TIME Foreign Policy

White House: EU, US to Impose New Russia Sanctions

(WASHINGTON) — The United States and European Union plan to impose new sanctions against Russia this week, including penalties targeting key sectors of the Russian economy, the White House said Monday.

The show of Western solidarity comes as the U.S. accuses Russia of ramping up its troop presence on its border with Ukraine and shipping more heavy weaponry to pro-Moscow separatists in eastern Ukrainian cities.

President Barack Obama and the leaders of Britain, Germany, France and Italy discussed the crisis during a rare joint video teleconference on Monday. The discussion follows days of bilateral talks on how to implement tougher sanctions after the downing of a passenger jet in eastern Ukraine, an attack the U.S. says was carried out by the separatists.

The U.S. and European sanctions are likely to target Russia’s energy, arms and financial sectors. The EU is also weighing the prospect of levying penalties on individuals close to Russian President Vladimir Putin, who appears to only be deepening Russia’s role in destabilizing Ukraine.

“It’s precisely because we’ve not yet seen a strategic turn from Putin that we believe it’s absolutely essential to take additional measures, and that’s what the Europeans and the United States intend to do this week,” said Tony Blinken, Obama’s deputy national security adviser.

Europe, which has a stronger trade relationship with Russia than the U.S., has lagged behind Washington with its earlier sanctions package, in part out of concern from leaders that the penalties could have a negative impact on their own economies. But a spokesman for British Prime Minister David Cameron said following Monday’s call that the West agreed that the EU should move a “strong package of sectoral sanctions as swiftly as possible.”

French President Francois Hollande said in a statement that the Western leaders “regretted Russia has not effectively pressured separatists to bring them to negotiate nor taken expected concrete measures to assure control of the Russian-Ukrainian border.”

The U.S. penalties are expected to be imposed after Europe finalizes its next moves. Neither set of penalties is expected to fully cut off Russian economic sectors from the West, an options U.S. officials have said they’re holding in reserve in case Russia launches a full-on military incursion in Ukraine or takes a similarly provocative step.

As the West presses ahead with new sanctions, U.S. officials say Russia is getting more directly involved in the clash between separatists and the Ukrainian government. Blinken said Russia appeared to be using the international attention focused on the downed Malaysia Airlines plane as “cover and distraction” while it moves more heavy weaponry over its border and into Ukraine.

“We’ve seen a significant re-buildup of Russian forces along the border, potentially positioning Russia for a so-called humanitarian or peace-keeping intervention in Ukraine,” Blinken said. “So there’s urgency to arresting this.”

Nearly 300 people were killed when the Malaysian plane was shot down by a missile on July 17. The West blames the separatists for the missile attack and Russia for supplying the rebels with equipment that can take down a plane.

Other leaders participating in Monday’s call were German Chancellor Angela Merkel and Italian Prime Minister Matteo Renzi. The White House said the leaders also discussed the stalled efforts to achieve a cease-fire between Israel and Hamas, the need for Iraq to form a more inclusive government and the uptick in security threats in Libya.

TIME Foreign Policy

Obama Contends with Congressional Backseat Drivers on Ukraine

Congress again threatens to push Obama foreign policy with legislation

A Malaysia Airlines jet is shot down over the Ukraine and Congress is, of course, full of back-seat foreign policy advice for President Obama. The problem is when they start passing some of this advice to be signed into law.

Some say Obama has already been too aggressive. “[T]he crisis in Ukraine started late last year, when the EU and U.S. overthrew the elected Ukrainian president, Viktor Yanukovych,” said former Rep. Ron Paul, a Texas Republican. “Without U.S.-sponsored ‘regime change,’ it is unlikely that hundreds would have been killed in the unrest that followed. Nor would the Malaysian Airlines crash have happened.”

On the other side of the hawk spectrum, Republican Senators such as Marco Rubio and Mark Kirk felt compelled by the tragedy to call on Obama to pass energy, banking and defense sectoral sanctions against Russia, which has been supporting Ukrainian separatists but denies having anything to do with the downing of the plane. Thus far the Obama Administration’s punishment for Russia’s seizure of the Crimea and rabble rousing in eastern Ukraine has been targeted individual sanctions and visa restrictions.

