards getting its own atomic deterrent, perhaps

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http://www.theaustralian.com.au/news/world/the-lesson-hang-on-to-your-nukes-if-putins-on-the-prowl/story-fnb64oi6-1226846228761

http://www.theaustralian.com.au/news/world/the-lesson-hang-on-to-your-nukes-if-putins-on-the-prowl/story-fnb64oi6-1226846228761


with the help of Pakistan - an enormous challenge to non-proliferation efforts.

Ukraine is the litmus test of US primacyKanat 3/17/14http://setav.org/en/the-ukrainian-crisis-as-a-new-chessboard-of-global-geopolitics/opinion/14586Kilic Bugra Kanat is an Assistant Professor of Political Science at Penn State University, Erie and a Research Fellow at the SETA Foundation at Washington, D.C. He received his doctoral degree in Political Science from Syracuse University. He holds a master’s degree in Political Science from Syracuse University and a master’s in International Affairs from Marquette University. He completed his undergraduate education in the International Relations Department of the Middle East Technical University. Dr. Kanat also holds a Certificate of Advanced Studies in Middle Eastern Affairs and Certificate of Advanced Graduate Study in Conflict Resolution. His research interests include foreign policy decision-making, foreign policy change, and domestic politics and foreign policy interaction. Dr. Kanat’s writings have appeared in Foreign Policy, Insight Turkey, Middle East Policy, Arab Studies Quarterly, Journal of South Asian and Middle Eastern Studies, and Journal of Muslim Minority Affairs. He also regularly contributes op-eds to Star, Sabah, Today's Zaman, Zaman Daily, Radikal Daily, and Hurriyet Daily News. He is also co-editor of an edited volume – History, Politics and Foreign Policy in Turkey – published by the SETA Foundation.

Halford Mackinder, one of the founding fathers of geopolitics, once wrote "Who rules East Europe commands the Heartland; who rules the Heartland commands the World-Island; who rules the World-Island controls the world." Ukraine was one of the integral parts of the Heartland that he stated. Now, the crisis in Ukraine is becoming an arena for a major geopolitical confrontation. The problem in Ukraine that has been overshadowed in recent days with the mysterious loss of the Malaysian Airlines plane is quickly being transformed into a global problem instead of a regional challenge for countries in Eastern Europe. The crisis not only brought Western powers and Russia face to face in Crimea but is becoming a global chessboard in which global powers have stakes . The most significant centers of gravity in international relations, namely the United States and China and their positions and diplomatic steps regarding the crisis will be very important for the future of the conflict in Crimea, their bilateral

relations, as well as the international system . The crisis and its outcomes will be

a major determinant of future global geopolitics. The crisis in Ukraine is yet another serious test of U.S.

leadership in terms of its international alliances, guarantees and assurances. The world is watching the

reaction of the U.S. after Russia's invasion of Crimea.

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http://setav.org/en/the-ukrainian-crisis-as-a-new-chessboard-of-global-geopolitics/opinion/14586

http://setav.org/en/the-ukrainian-crisis-as-a-new-chessboard-of-global-geopolitics/opinion/14586


Arctic Drilling

Sanctions have blocked cooperation with western oil companies that is needed for drilling in the arctic


One of the main state-owned companies to be targeted by punitive measures is oil producer Rosneft. It had to postpone plans to drill in the Arctic with U.S. firm ExxonMobil. At the same time, sanctions have largely cut off state firms from international lending, making refinancing difficult, costly and a burden on the government.

