Russian President Vladimir Putin said at a press conference earlier today in Moscow that anyone who thinks of imposing sanctions against his country should think about their consequences. He said, “I think in today’s world, where everything is interconnected and everyone is dependent on one another in this way or another, we can, of course, inflict damage on one another, but his damage will be mutual. They should think about that, too.” Putin was addressing US president Barack Obama without saying so.
Putin appears to have warned of consequences that go beyond the strictly economic and financial domain when he said “everything is interconnected.” This warning will be taken seriously in Washington, because there are any number of areas where the US counts on Russia’s cooperation — Iran, Afghanistan, Syria, Iraq being the most obvious hotspots to begin with.
Again, Russia can deploy tactical nuclear weapons, pull out of START III, and, of course, team up with China in the Asia-Pacific, apart from rendering the UN Security Council even more dysfunctional. Russia can also hit back real hard if it dumps the US Treasury bonds it is holding ($200 billion) and/or moves away from dollar for conducting its oil trade.
Over and above, touch Russia and it boils down to oil price in the world market and any upsurge in oil price will adversely affect the western economies when they are barely on the recovery path. In sum, Obama’s foreign policy will be total disarray for the rest of his presidency.
However, what hits the Obama administration most is that the European Union will be extremely chary of any US move to impose sanctions against Russia. On the face of it, half of Russia’s trade is with the EU and any sanctions by the latter would have crippling effect on Russia. But the devil lies in the fine print, as always.
The point is, Germany accounts for one-third of the EU’s exports to Russia, the Baltic states and several countries in Central Europe depend on Russia to meet 100 percent of their needs for natural gas, and the EU trade sanctions are decided unanimously. See the excellent blog, here, on the issues involved.
No wonder, the G7 statement condemning Russia’s moves in Crimea altogether steers clear of the sanctions route. Interestingly, at his press conference today, Putin mentioned that confidential exchanges are going on between Moscow and the western capitals.
Take Japan’s predicament. Although Japan has heeded the US demarche and signed up on the G7 statement, it cannot be very pleased with the prospect of freezing relations with Russia just when things are looking up and a full-fledged strategic dialogue has commenced between Tokyo and Moscow. Prime Minister Shinzo Abe has already made amends.
Tokyo has signaled that the planned visit by the Japanese foreign minister to Moscow is still on course. Putin is also expected to visit Japan later this year. For Japan, normalization of relations with Russia and the conclusion of a peace treaty settling the dispute over the Kurile islands is a top foreign-policy priority, given the rising tensions in relations with China.
Equally, beneath the placid surface of the US-Japan relations, there are undercurrents, the latest evidence being Washington’s insistence that Japan returned to the US over 300 kilograms of weapons-grade plutonium.
Japan’s former defence minister and national security advisor Yuriko Koike wrote an insightful analysis recently on the strains that have appeared lately in the US-Japan relationship. Evidently, getting Japan on board any US-led initiative to ‘isolate’ Russia is not going to be easy. Tokyo will factor in that Beijing has taken a stance broadly supportive of Russia in the Ukraine crisis.
– March 4, 2014