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Putin reluctant to strike back against US following sanctions

Arild Moe
Researcher Arild Moe from the Fridtjof Nansen Institute.

Vladimir Putin has declined to return fire over this week’s new EU and US sanctions against his inner circle. He did warn that further action may result in retaliation, but some analysts, like Arild Moe with the Fridtjof Nansen Institute, are saying this would hurt Russia more than the West.

Russian President Vladimir Putin has warned that sanctions from the US, Canada and EU against members of his inner circle may provoke retaliation against western businesses operating in Russia. But with the Russian economy dependent on cooperation with other nations, no action has yet been announced.

“I do not see a need for us to take countermeasures,” he said to reporters following the Supreme Eurasian Economic Council summit. “But if this kind of situation continues, of course we will have to start looking at who is doing what in Russia in different sectors of our economy, including the energy sector.”

Putin repeated that his government has “no desire” to reciprocate, but that some countermeasures have already been proposed. 

Some analysts say the West is driving the economic tensions while Russia continues to avoid confrontation.

Western powers are “stepping up while Russia is trying not to fuel the fire any further,” said Daniel Fjærtoft, managing director of Sigragroup, a Norwegian consultancy focused on Scandinavian-Russian cooperation. “This is of course because Russia has more to lose from a sanction war than the US.”  

However many US, Canadian and European companies have investments in Russia, most notably in the energy sector. 

“This is Putin saying, ‘your companies are over here too,’” said Fjærtoft. “This isn’t Putin threatening, this is more of a sober response to the US sanctions.”

Even after Monday’s sanctions, Canada remains the country with the most extensive sanctions, with a list of 70 parties. 

Individuals targeted by US sanctions, such as Rosneft CEO Igor Sechin, have had any assets under US jurisdiction frozen and are prohibited from entering the country. As for the businesses, such as gas-pipeline builder OOO Stroygazmontazh, US citizens are generally prohibited from doing businesses with them. 

Rosneft, the powerful state-owned oil company with several partnerships with western oil companies, is not among those targeted at this point.

But that may not be enough to shelter US and EU companies from the effects of the sanctions if Putin and his government retaliate with restrictions of their own. 

“The area where Russia really has clout is energy,” said Arild Moe, a researcher with the Fridjof Nansen Institute in Oslo. 

But he says that actions taken against energy companies, even foreign ones, will have serious repercussions for the Russian economy. 

“I find it hard to think that they will use that [power] because it’s of such crucial importance to Russia,” he said. 

“Of course that goes for all economic sanctions, that they really work both ways.”