Howard Lafranchi, The Christian Science Monitor January 30, 2015, West eyes new Russian sanctions amid renewed fighting in eastern Ukraine, Sanctions don’t threaten Russia, http://muckrack.com/howard-lafranchi/articles?page=7 DOA: 11-27-15

As fighting once again rages in eastern Ukraine between government forces and Russian-backed separatists, charges and counter-charges between the principal geopolitical backers on each side are spiraling to new heights.Yet even as the United States and European Union prepare another round of sanctions on Russia , and Russia warns of "catastrophe" if the West pursues its support of what it considers to be the aggressor government in Kiev, there are no signs of either side heeding the dire warnings of the other.After President Obama and German Chancellor Angela Merkel agreed in a phone conversation earlier this week on the need to "hold Russia accountable" for stoking a return to violence in eastern Ukraine, the European Union (EU) moved Thursday to expand the list of mostly Russian individuals hit with sanctions over Ukraine. EU foreign ministers also moved to prepare "further action" to pressure the sides to halt the fighting, signaling that EU leaders could adopt new sanctions against Russia when they hold a summit Feb. 12.Such action could be the moment for the US to proceed with the additional sanctions it has been threatening against Russia, since the two Western powers have moved in tandem at each step of the gradual ratcheting-up of Western sanctions targeting Russia. This week Treasury Secretary Jack Lew said the US is ready to turn the sanctions screw if Mr. Obama issues the order. The ratcheting up of tensions occurred as the State Department announced Friday that Secretary of State John Kerry would visit the Ukrainian capital, Kiev, next week to "highlight the United States' steadfast support for Ukraine and its people."Even Russian President Vladimir Putin acknowledges the impact Western sanctions are having on Russia's increasingly fragile economy. On Friday, the Russian Central Bank unexpectedly cut the interest rate, shocking markets and potentially causing more volatility for the ruble. But there are no signs the sanctions are succeeding with the intended objective of altering Russia's support for the separatists. If anything, Mr. Putin is lionizing the separatists before the Russian public as a kind of defensive wall

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http://muckrack.com/howard-lafranchi/articles?page=7

http://muckrack.com/howard-lafranchi/articles?page=7




holding back a NATO reach into Russia's historical sphere of political and economic influence.Reports from the conflict zone indicate the separatists are fighting with fresh supplies of heavy weaponry that could have only come from across the border in Russia.Russia has a very different perspective on the conflict, however, labeling the Ukrainian forces fighting in the east as the aggressor.

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A2: Sanctions Hurt US Relations with the EU

US in lockstep with the EU on Russia sanctions

RIA Novosti, June 18, 2015, US to Continue in 'Lockstep' With EU on Anti-Russian Sanctions

The United States will continue to closely follow the lead of the European Union (EU) in extending existing sanctions on Russia, Director of the Office of Foreign Assets Control (OFAC) John Smith said on Thursday. "I expect you will continue to see us move in lockstep with the European Union, our European partners, as much as possible," Smith said in a speech hosted by the Venable LLP law firm. On Wednesday, EU leaders announced they would extend existing sanctions against Russia for an additional six months, until January 2016. OFAC is the branch of US Treasury Department in charge of implementing economic and financial sanctions. Smith noted that the "keeping the US and EU sanctions as identical as possible" is critical to the success of sanctions aimed at Russia.

EU planning to renew sanctions

Banking and Stock Exchange, Finance, Economics (Russia), November 20, 2015, The EU is planning to renew sanctions against Russia regardless of the intentions to jointly struggle against the Islamic State, http://www.wps.ru/ru/digests/en/wps-ru-digests-en-banks.pdf DOA: 11-27-15

