You're reading: Q&A with US sanctions policy chief Daniel Fried on checking Russia’s aggression toward Ukraine

Editor’s Note: The following interview with Ambassador Daniel Fried, U.S. State Department coordinator for policy issues, first appeared on Aug. 21 in the Lithuanian news portal alfa.lt and was conducted by Tomas Dapkus. The translated interview is re-published in English with the author’s permission and can be read in its original format here: http://alfa.lt/straipsnis/593153/kiek-rusijai-kainuos-vakaru-sankcijos-del-agresijos-pries-ukraina#.U_Xf61YdszU 

Alfa.lt:  When do sanctions work?

D. Fried:
They can work. They don’t always work. They work best when they are
multilateral, including, but not necessarily, blessed by the U.N. Security
Council resolutions. Clearly that is the best way to go. They can work when the
world’s leading centers of
economic power are more or less united and when the key governments involved
devote the resources needed to see that sanctions are in fact carried out and
implemented over time. It took us years and it was a very complicated process
involving sanctions against Iran yet in the end we succeeded in establishing a
multilateral regime which was effective. 

Also,
sanctions are not a policy. They are an instrument which needs to be embedded
into a larger policy. They are useful but we mustn’t ever forget the difference between ends and means. And you
have to understand and never forget what it is you are trying to achieve with
the sanctions. All that said, I think the sanctions, which the United States of
America and the European Union, and key other countries Canada, Australia,
Japan have discussed and implemented against Russia, for its aggressive actions
against Ukraine, have been effective because they meet most of these criteria.

Alfa.lt: Are there any other countries in the world who will support these
sanctions against Russia or it is vital that they would support sanctions for
them to be effective?
 

D. Fried: I
believe, that Norway as a general rule supports EU sanctions even though it is
not an EU member. I believe it is doing so in this case. Switzerland, a non-EU
member, as a general rule supports those sanctions. And it is doing so in this
case. That’s a good thing.
We’ve been talking also to
South Korea, Singapore, we had consultations with China and we will continue
our consultations. The more solidarity that exists in the world on this issue, the
better. 

Alfa.lt:
Russia has also introduced counter-sanctions against the European Union and the
United States. Some say that these Kremlin imposed sanctions would hurt Russia
more than the EU. What do you think?
 

D. Fried: That
could very well be the case. Why Russian leaders think it is a good idea to
deprive the Russian people of high quality food is something I don’t understand and they will have
to explain. Maybe, some of your readership remembers the Soviet period. I do.
You remember the food lines for oranges and bananas, you remember the special
stores where privileged members of the ruling elite could get food which was
not available to the general population, you remember the difference between
the free market price at the rynok (market) and kolkhoznyi rynok (farmer’s
market), and the price in the state stores. Those things are gone in Russia after
1991, and, of course, they are never coming back in your country Why the
Russians would take a step back to that period is not easily understood by
anybody. I suspect that Russians will find ways to mitigate the impact of their
own sanctions so it is to avoid this problem, but I can’t say. 

Alfa.lt:
The sanctions imposed by the European Union now are tougher than they were in
the beginning. But still the weapons and the personnel and so-called
«volunteers» are flowing through the
Russian border into Ukraine; Ukrainian officers are being kidnapped and
illegally kept in Russian jails.
 

D. Fried: It
is true that despite the sanctions Russian arms and fighters are still flowing
across the border. This needs to stop. Leaders throughout the world, including
Chancellor Angela Merkel over the weekend, have called Russia to stop this. The
White House issued a statement saying that if Russia wanted to contribute to
the welfare and improvement of the humanitarian situation in Luhansk and
Donetsk oblasts, they could start by stopping the weapons and fighters across
the border to their proxies. 