“I don’t know how anybody can say our response has been anything but timid and cautious,” said Senator Bob Corker of Tennessee, the top Republican on the Foreign Relations Committee. “Hopefully on the positive side, this will galvanize the international community to take the kind of steps that should have been taken months ago to push back on [Russian President Vladimir] Putin and cause him to pay the kind of price that he should pay for this outrageous act.”

Kirk also called on Attorney General Eric Holder to launch a wrongful death suit. “I want to hear that the Department of Justice will bring one hell of a wrongful death suit against Russian assets located in the United States to make sure that there is significant cost paid by Russia for this action of shooting down with an international airliner with a weapons system that is directly related to Russian armed forces,” he told CNN.

Senator John McCain of Arizona, the 2008 GOP presidential nominee, went so far as to call on Obama to arm the Ukrainian government. “Now is the time to provide Ukraine with the weapons and other military assistance they have requested and require to defeat the separatist groups and secure their country—assistance that, had we provided it earlier, might have enabled Ukrainian forces to succeed in this effort by now and thereby prevented last week’s tragedy,” McCain said on Monday.

So far, all Obama has threatened is to levy unspecified costs against Russia, along with urging the Europeans to step up on sanctions.

Congress, and particularly the party in opposition, has often expressed strong views on the President’s foreign policy. Despite the fact that, constitutionally, foreign policy is the purview of the Oval Office, Congress drove the War of 1812 and was a key factor in the Mexican-American War. They also dragged Franklin Roosevelt’s heels in getting into World War II and had an enormous impact on Vietnam policy, not to mention Democratic efforts to defund President George W. Bush’s actions in Iraq.

But Obama not only has to contend with opposition complaints about his foreign policy, but with some friendly fire as well. Senate Foreign Relations Committee Chairman Bob Menendez, a New Jersey Democrat, has been the driving force to get Obama to beef up sanctions against Iran, support Israel more strongly and hold a tougher line on Cuba. Menendez has helped push through sanctions that the Administration has explicitly said it didn’t want, something he could do again against Russia if the Administration doesn’t act.

Obama has not had an easy time with Congress on much of anything, but particularly on foreign policy. The other end of Pennsylvania Avenue is quick to condemn, and yet when they are asked to act, for example with Syria or Libya, they suddenly remember the separation of powers. Congress in both instances failed to pass any kind of resolution approving action in either country. That’s because polls show that from Libya to Syria to the Ukraine, the American people have zero desire to engage in more wars. Which means that despite the sturm und drang coming out of the hawkish wing of the GOP, Obama is probably more likely to listen to Paul’s libertarian Dovish wing.

TIME Ukraine

Ukraine Claims Russia Shot Down Military Jet

Ukraine
Ukrainian Army jets fly over the Ukrainian government military base while troops wait for Ukrainian President Petro Poroshenko's visit in Devhenke village, Kharkiv region, eastern Ukraine on July 8, 2014. Evgeniy Maloletka—AP

The alleged incident is the third this week of a Ukrainian jet being fired upon

A Russian plane shot down a Ukrainian jet as it was flying on military operations over east Ukraine, Reuters reports.

Ukrainian military spokesperson Andriy Lysenko confirmed Thursday that a SU-25 warplane was shot down Wednesday evening by a Russian jet.

The allegation is the most vehement to date of Russia directly intervening in the military conflict engulfing east Ukraine. Russia’s defense ministry has refused to respond to the accusation.

Lysenko, a spokesperson for Ukraine’s Defense and Security Council, told journalists the plane was downed by a rocket strike. He added that the pilot ejected without danger.

This is the third incident of a Ukrainian plane being fired upon this week. Last Monday a Russian missile allegedly shot down an An-26 transporter plane. Two of the eight people on board were killed, Kiev said.

On Wednesday, another SU-25 plane was struck by a rebel missile, though the pilot managed to land the plane with little damage. Ukrainian officials don’t suspect Russian involvement.

The conflict in east Ukraine between government forces and separatist rebels has been ongoing for three and a half months, with over 270 Ukrainian servicemen killed. Kiev has accused Russia of assisting the rebels.

On Wednesday U.S. President Barack Obama enforced sanctions on some of Russia’s largest companies, reducing their access to funds. Western governments have accused Russia of failing to help halt the violence.