Berlin, London and Paris do not want Moscow's assistance in Syria "at the cost of Ukraine", say WSJ's sources. "Any change in the U.S. and EU current position in respect of Ukraine will be very harmful not only to Ukraine, but to Europe as well," said a source close to the Ukrainian government.The EU high-ranking official emphasized that there are no signs at the moment that the countries' position concerning the extension of anti- Russia sanctions could change. "Today there is a general understanding that sanctions must be renewed," he said. A meeting of foreign affairs ministers held on November 16, 2015 did not discuss a revision of the anti- Russia sanctions which could push Moscow to jointly struggle against Islamists in Syria, said Edgars Rinkevics, Latvian Minister of Foreign Affairs.The USA, too, has no intention to review its stance, said WSJ's sources. At the G20 summit on November 15, 2015, U.S. President Barack Obama discussed the question of sanctions at a meeting with the leaders of France, Germany, Italy and Great Britain, WSJ notes. When in Berlin on November 17, U.S. Assistant Secretary of State Victoria Nuland stressed that sanctions against Moscow must be renewed, declaring further support to Kiev.Today the West is looking into three possible scenarios for the sanctions policy continuation, according to WSJ: the restrictions may be extended for six, twelve or only three to four months. In the latter case, the EU will show an approval of some of Moscow's concessions in respect of Ukraine.

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http://www.wps.ru/ru/digests/en/wps-ru-digests-en-banks.pdf


A2: Sanctions Russia-China Alliance

Partnership is self-defeatingBaker & Glosserman 15 (Carl Baker is the director of programs and co-editor of Comparative Connections at Pacific Forum, CSIS and an adjunct professor with the International Studies Department at Hawaii Pacific University. P A graduate of the Air War College, he has an M.A. in public administration from the University of Oklahoma and a B.A. in anthropology from the University of Iowa. Brad Glosserman is executive director at Pacific Forum CSIS and co-editor of Comparative Connections.J.D. from George Washington University, an M.A. from Johns Hopkins University’s School of Advanced International Studies (SAIS) and a B.A. from Reed College. May 2015 “Comparative Connections A Triannual E-Journal on East Asian Bilateral Relations”, http://csis.org/files/publication/1501q.pdf)

As a result, China and Russia have been reluctant to turn their strategic partnership relationship into

an alliance , even if they perceive that their strategic space is been squeezed by tightening of the military alliances by the world’s most powerful countries (NATO and the US-led alliances with Asian countries) in the name of collective defense. It that sense, China and Russia are not just being haunted by the ghost of WWII , but also that of World War I , when major powers in the West (except the US) declared war on each other in 10 days. If anything, the world today is more dangerous than 100 years ago with the proliferation of weapons of mass destruction in the hands of nation-states in a far less balanced world than either the pre-World War I era or the Cold

War. In this context, one wonders how long the current strategic partnership relationship (not alliance) between Russia and China would continue.

Russia-China alliance doesn’t cause wars. Ikenberry 14 (G. John Ikenberry, Albert G. Milbank Professor of Politics and International Affairs at Princeton University and George Eastman Visiting Professor at Balliol College, University of Oxford. MAY/JUNE 2014 ISSUE, “The Illusion of Geopolitics The Enduring Power of the Liberal Order”)Not only does Mead underestimate the strength of the United States and the order it built; he also overstates the degree to which China and Russia are seeking to resist both. (Apart from its nuclear ambitions, Iran looks like a state engaged more in futile protest than actual resistance, so it shouldn’t be considered anything close to a revisionist power.) Without a doubt, China and Russia desire greater regional influence . China has made aggressive claims over maritime rights and nearby contested islands, and it has embarked on an arms buildup. Putin has visions of reclaiming Russia’s dominance in its “near abroad.” Both great powers bristle at U.S. leadership and resist it when they can.But China and Russia are not true revisionists. As former Israeli Foreign Minister Shlomo Ben-Ami has said, Putin’s foreign policy is “more a reflection of his resentment of Russia’s geopolitical marginalization than a battle cry from a rising empire .” China, of course, is an actual rising power, and this does invite dangerous competition with U.S. allies in Asia. But China is not currently trying to break those alliances or overthrow the wider system of regional security governance embodied in the Association of Southeast Asian Nations and the East Asia Summit. And even if China harbors ambitions of eventually doing so, U.S. security partnerships in the region are, if anything, getting stronger, not weaker. At most, China and Russia are spoilers. They do not have the interests—let alone the ideas, capacities, or allies—to lead them to upend existing global rules and institutions.

