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U.S. can cut Russia off from dollar economy

12 March 2014 13:33 (UTC +04:00)

Baku – APA. As President Obama searches for a way to contain and ultimately reverse Russia’s invasion of southern Ukraine without using force, his team finds itself torn over just how far to go using the economic weapons in America’s arsenal, APA reports quoting The New York Times.

Administration officials have concluded that they have the means through sanctions to badly damage the Russian economy, and some officials think they should use that power sooner rather than later if President Vladimir V. Putin refuses to surrender control of Crimea and proceeds to annex it.

Mr. Obama, who will host Ukraine’s new prime minister, Arseniy P. Yatsenyuk, at the White House on Wednesday in a show of solidarity, has so far held off imposing measures with any financial bite, in part to give diplomacy a chance. While he has canceled trade talks and military cooperation, his only move on sanctions has been to ban visas for fewer than a dozen Russian and Ukrainian figures deemed responsible for undermining Ukraine’s sovereignty. Beyond freezing assets of individuals, the administration could sanction banks and potentially cut the country off from the dollar economy.

"Treasury already has the authority to sanction individuals—Ukrainian or Russian—who are involved in the proposed annexation of Crimea," said a senior U.S. official briefed on the sanctions debate, writes The Wall Street Journal. "As we have said, we are actively looking at those who might fit the criteria, and we will be designating individuals." Longer term, the U.S. is looking to weaken the Kremlin's finances by identifying the suspected role of senior Russian officials and businessmen in human-rights abuses and illicit trade, current and former administration officials said. Congress in 2012 passed legislation, called the Magnitsky Act, that calls for the sanctioning of Russian authorities allegedly involved in human-rights abuses. To date, only 18 individuals have been designated under this law. But U.S. officials and lawmakers said the legislation could be broadly defined to apply to numerous officials in Mr. Putin's government and security services.

In Washington, the Obama administration moved closer toward punitive measures against Russian officials and companies, while progress on an aid package for Ukraine slowed in Congress. Especially since the Sept. 11, 2001, terrorist attacks, the U.S. has worked to partner with Mr. Putin in trying to combat the proliferation of arms and money-laundering across the Middle East and Central Asia. The efforts have placed Moscow at the center of many international institutions charged with overseeing global commerce, such as the World Trade Organization and the Financial Action Task Force.

According to The New York Times, American officials said there would be more unanimity if Russia escalated the crisis by following through with annexation or moving further into Ukraine. Officials are increasingly worried because the Crimean Peninsula, with no land connection to Russia, depends on Ukraine for water, electricity and other energy, which means Moscow might decide to seize more Ukrainian territory to supply the enclave.