[Reuters]

TIME russia

Putin: U.S. Sanctions Hurt Bilateral Ties, U.S. Firms

Vladimir Putin
Russia's President Vladimir Putin leaves the Itamaraty Palace after attending the final day of the BRICS Summit in Brasília on July 16, 2014 Felipe Dana—AP

The Russian Premier said the new round of sanctions were driving relations between the two countries "into a corner"

(MOSCOW) — President Vladimir Putin on Thursday lamented the latest round of U.S. sanctions against Russia, saying they will stalemate bilateral relations and hurt not only Russian but also American businesses.

Russia’s benchmark MICEX plummeted 2.6 percent at the opening Thursday upon news of the sanctions while Russia’s biggest oil company, Rosneft, was nearly 5 percent down.

Putin’s comments came hours after President Barack Obama announced broader sanctions against Russia, targeting two major energy firms, a pair of powerful financial institutions, eight weapons firms and four individuals. The increased U.S. economic pressure is designed to end the insurgency in eastern Ukraine that is widely believed to be backed by the Kremlin.

The U.S. penalties, however, stopped short of the most stringent actions the West has threatened, which would fully cut off key sectors of Russia’s oil-dependent economy. But officials said those steps were still on the table if Russia fails to abide by the West’s demands to stop its support for pro-Russia insurgents who have destabilized swaths of eastern Ukraine.

Pro-Russia insurgents have been fighting government troops in eastern Ukraine for four months now in a conflict that the U.N. says has killed over 400 and displaced tens of thousands. The conflict took off shortly after Russia annexed the mostly Russian-speaking Ukrainian peninsula of Crimea.

In televised comments Thursday, Putin said the sanctions are “driving into a corner” relations between the two countries as well as the interests of American companies and “the long-term national interests of the U.S. government and people.”

Putin warned Washington that the sanctions will backlash against American companies working in Russia.

The most noticeable companies on the list are Rosneft and Russia’s largest independent gas producer, Novatek. Both are now barred from getting long-term loans from U.S. entities.

Moscow-based investment bank Sberbank-CIB said in a note to investors that Russian companies cannot replace long-term loans from the U.S. immediately.

“While Asian and Middle Eastern money can step in to fill the gap, we expect that this will take time,” the note said, adding that borrowing will also cost more.

Rosneft has a multibillion-dollar deal with ExxonMobil, which among other things allowed Exxon to develop lucrative oil fields in Russia.

“We gave this American company the right to work on the shelf,” Putin said in Brazil, referring to Exxon’s potential exploration on the Russian Arctic shelf. “So, what, the United States does not want it to work there now?”

Putin made no mention of the additional sanctions levied Wednesday by the 28-nation European Union, which urged the European Investment Bank to sign no new financing agreements with Moscow and was suspending operations in Russia financed by the European Bank for Reconstruction and Development. European nations have much closer energy and other economic ties with Russia and have not imposed as tough sanctions as the United States.

Igor Sechin, Rosneft’s CEO and a close confidante of Putin, dismissed the sanctions as “unfounded, subjective and unlawful,” adding that his company “had no role in the events in Ukraine.”

Sechin said their lawyers have to yet to explore how hurtful the sanctions could be but added that the company has enough money in reserves to refrain from taking out new loans for a while.

Rosneft posted $2.5 billion in net profit in the first quarter of the year and about $3.5 billion in free cash flow.

“This is the wrong way,” Sechin said, referring to the sanctions, in comments carried by Interfax. “But I think God sees everything and will put things right.”

TIME Iran

A Side Effect of Iranian Sanctions: Tehran’s Bad Air

An overview of Tehran, July 7.
An overview of Tehran on July 7, 2014 Kiana Hayeri for TIME

Air pollution has decreased significantly since sanctions were temporarily lifted in January. As Iran and the U.S. attempt to hammer out a comprehensive nuclear deal before the July 20 deadline, the capital city’s newly cleaner air hangs in the balance 

When the U.S., the U.N. and Europe implemented, in 2010, one of the harshest sanctions regimes ever seen globally to curb Iran’s suspected development of a nuclear-weapons program, it was widely expected that the country would soon fall to its knees. Instead, Iran absorbed the blow, and though weakened, has managed to keep its economy afloat.