In fact, although they resent that the U nited S tates stands at the top of the

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current geopolitical system, t hey embrace the underlying logic of that framework , and with good reason. Openness gives them access to trade, investment, and technology from other societies. Rules give them tools to protect their sovereignty and interests.Despite controversies over the new idea of “the responsibility to protect” (which has been applied only selectively), the current world order enshrines the age-old norms of state sovereignty and nonintervention . Those Westphalian principles remain the bedrock of world politics —and China and Russia have tied their national interests to them (despite Putin’s disturbing irredentism).

It should come as no surprise, then, that China and Russia have become deeply integrated into the

existing international order . They are both permanent members of the UN Security Council, with veto rights, and they both participate actively in the World Trade Organization, the International Monetary Fund, the World Bank, and the G-20. They are geopolitical insiders, sitting at all the high tables of global governance.

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Unchecked Russian Aggression Causes War

Unchecked Russian influence risks extinctionFisher 15 (Max, Foreign affairs columnist @ VOX, "How World War III became possible," 6/29, http://www.vox.com/2015/6/29/8845913/russia-war)That is why, analysts will tell you, today's tensions bear far more similarity to the period before World War I : an unstable power balance, belligerence over peripheral conflicts, entangling military commitments, disputes over the future of the European order, and dangerous uncertainty about what actions will and will not force the other party into conflict. Today's Russia, once more the strongest nation in Europe and yet weaker than its collective enemies, calls to mind the turn-of-the- century German Empire , which Henry Kissinger described as "too big for Europe, but too small for the world." Now, as then, a rising power, propelled by nationalism, is seeking

to revise the European order . Now, as then, it believes that through superior cunning, and perhaps even by proving its might, it can force a larger role for itself. Now, as then, the drift toward war is gradual and easy to miss — which is exactly what makes it so dangerous. But there is one way in which today's dangers are less like those before World War I , and more similar to those of the Cold War: the apocalyptic logic of nuclear weapons . Mutual suspicion , fear of an existential threat, armies parked across borders from one another, and hair-trigger nuclear weapons all make any small skirmish a potential armageddon . In some ways, that logic has grown even more dangerous. Russia, hoping to compensate for its conventional military forces' relative weakness, has dramatically relaxed its rules for using nuclear weapons. Whereas Soviet leaders saw their nuclear weapons as pure deterrents, something that existed precisely so they would never be used, Putin's view appears to be radically different. Russia's official nuclear doctrine calls on the country to launch a battlefield nuclear strike in case of a conventional war that could pose an existential threat . These are more than just words: Moscow has repeatedly signaled its willingness and preparations to use nuclear weapons even in a more limited war. This is a terrifyingly low bar for nuclear weapons use, particularly given that any war would likely occur along Russia's borders and thus not far from Moscow. And it suggests Putin has adopted an idea that Cold War leaders considered unthinkable: that a "limited" nuclear war, of small warheads dropped on the battlefield, could be not only survivable but winnable. "It’s not just a difference in rhetoric. It’s a whole different world," Bruce G. Blair, a nuclear weapons scholar at Princeton, told the Wall Street Journal. He called Putin's decisions more dangerous than those of any Soviet leader since 1962. "There’s a low nuclear threshold now that didn’t exist during the Cold War." Nuclear theory is complex and disputable; maybe Putin is right. But many theorists would say he is wrong, that the logic of nuclear warfare means a "limited" nuclear strike is in fact likely to trigger a larger nuclear war — a doomsday scenario in which major American, Russian, and European cities would be targets for attacks many times more powerful than the bombs that leveled Hiroshima and Nagasaki. Even if a nuclear war did somehow remain limited and contained, recent studies suggest that environmental and atmospheric damage would cause a "decade of winter " and mass crop die-outs that could kill up to 1 billion people in a global famine.

