Mikhail Kasyanov: Oil Price Drop Could Bankrupt Kremlin in Six Months; Putin Overestimates His Ability to Cope
The Obama administration and its European partners should add hundreds of Russian legislators, business executives and government ministers to those barred from travel and financial transactions in the West, Russian former prime minister Mikhail Kasyanov said yesterday. As the White House says is it preparing new sanctions against the government of Russian President Vladimir Putin, Kasyanov urged the West to continue targeting Putin’s “ruling group,” rather than the Russian economy as a whole.
The United States and European Union should act immediately – “tomorrow” – Kasyanov said, to sanction at least 598 of the 605 members of Russia’s parliament who voted last month to approve Russia’s annexation of Crimea and who authorized Putin to send troops into neighboring Ukraine. It also should sanction “business people” who “strengthen his particular regime” and “are special tools in Putin’s hands.” Currently, the United States has sanctioned twenty-seven individual allies of Putin as well as the Bank Rossiya, which handles many of their transactions; the European Union has sanctioned thirty-three people close to Putin.
Kasyanov disputed suggestions by US critics, including both Democratic and Republican US senators, of the West’s sanctioning of individuals, rather than broad sectors of Russia’s economy, saying that even the sanctioning of the roughly thirty people so far has changed “the atmosphere” of policy-making in the Kremlin. Kasyanov, who served under Putin as prime minister from 2000 to 2004 and now heads an opposition political party, spoke in a discussion forum and a subsequent interview at the Atlantic Council.
President Obama said today that new sanctions against Russia are “teed up,” and could be applied within days if Russia does not take concrete steps in line with last week’s Geneva agreement to obtain the disarmament and withdrawal of armed groups that have seized cities and local government buildings in Ukraine’s two southeastern-most provinces. A widening of sanctions to hundreds of Russia’s officials, rather than to sectors of its national economy might be an approach that could narrow gaps between Washington and European governments over Russia policy. Germany, France and the UK, among others, would suffer significant economic pain themselves from macro-economic sanctions that would hurt their trade relations with Russia.
In the interview, Kasyanov said Putin’s government and the Russian economy are more fragile than Putin realizes, in part because of its dependence on high oil prices. A drop of 20 percent in the current price of $110 a barrel would bankrupt Putin’s government within six months, said Kasyanov, who also served as Russia’s finance minister.
Putin is aware of the weakness of his position, Kasyanov said, but overestimates his ability to manipulate events. “He thinks that all these scenarios” for managing crises are “in his hands.”