The sanctions all but stopped international financial transactions, limited military purchases, reduced the import and export of petroleum products and significantly curtailed trade — but you wouldn’t know it by walking the bustling streets of Iran’s capital of Tehran. According to economist Saeed Laylaz, Iran imported $3 billion worth of European luxury cars last year, triple the number before sanctions. Grocery stores are packed with all kinds of American products: from Coca-Cola to Snickers candy bars to Duracell batteries, while electronics shops even in small towns proudly display the full range of Dell, Hewlett-Packard and Apple products — even the iPhone 5S. The sanctions didn’t hurt Iran, say Iranians; they merely amplified an economic crisis wrought by government mismanagement in the preceding years.

About the only place where the impact of sanctions is visible is in the skies above Tehran. Iran may have the fourth largest proven petroleum reserve in the world, but it refines little of its own product, depending instead on imports of fuel from Europe. Sanctions cut those commodities off, sharply reducing supplies of gasoline. In order to keep Iran’s 26.3 million cars, trucks and motorcycles on the road, government officials were forced to convert petrochemical factories into ad hoc refineries, an expensive and inefficient process that produces a low-grade fuel choked with pollutants.

The results were devastating. Already home to some of the world’s most polluted cities, Iran saw a dramatic increase in the air pollution that contribute most directly to ill health, according to a worldwide World Health Organization assessment released in 2013. It is impossible to definitively link the impact of sanctions to the rising rates of childhood asthma cases and lung disease documented by Iran’s Health Ministry over the past four years — the concurrent increase in car ownership may also play a role. But when some sanctions, including those on the import of gasoline, were lifted in January under an interim agreement that proffered relief in exchange for substantial negotiations over the scope of Iran’s nuclear program, the impact was visible.

In June 2013, the pollution in Tehran was so bad that the mountains surrounding the capital could not even be made out from the 13th floor of a hotel popular with journalists in the city center. A year later, however, the last vestiges of winter snow could be spotted high on the mountains to the north of the city. “Sanctions significantly contributed to pollution, and particularly the kinds of pollution that are damaging to health,” says Rocky Ansari, an economist and sanctions expert at Cyrus Omron International, a firm that advises international companies on investing in Iran. Even before the sanctions were lifted, he says, the government was working on improving refining capacity in the country, but the international decision to clear the way for increased imports of refined fuel was a huge boost. “Now that hardly any petrol from petrochemical factories is being used, the pollution has reduced, and already people can breathe better air.”

That may be the case, but many Iranians are still holding their breath. The interim agreement ends on July 20, and a comprehensive deal that limits Iran’s ability to produce nuclear weapons in exchange for a permanent lifting of sanctions is still in doubt. Iran says its nuclear program is purely for peaceful purposes, but a long history of subterfuge when it comes to international inspections has raised doubts about the country’s true intentions. The U.S. wants to see a sharp reduction in Iran’s ability to enrich nuclear fuel to weapons grade; Iran says it will not submit to overly onerous limits on its nuclear energy program.

The temporary agreement can be extended by up to six months, a point raised by French Foreign Minister Laurent Fabius on the sideline of talks in Vienna on July 13. “If we can reach a deal by July 20, bravo, if it’s serious,” he told reporters, according to Reuters. “If we can’t, there are two possibilities. One, we either extend … or we will have to say that unfortunately there is no prospect for a deal.” Should the talks fail, as with several previous attempts to strike a deal, the U.S. is likely to lead the call for even tougher sanctions, risking more conflict in a region already in turmoil — and further darkening the skies above Tehran.

— With reporting by Kay Armin Serjoie / Tehran

TIME Iran

Iranian Sanctions Have Cost U.S. Economy Up to $175 Billion, Study Says

From left: Iran's Foreign Minister Mohammad Javad Zarif meets with U.S. Secretary of State John Kerry during talks between the foreign ministers of the six powers negotiating with Tehran on its nuclear program, in Vienna, on July 13, 2014.
From left: Iran's Foreign Minister Mohammad Javad Zarif meets with U.S. Secretary of State John Kerry during talks between the foreign ministers of the six powers negotiating with Tehran on its nuclear program, in Vienna, on July 13, 2014. Jim Bourg—AFP/Getty Images

National Iranian-American Council (NIAC) report finds tens of billions of potential export revenue lost

U.S. sanctions against Iran don’t just hurt the Islamic Republic, they also have an impact on the U.S. economy—to the tune of as much as $175.3 billion since 1995, according to a new study.