World War 3Butters 15 (analyst citing British Intelligence Experts from Chantam House

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which is a independent policy institute based in London. The report was authored by two former British ambassadors to Moscow. http://www.inquisitr.com/2143988/world-war-iii-the-west-must-face-up-to-vladimir-putin-or-risk-moscows-use-of-tactical-nuclear-weapons-british-intelligence-experts-warn/If the West fails to stand up to Vladimir Putin and Moscow, then it could initiate a chain of events which would lead to World War 3 , British intelligence experts have warned. The U.K’s foreign affairs think-tank, Chatham House, has issued a report which states that

Putin and Moscow could easily use tactical nuclear weapons on Europe in the future and create a possible World War 3 scenario . “Just because something is unimaginable for Western planners does not mean it is not considered a viable option by Russia.” The authors of the report include Sir Roderic Lyne and Sir Andrew Wood. The two former ambassadors to Moscow are well-aware just how ruthless Vladimir Putin can be. They are hypercritical in their condemnation of the Western leaders’ failure to predict the Ukraine crisis, and its potential to be one of the contributing factors to a World War 3 scenario. The report accuses U.S. President Barack Obama and U.K. Prime Minister David Cameron of suffering from a “collective amnesia,” and whose “weak and unconvincing responses” have encouraged Putin to further his global interests and ambitions. “The Kremlin perceives that the West lacks the will to pay the necessary price to defend its principles.” The report states that lack of effective support for the “outgunned and outmanned” Ukrainian government by the West would have far reaching consequences for the Western

alliance, namely the possible risk of a World War 3 situation. “The conflict in Ukraine is a

defining factor for the future of European security . Russia may have the greater interest in Ukraine, but the West has an even bigger interest in preserving the post-Cold War environment. If that is

dismantled , it is conceivable that Nato and the EU could collapse too.” The report, which indicates World War 3 could be a possible outcome of current global situations if the West refuses to act accordingly, also admits that Putin currently faces the biggest challenge of his 15-year rule. However, the British intelligence experts stress that Putin’s fragile position could make the Russian bear even more dangerous if provoked. “Indeed one school of thought holds that Moscow is at its most dangerous when weak.” The Express reports that the intelligence paper arrives at a time when both Europe and the U.S. are facing increasing aggression and bullish manoeuvres from Putin. In May of this year, both Britain and Sweden scrambled fighters to intercept Russian bombers who were close to violating their respective airspaces, and a Russian fighter’s “sloppy and unsafe” interception of a U.S. reconnaissance plane in international aerospace above the Baltic Sea has caused the United States to file a complaint with Russia. Europe Minister David Lidington has announced, in no uncertain terms, Europe’s intentions to curb Putin’s aggressive tactics. “The blame for the current crisis lies squarely with Russia and the separatists in eastern Ukraine, who are backed by the Russian authorities. The UK is working closely with EU and G7 partners in response to Russian actions in Ukraine. By imposing a robust sanctions regime, we have shown Russia that its unjustifiable and illegal actions will not be tolerated.” What respect Putin will give to such words

is questionable, but as the British intelligence report indicates, the West must start effectively

standing up to Putin and defend what it holds dear if it is to prevent the hell and horror of a

World War 3 scenario.

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http://www.express.co.uk/news/world/582091/Russia-Vladimir-Putin-Nato-European-Union-aggression-Chatham-House-politics-news

http://www.inquisitr.com/2119177/vladimir-putins-deputy-warns-the-west-tanks-dont-need-visas/


Ukraine Aggression Risks War

Aggression in Ukraine risks extinctionBaum 14 - Executive Director @ Global Catastrophic Risk Institute [Seth Baum (Ph.D. in Geography @Pennsylvania State University and a Post-Doctoral Fellowship @ Columbia University Center for Research on Environmental Decisions), “Best And Worst Case Scenarios for Ukraine Crisis: World Peace And Nuclear War,” Huffington Post, May 7, 2014, http://tinyurl.com/lxx49og]

