"IT IS one thing to see Russia’s hand in the disruption in eastern Ukraine, quite another to muster the strength to arm-wrestle it back. Europe says meekly that it will expand its list of Russian citizens subject to travel bans and asset freezes. America, which faces less economic blowback from sanctions, is showing more resolve.
Having targeted senior Kremlin figures, an oligarch and Vladimir Putin’s favourite bank in three earlier rounds of measures, America is preparing to add more of the president’s allies to the list. It has been reported that Igor Sechin, the president and chairman of Rosneft, a giant state-owned oil company, could join Gennady Timchenko, who has called being sanctioned “quite an honour” while admitting it has caused problems for Gunvor, the oil-trading firm he co-founded, because banks are “frightened”. The limited sanctions already in place are having a chilling effect on business in Russia (see page 64). A Treasury official points out that more capital has left Russia so far this year than in the whole of 2013, and that stocks, bonds and the rouble have all fallen. Now the White House has mooted targeting whole sectors, such as financial services and energy.
Finance is the obvious place to start because of the pre-eminence of the dollar, America’s central role in the clearing of cross-border bank and credit-card transactions, and the American-led globalisation of money-laundering compliance. These make America’s unilateral actions multilateral. “Russia is much more vulnerable in finance than we are. Putin knows this, which explains his attempts in recent years to reduce reliance on the dollar in international trade and banking,” says Juan Zarate, a former deputy national security adviser and author of “Treasury’s War”, a book about financial statecraft.”
There isn’t really a word for how incredibly stupid of a move this would be by the White House. It is kind of like the USA is threatening to stab Russia, even though Russia has a gun. What were to happen, for instance, if Russia just decided they didn’t want to use the dollar anymore? We would look pretty fucking dumb.