Western powers have been sanctioning Iran since the mid-1990s over its sponsorship of terrorism and, lately, its pursuit of nuclear power and possibly weapons. The restrictions on trade and exports have had a “crippling” effect on the Iranian economy, according to Iranian Foreign Minister Javad Zarif.

But according to the National Iranian-American Council (NIAC) report, the impact has also been felt on those handing out the sanctions — particularly the U.S. The report found the U.S. had lost between $134.7 and 175 billion in potential export revenue since 1995, after examining decades of bilateral trade patterns between Iran and its 25 largest trading partners, plus Mexico, due to its high level of trade with the U.S.

The report also finds an average of between 51,000 and 66,000 lost job opportunities in the U.S. every year since 1995. Texas and California are likely the biggest losers in terms of lost employment, the study found. Among European nations, Germany was the biggest potential loser, with between $23.1 and $73 billion in missed economic opportunities.

The study comes as Western powers are working to reach a deal with Iran that could reduce sanctions in exchange for a scaling back of its nuclear program. Its authors said the Obama administration should consider the true cost of sanctions during talks in Vienna.

“The arguments in favor of sanctions, or against a deal that entails sanctions relief, are debatable. But any debate over whether to exchange sanctions relief for limitations to Iran’s nuclear program would be incomplete at best and misleading at worst if it does not address the cost of this policy,” the report reads.

The report’s authors said they didn’t wish to cast opinions on U.S. foreign policy, or evaluate whether the sanctions were “worth the cost or not.”

“[The study] only seeks to ensure that the cost of sanctions is recognized as America approaches the moment when it must decide whether to exchange the sanctions for nuclear concessions or continue the economic warfare,” the report reads.

TIME North Korea

Japan To Lift Some Sanctions On North Korea

North Korea Agrees To Reopen 'Full-Scale' Investigation Into Abduction Issue
Japanese Prime Minister Shinzo Abe announces North Korea has agreed to reinvestigate its abduction of Japanese nationals at his official residence on May 29, 2014 in Tokyo, Japan. The Asahi Shimbun

Japanese Prime Minister Shinzo Abe announced the decision Thursday but provided no immediate details.

(TOKYO) — Japan says it will lift some of the sanctions it has imposed on North Korea.

Japanese Prime Minister Shinzo Abe announced the decision Thursday but provided no immediate details.

The lifting of the sanctions is in return for North Korea’s promise to reinvestigate the fate of Japanese who were abducted by North Korean agents in the 1970s and 1980s.

Even a partial thaw could provide Pyongyang with a small but potentially meaningful boost to its recent efforts at promoting international tourism and, perhaps farther down the road, increased trade.

TIME Morning Must Reads

Morning Must Reads: June 25

Capitol
The early morning sun rises behind the US Capitol Building in Washington, DC. Mark Wilson—Getty Images

In the news: Iraqi premier refuses calls to form broader government; U.S. sanctions on Russia could be delayed; Sen. Thad Cochran wins Mississippi primary; Rep. Charlie Rangel in the lead

  • “Iraqi Prime Minister Nouri al-Maliki refused Wednesday to bend to international appeals to form a more broad-based government to curb the country’s swelling Sunni Muslim insurgency.” [WSJ]
    • “Iran is flying unarmed surveillance drones over Iraq from an airfield in Baghdad and is secretly supplying Iraq with tons of military equipment, supplies and other assistance, American officials said. Tehran has also deployed a unit there to intercept communications…” [NYT]
  • “Sanctions aimed at key economic sectors in Russia because of its threatening moves in Ukraine might be delayed because of positive signals from Russian President Vladimir Putin…” [AP]
  • “Sen. Thad Cochran narrowly won Mississippi’s Republican primary election Tuesday, prevailing over a Tea Party challenger in a hard-fought runoff vote that was seen as a proxy for the intramural fight between the GOP establishment and conservative insurgents.” [TIME]
    • “After trailing the lesser known McDaniel in the June 3 primary, Cochran, in three weeks time, managed to: a) grow the electorate in his favor by, among other things, recruiting African Americans to his cause b) run successfully on a message of keeping his seniority in Washington and c) win despite, quite clearly, being the less naturally skilled candidate on the stump.” [WashPost]
  • “New York Democratic Rep. Charlie Rangel held a slim lead in a primary race against state Sen. Adriano Espaillat early Wednesday, as the longtime incumbent looked for a victory that would give him what he’s said will be one last term in Congress.” [TIME]
  • Boehner Planning House Lawsuit Against Obama Executive Actions [Roll Call]
  • “The Obama administration cleared the way for the first exports of unrefined American oil in nearly four decades, allowing energy companies to start chipping away at the longtime ban on selling U.S. oil abroad.” [WSJ]
TIME russia