Here's the short version: The best case scenario has the Ukraine crisis being resolved diplomatically through increased Russia-Europe cooperation, which would be a big step towards world peace. The worst case scenario has the crisis escalating into nuclear war between the U nited States and Russia, causing human extinction .Let's start with the worst case scenario, nuclear war involving the American and Russian arsenals. How bad would that be? Put it this way: Recent analysis finds that a " limited " India-Pakistan nuclear war could kill two billion people via agricultural declines from nuclear winter. This "limited" war involves just 100 nuclear weapons. The U.S. and Russia combine to possess about 16,700 nuclear weapons. Humanity may not survive the aftermath of a U.S.-Russia nuclear war .It seems rather unlikely that the U.S. and Russia would end up in nuclear war over Ukraine. Sure, they have opposing positions, but neither side has anywhere near enough at stake to justify such extraordinary measures. Instead, it seems a lot more likely that the whole crisis will get resolved with a minimum of deaths. However, the story has already taken some surprising plot twists. We cannot rule out the possibility of it ending in direct nuclear war.A nuclear war could also occur inadvertently , i.e. when a false alarm is misinterpreted as real, and nuclear weapons are launched in what is believed to be a counterattack. There have been several alarmingly close calls of inadvertent U.S.-Russia nuclear war over the years . Perhaps the most relevant is the 1995 Norwegian rocket incident. A rocket carrying scientific equipment was launched off northern Norway. Russia detected the rocket on its radar and interpreted it as a nuclear attack. Its own nuclear forces were put on alert and Boris Yeltsin was presented the question of whether to launch Russia's nuclear weapons in response. Fortunately, Yeltsin and the Russian General Staff apparently sensed it was a false alarm and declined to launch. Still, the disturbing lesson from this incident is that nuclear war could begin even during periods of calm.

World war III – military simulations proveChossudovsky 3/12/14http://www.globalresearch.ca/ukraine-the-worst-case-scenario-is-world-war-iii/5373075Michel Chossudovsky is an award-winning author, Professor of Economics (emeritus) at the University of Ottawa, Founder and Director of the Centre for Research on Globalization (CRG), Montreal and Editor of the globalresearch.ca website. He is the author of The Globalization of Poverty and The New World Order (2003) and America’s “War on Terrorism”(2005). His most recent book is entitled Towards a World War III Scenario: The Dangers of Nuclear War (2011). He is also a contributor to the Encyclopaedia Britannica. His writings have been published in more than twenty languages. He can be reached at [email protected]

Ukraine: The Worst Case Scenario is World War III

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We are at a very dangerous crossroads . We are observing the confrontation between the two major nuclear powers, namely the US and Russia. The worst

case scenario is World War III . I’m not suggesting that it is going to occur, but I should also mention, having reviewed military documents over the last 10 years, that WWIII, from the point of view of US military planners – Pentagon and NATO – is not an abstract concept. They have been involved in various exercises with the so-called WWIII scenarios . One of these famous exercises was called TIRANNT, which stands for Theater Iran Near Term. That’s when Iran was the object of military threats from the West. But in fact, this particular WWIII scenario involved several countries, including Russia, China and Iran, and North Korea. These were the stated enemies of the Western military alliance. That particular WWIII scenario was leaked to the Washington Post. It is well-documented and it is a very detailed simulation of different actions and failures of diplomacy leading up to a WWIII scenario. So, let’s be under no illusions – the weapons systems are devastating, the decision-making processes are very complex

and errors and misjudgments can take place .

