Russia to Strike Hard in Response to US Sanctions
EDITORIAL | 28.07.2017

Russia to Strike Hard in Response to US Sanctions

US Senate has voted on the bill containing a package of sanctions against Russia, Iran and North Korea. The senators have taken on great responsibility because Moscow is not going to watch the hostile action idly, it will respond. The retaliatory measures will be felt.

As Russia’s Foreign Ministry announced on July 28, the decision has been taken to seize the Serebryany Bor diplomatic compound in north-west Moscow as well as the embassy’s warehouse in a tit-for-tat move. A total of 35 diplomats will be sent home. The embassy staff must be reduced to 455 – the level of Russia embassy staff in Washington.

If President Trump signs the bill into law, it’ll be hard to imagine Moscow cooperating with the US in the UN Security Council on the draft resolution sanctions to punish North Korea. Washington may need the Russia’s support badly pretty soon.

The US space research programs will suffer a severe blow deprived of Russia RD-180 and RD-181 rocket engines they so much depend on. NASA’s Atlas 5 rocket launches will be suspended.

The export portfolio of JSC Techsnabexport (TENEX) includes 25 contracts with a total value of about $6.5 billion concluded with 19 US companies with the supply perspectives until 2028. The volume of the agreed supplies of Russian uranium products (that is 20% of annual reactor needs at the US nuclear power plants) is 95% used. There are few actors on the world market who could substitute the Russian supplies and it takes time and effort to make new deals, if it possible at all.

VSMPO-AVISMA is the world’s largest manufacturer of titanium products and the Russian supplier of titanium to Boeing and other US aerospace companies. It accounts for about a half of all titanium imported by the United States and over a third (35%) of titanium consumed by Boeing. The American company has investments in Russia. It has been in the country for decades. About five years ago, it announced plans to invest $27 billion over the next 30 years. In 2014, VSMPO and Boeing had signed an extension of the supply contract for titanium sheet to 2022.

VSMPO-AVISMA has no competitors in the world and can easily find other customers. The US partners will face a very serious problem unable to find an alternative. The suspension of titanium supplies from Russia would damage the US defense industry capabilities.

American companies operating in Russia could be targeted. They risk suffering heavy losses, especially energy giants and banking conglomerates. For instance, Caterpillar could lose orders for heavy equipment needed to build pipelines and other construction projects. US high-tech companies may be prevented from working with Russian counterparts – something they are interested in.

The issue fits into a larger geopolitical pattern. The EU reaction makes it a pro-Russian bill, pushing Europe away from the United States to Russia. Europeans get more evidence to see that Washington’s high-fallutin’ harangues about Atlantic solidarity are the way to promote its selfish interests. The differences between the United States and the EU undermine the G7’s unity regarding Russia. The countries agreed on the link between the Minsk accords and the sanctions. Now the US is going unilateral, provoking Europeans into continuing with the North Stream 2 project to defy America and, thus, benefit Russia. According to Europeans, «America First» should not be a synonym for «Europe second» or «Europe irrelevant».

According to Wolfgang Ischinger, chairman of the Munich Security Conference, this bill «will not achieve its objectives and will instead cause new problems. Unless it undergoes significant revision, it would compromise European energy security and damage US relations with Europe. The beneficiary of such an outcome would be Russia». According to Ischinger, the North Stream-2 issue «is not a question that should be decided in Washington. It is a European issue, to be decided by Europeans based on European law and regulation». The expert believes that signed into law, the legislation would «tip the scales in favor of those who want to end Europe’s participation in the existing trans-Atlantic policy approach on Russia, including the sanctions regime. If the president signs the bill in its current form, it would alienate America’s important complicating our alliance at a critical moment».

So, in an effort to strike Russia the US Congress has targeted Europe and NATO solidarity.

The fraying US-Russia ties will entail fraying arms control relationship. The «Russia sanctions bill» is not the only legislation expected to become law if Presidents Trump signs it. The proposed defense budget for 2018 has taken aim at the Intermediate-Range Nuclear Forces (INF) Treaty, as well as the Open Skies and even New START treaties. Becoming law, it would deal a major blow to the US-Russia arms-control architecture. Russia would have no choice but respond. This would lead to arms race. If the US provokes the termination of the INF Treaty, it will greatly spoil its relations with the European allies. Is it wise to develop an intermediate range missile nobody wants on its soil?

President Trump has also ordered a major review of US nuclear policy, a common move by new administrations. The mission is impossible without making clear if the US has arms control arguments with Russia in force or not. No clarity on the issue would greatly complicate military planning in general.

Russia can and will deal a heavy blow in response to the US «sanctions bill». Unlike Iran or North Korea, it can do it. This ability should not be underestimated by the president who intends to sign the bill into law. Too many times have US experts and lawmakers made calculations about how much the measures will hurt Russia without assessing the damage America will inflict on itself.

Tags: Russia  US  Sanctions