We’re Not Impressed With Your Space Tantrum, Mr. Putin

The International Space Station: Putin won't come to play anymore
The International Space Station: Putin won't come to play anymore NASA

An open letter to the Russian leader as his deputy prime minister threatens to ground American astronauts and military satellites

Dear Vladimir,

So you’re not having enough problems digesting Crimea, that half-bankrupt hairball you swallowed because it was there and looked tasty but now it won’t go down and everyone in the world is mad at you? Now you want to pick a fight in space too?

That’s how it seems, at least, after your Deputy Prime Minister Dmitry Rogozin announced a number of tit-for-tat sanctions against the U.S. today—specifically among them, targeting our countries’ once-cozy collaboration on the International Space Station. According to Rogy, you’ll quit selling us seats on your Soyuz booster—which, since the grounding of the shuttle, is American astronauts’ only way into space—and use the station on your own, despite the fact that it was largely a NASA construction project. What’s more, you’ll no longer sell us the NK-33 and RD-180 engines we currently buy from you for our Atlas V boosters, at least for any launches of military satellites.

Ooh, smack! Now put down your lightsaber young Skywalker. Here’s why we’re not impressed:

First of all, you’ve conveniently scheduled the shutdown of your Soyuz taxi service for 2020, or four years before we plan to abandon the ISS and drop it in the drink anyway. Why wait until then? Could it be the cool $76 million we pay you per seat—cash that an oil-drunk economy like yours needs when fossil fuel prices are falling? But, as you surely know, at least two American companies—Orbital Sciences and Elon Musk’s SpaceX—will all but certainly have their own for-lease spacecraft flying well before then, and even NASA, which has been inexcusably slow in getting a next generation manned vehicle built, may be back in the game by 2020. In other words, you’re going to quit selling us a service we weren’t planning to use anymore anyway. (According to an e-mail from NASA to TIME, by the way, you’ve not even officially been in touch about your new plans, though you did take the time to let the media know—a little like breaking up over Twitter.)

As for the engines: yes, it’s true that the NK-33 and D-180 are nice bits of hardware and the Atlas does rely on them. But the Atlas pre-dates you, Vlad. Remember John Glenn? He flew on one of them, as did the ICBMs we were building in those days and pointing your way—and you guys weren’t exactly selling us the hardware we needed to take you out. You don’t want the revenue that comes from globalized trade? OK, so we’ll in-source our engines again and keep the cash at home.

Look, Czar Descamisodo, history will decide if your Ukrainian adventure was a winning hand. But the Space Race is over and America won. Even decades after the glory days of the moon landings, it’s still NASA that’s got spacecraft approaching, orbiting or on the surface of Mercury, Mars, Jupiter, Saturn, Pluto and multiple asteroids. Russia? Not so much. The world will have to reckon with you for as long as you choose to misbehave in Europe and anywhere else your eye may wander. But in space? We’re fine without you. Tranquility Base, out.

TIME Ukraine

U.S. Sanctions Push Putin Toward His Dream of A New Financial System

Russan President Vladimir Putin Visits Petrozavodsk
Russian President Vladimir Putin Sasha Mordovets—Getty Images

Although Monday's sanctions will hurt Russia in the short term, they will also force Putin to step up his efforts to weaken U.S. influence over the global economy, which so far has been "little more than wishful thinking because of the difficult reforms it would require"

A little over a year ago, in early March 2013, the Russian state energy czar Igor Sechin made his American debut at an oil summit in Houston, Texas, reportedly accompanied by armed guards equipped with a K-9 unit. The speech he gave that day at the СERAWeek conference, an annual gathering of energy titans from around the world, was part of a pit stop for Sechin. He was on his way to a more high profile event, the funeral of his old friend Hugo Chavez, the truculently anti-American President of oil-rich Venezuela. But since he was passing through the Western hemisphere anyway, Sechin clearly felt it was worthwhile to court some American investors. “I call for us to work together,” he told the audience that day, according to Russia’s Vedomosti daily, “to drive our business for mutual benefit.”