World war III and depressionVon Greyerz 3/8/14http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/3/8_The_Ukraine_Crisis_%26_A_Terrifying_Global_Economic_Meltdown.htmlounder and Managing Partner of Matterhorn Asset Management AG (MAM) and GoldSwitzerland based in Zurich, Switzerland.EvG forecasted the current present problems in the world economy well over 10 years ago. In 2002 when gold was $300 per ounce, MAM recommended to its investors to put 50% of their investment assets into physical gold stored outside the banking system. Egon von Greyerz started his working life in Geneva as a banker and thereafter spent 17 years as Finance Director and Executive Vice-Chairman of a FTSE 100 company in the UK, Dixons Group Plc. Since the 1990s EvG has been actively involved with financial investment activities including Mergers and Acquisitions and Asset allocation consultancy for private family funds. This led to the creation of Matterhorn Asset Management in 1998, an asset management company based on wealth preservation principles. The GoldSwitzerland Division was created to facilitate the buying and storage of physical gold and silver for private investors, companies, trusts and pension funds. EvG makes regular media appearances such as on, CNBC, BBC and King World News and speaks at investment conferences around the world. He also publishes articles on precious metals, the world economy and wealth preservation.

We have also discussed the potential catalysts around the world that could trigger the world falling into the black hole. These can be economic events such as Japan defaulting, or it could a collapse of the dollar. It could also be geopolitical like the Middle East. Each one of those risks can create a major disaster. But we also have the possibility of black swan events. These are events that very few people can forecast, and Ukraine is such an event. Very few

people thought the problems in Ukraine could be the trigger for the collapse of the world

economy but we have to remember that any of these events are just catalysts.

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The world is bankrupt economically, financially, and morally. And if Ukraine now

will be the trigger for the inevitable economic collapse , it’s also possible that it will be the

beginning of World War III as Paul Craig Roberts has indicated. Ukraine is an important pawn for both Russia and the West, which is led by the United States. Russian President Vladimir Putin has a strong hand with almost 40 percent of Europe’s gas requirement going through Ukrainian pipelines from Russia. But Ukraine is bankrupt and needs money either from Russia or the West. The $1 billion the U.S. has offered would pay only half of Ukraine’s debt to Russian giant Gazprom. And I’m sure the U.S. does not want to pay $1 billion to Putin. This crisis will have a major impact on both the Ukrainian and Russian economies. Ukrainian bonds are collapsing and interest rates are up to 47 percent now, from 10 percent in January, and the currency is falling fast. The same thing is happening in Russia, with the ruble down 10 percent this year and the stock market falling. The Russian central bank had to raise interest rates from 5.5 percent to 7 percent in order to stabilize markets. But in spite of economic problems, I doubt that Putin is going to give in on Ukraine. And for Obama, a war would be a good solution to the U.S. economic pressure. So with this potential black swan event in Ukraine, the risks are extremely high and the consequences could be devastating. But whether Ukraine is the catalyst or some other event is, the outcome is inevitable. The world is already set up to go into a hyperinflationary depression. That in itself is bad enough, but a major war would also be horrific. Today we are looking at commodities that are still going up strongly, and pointing out that inflation is coming. Most currencies are weak, not just emerging-country currencies but also the dollar. The falling dollar will be the trigger to the hyperinflation I expect, and to higher precious metals prices. Investors should ignore event-driven price movements. Gold went up this week on Ukraine, and then down today on non-farm payrolls. Precious metals investors must understand that long-term price movements in gold and silver have nothing to do with events. Gold is going up because currencies are being destroyed by virtually every nation due to deficit spending, debts, and money printing. So precious metals investors must ignore these short-term moves. The trend is clear and will not change. So it won’t matter what happens in the world politically or economically. With regards to the non-farm payroll figures today, it had to be a good figure. The U.S. had to counteract the bad Ukraine news with some good unemployment figure. But what is interesting and important is that the dollar did not move higher on the bogus jobs release. Currently the euro is just under 1.39, and the U.S. Dollar Index is around 79.7. This is what precious metals investors must focus on. The weak dollar indicates that the 1-percent move down in gold today will be short-lived. What investors must realize is that the time for protecting their wealth is running out. Ukraine could be the black swan event or there could be another. Therefore, it is critical to own physical gold and protect against the inevitable consequences of the mess that the world is in. You must ask yourself if you are prepared for such a collapse. If not, as I said, time is running out.

