The impact of sanctions on Russia’s poles of power
To what extent are Western sanctions on Russia impacting the Putin regime? Evidence suggests that economic sanctions are fostering a divide between (1) the groups that profit from Western money (Russia’s “oligarchs”), and (2) those who wield state power and/or profit from the domestic budget (Russia’s siloviki). Two previous rounds of financial sanctions – credit freezes and the latest addition of several large companies to the U.S. Treasury’s list of “Specially Designated Nationals” (SDN) – appear to be straining the relationship between the oligarchs and the siloviki because of the strong impact these measures have on the Russian economy. For now, what is unclear is whether this tension at the top of Russian society will translate into a substantive policy change from the Kremlin.
In the final installment of a three-part analytical series on Russia, the Center for European Policy Analysis (CEPA) publishes its latest brief, “Tension at the Top: The Impact of Sanctions on Russia’s Poles of Power.” In it, Adjunct Fellow Maria Snegovaya tackles critical questions related to the Kremlin’s strategic behavior; and its ability to absorb the financial price of Western sanctions. Snegovaya finds that today’s sanctions will bite hardest over the long-term, while in the near-term, the Russian government must now account for the possibility that the West will impose even higher costs on future disruptive actions. This represents a new “cost” factor for the Kremlin. Putin may be willing to pay these costs. The poles of power around him may not.
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July 18, 2018