At the time, no one could have predicted that this would be Sechin’s last American visit as a welcome ambassador for big Russian oil. On Monday, the U.S. released a blacklist of seven Russian officials sanctioned in retaliation for Russia’s incursions in Ukraine. By far the most influential figure on that list is Sechin, who is not only the head of the world’s biggest oil producer, Rosneft, but an old friend and confidante to Russian President Vladimir Putin.

And his response? That’s been clear since the middle of March, when Sechin first learned that he was in the U.S. Treasury Department’s crosshairs. “He who messes with us also helps us. So thank you very much,” he said. “From a business standpoint, Russian companies have plenty of places to move their activities. There is a global economy, a big world, where Europe and America haven’t been the bosses for a while now.”

Part of that answer was clearly bravado. As TIME reported last month, when the U.S. hit Russia with its first round of sanctions, the impact on the targets of the sanctions was quick, choking off access to global markets and payment systems, which are still dominated by the U.S. But Sechin also has a point. There is no way to isolate the world’s largest publicly traded oil producer from the global economy without causing the world economy to crash, and if the U.S. refuses to do business with Sechin, there are plenty of others standing in line. The global oil major BP, for instance, is already the second biggest stakeholder in Rosneft after the Russian government, and has been more than willing to offer Russia its state of the art technology.

But all of these concerns take a backseat to Putin’s larger strategy – and Sechin’s. For years, they have been calling for a new world order – or as they tend to call it, a “multipolar world” – in which the West must cede its dominance of the global economy to several regional powers, including Russia. That dream has long been little more than wishful thinking because of the difficult reforms it would require. Central banks around the world would likely have to start keeping their reserves in currencies other than the dollar and the euro. Commodities trading would have to diversify away from the hubs in New York and London. Because of the inertia of the global financial infrastructure, these changes have often been dismissed either as pipedreams or very longterm projects.

But the sanctions regime against Russia will likely only accelerate its drive to carry out these reforms. In the past month, Moscow has already begun trying to set up its own “national payment system” to challenge global players like Visa and Mastercard. It also appears to be dumping American treasury bills, one of the favored means of storing its reserves. The next stage in this strategy is expected to come in May, when Sechin is set to take the helm of a commodities exchange in St. Petersburg, his and Putin’s hometown. In the coming years, that exchange, which is known as SPIMEX, will be seeking to take a major chunk of the global trade in oil and gas, with the ruble as its main form of settlement. All of these efforts have been pushed into overdrive amid Russia’s standoff with the West over Ukraine, and to be sure, they have nudged Russia into murky economic waters. In seeking to disrupt the framework of the global economy, Russia could easily drag itself into a depression.

But Putin has been preparing for that. Over the past two years, he has urged all Russian businessmen and officials to bring their money onshore, and apart from building closer ties with China – the main challenger to the West’s economic hegemony – Russia has formed alliances with other states that would love to see that hegemony broken. Venezuela is one example. It sits on top of the largest untapped reserves of oil in the world, but it has struggled to bring that fuel to market because of its lack of partners in the West. (The U.S. has not had an ambassador in Caracas since 2010.)

All the while, Russia has gone out of its way to help. Less than three months after attending Chavez’s funeral, Sechin returned to Venezuela to sign a lucrative joint venture that was wistfully christened Petrovictoria. After the signing ceremony, he presented the Venezuelan President, Nicolas Maduro, with a gift from Putin – a bronze bust of the late Commandante Chavez that is now stored in the Presidential Palace in Caracas. It was a touching show of friendship, and a few months later, Maduro sent his own envoy to Putin with a message, “congratulating him on that important role that he plays in the process to shape the multipolar world without war, a world, which our Commandante Hugo Chavez was dreaming about.”

Any nation hit with U.S. sanctions would likely share in that dream, as it presupposes the end of the American supremacy that gives its economic sanctions force. And the more isolated Russia grows from the West, the more desperate it will become to turn that dream into reality. It already has a lot of allies on its side, not least of all China. So when the dust settles and Russia grows accustomed to the pain of Western sanctions, Putin may wind up a lot closer to the multipolar world he wants. That, at least, seems to be his strategy, and if it means staying away from the oil kings of Houston, then so be it. Beijing and Caracas will have to do.

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