Massive global food price spikes, depression and political instabilityBrombry 3/1714First, an update on my decades-long jack-of-all trades career. You can read me each Monday in "The Australian", each Thursday on Miningnews.net, each month in "Australia's Mining Monthly" - and then at least three times a week (discussing

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rare earths, graphite, potash and others) on the Toronto-based investorintel.com. 1. First and foremost, I'm a mining and resources writer, having carved out a niche within a niche with critical and strategic metals. Latched on to the rare earth story in 1996 (somewhat before most others) and have branched out into what I see are the more fascinating commodities from potash/phosphate to graphite/graphene, not to mention antimony, tungsten and tin. Defending gold's corner takes up a fair bit of my time, too. 2. Forging a new path in book publishing, using both print and electronic formats. The books reflect my interests: "The Farming of Australia", "German Raiders of the South Seas" (my contribution to the present Great War publishing tsunami - this one deals with merchant raiders operating in this region from 1914 and Australia and New Zealand's naval dramas), "Australian Railways: Their Life and Times". And, before the year is out, a book on minerals and metals. No, not a "copper is used for ..." tome, but trying to make sense of how the world is changing and how this will affect future metals demand. Others to follow. How to get them? Highgate Publishing (www. highgatepublishing.com.au) is issuing titles available as paperbacks (via Amazon), for e-book readers (Amazon Kindle, Smashwords, Nook, etc.) and also can be purchased as PDF books for downloading on computer through my website. Fifty-one years in this racket, one way or another. Written for and edited newspapers, written a handful of books, made radio documentaries, reported for TV and made a television wild life documentary, written and published books, started a magazine which actually found its audience and would go on for more than 30 years.http://www.theaustralian.com.au/business/opinion/russian-invasion-of-ukraine-could-drive-global-food-prices-up/story-fnciihm9-1226856346079#

Russian invasion of Ukraine could drive global food prices up The last thing the shaky global recovery -- and the mining industry in particular, we would add -- needs now is a further spike in food prices caused by disruption to farming in eastern Ukraine. Ukraine is the world's third-largest exporter of corn, the sixth-largest of wheat, and almost all of that is grown in the Crimea and other eastern parts now trembling under Moscow's boot (voting in Crimea was due to begin late yesterday). Any denting of the fragile global recovery sentiment would (probably) have severe consequences for metals demand, a blow this sector can barely afford, with copper down 13 per cent so far this year and fears of a huge unloading of physical metal as financing deals are unwound (as explored here last week). Copenhagen-based Danske Bank says of potential disruption of Ukrainian food exports that this is the last thing the "shaky global economy" needs. It adds that both Russia's and Ukraine's economies are struggling and they need every cent of revenue they can lay their hands on. Ukraine supplies about 40 per cent of all the wheat grown in Europe, 20 per cent of the corn and 10 per cent of the rapeseed. While the wheat and corn are grown mainly in the threatened eastern part of the country, the rapeseed is produced mainly in the west, so is not (yet) threatened by Russian acquisitiveness. Up to 60 per cent of Ukraine's output of wheat and corn is exported while 95 per cent of rapeseed is shipped abroad. Disruption, especially of grain exports, would have "severe repercussions" for the global grain

market, the bank says. Here's another cruncher: there are just a few months before the

wheat harvest is due . Unavailability of Ukrainian grain is not what Europeans would like to see. This past week we have seen what the Commonwealth Bank termed "massive speculative investor and fund" buying of wheat positions, all pushing the prices higher. Food prices do, indeed, pose a threat to the global economy

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-- and global stability (remember the food riots in Tunisia and Egypt that brought down those governments). As of last week, coffee prices have risen 78 per cent since January 1, sugar by 23 per cent and soybeans by 11 per cent. Now wheat prices are on the march.

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