The European
Union deserves to be applauded for its show of leadership and determination on
the very difficult circumstances. The U.S. and Europe acted together after long
consultations to impose sanctions that were very close if not identical and
certainly complementary. Again this is a show of leadership and many who have
doubted the EU to take that step have been proven wrong and Europe proved
itself to be effective. It doesn’t
mean that the sanctions at once, through a single step solve the problem. They
clearly haven’t in this
case. And that’s
unfortunate. The Russians should think hard about what it is they are doing and
why they are doing it.

Russian President Vladimir Putin during his visit to occupied Crimea on Aug. 14 2014.

Alfa.lt:
We have much public information about Russian sponsors of terrorism in Ukraine.
For example Russian oligarch Konstantin Malofeev, who owns international
investment fund Marshall Capital does not hide he is one of those who are
involved in breaches of the sovereignty of Ukraine. Fomer terrorist leaders in
Donetsk, for example, Igor Girkin – Strelkov and Alexander Baroday are his employees.
Will individuals who publicly supported or sponsored terrorism and insurgency
in Ukraine be punished by Western sanctions?

D. Fried:
We are constantly looking at our sanctions and looking at ways to update them
using our existing authorities. Sanctions work over time. The Department of
Treasury manages most of the financial sanctions for the United States, they
have a very efficient office – the Office of Foreign Asset Controls,
OFAС, which manages this.
They are always looking at potential new targets for sanctions. I’m not going to comment about
any individual case, but we have authorities and we intend to carry them out.
And it is not an escalation of sanctions to simply implement the sanctions
authorities we already have. We can work at this. It does take time. And
sanctions, as I said, work over time. Now that’s frustrating because the Ukrainians are under attack right
now. But sanctions cannot be and are not the only instrument of our policy. I
think we have seen including over this weekend the Germans and French stepping
up by organizing the Foreign Ministers meeting in Berlin, and you have leaders
in the EU, President Barack Obama, other leaders, all speaking out making it
clear to the Russians that they are indeed deeply isolated and this isolation
is growing and will have increasing impact on Russia.

Alfa.lt:
How much can these sanctions cost Russia?


D. Fried:
There been various numbers tossed about. Like $100 billion of
capital flight this year anticipated. I think that’s the
IMF estimate. But it is hard to qualify this because you’re dealing with a major loss of investor confidence and a
major rise in uncertainty about Russia. And that uncertainty is going to cost
Russia many tens of billions of dollars in investments that do not take place
that otherwise would have taken place. The financial sanctions which the EU and
the United States imposed late in July will also have an accelerating and
intensifying, I should say, impact as time goes on. These things are hard to
quantify but our view is that the direct impact will be significant and
indirect impact will be even more so.

Alfa.lt:
Russia tries to find prominent European businessmen who can invest in occupied
Crimea. How can these kind of investments be stopped?

D. Fried: The
EU has imposed severe sanctions on Crimea which may complicate these sorts of
investments. Now, I will acknowledge that in this case Europe is ahead of the U.S..
We have imposed some sanctions against Crimea for Russia’s illegal attempted annexation but Europe may have gone
further and I think that over time it will become increasingly difficult for
anyone to invest in Crimea. It will become simply more complicated and risky.
Crimea is not going to be any kind of a show place. It will be, unfortunately,
very badly hurt by what Russia has done.

Alfa.lt:
You mentioned the Soviet period. Can we compare the situation now to the Cold
War? Though President Barack Obama said it is not a new Cold War, many experts
are calling it a
“new
Cold War
”.

D. Fried:
President Obama was quite right: this is not a new Cold War. It is a case
of Russia’s aggression
against its neighbor and a case of Russia’s deepening isolation as a result of that aggression and a
result of world’s reaction
to that aggression. Russia seems to be in a hole and it unfortunately appears
to still be digging. And that is too bad. Many people, including myself, hoped
that there would be a new relationship between Russia and the World. We still
do. There are many areas where Russia has overlapping or even shared interest with
the U.S. But the anti-American rhetoric coming out of Moscow, the authoritarian
actions, the repression of the independent institutions and of political
opposition are all problems. Russia is a great nation with a great culture,
great intellectual capital, fantastic potential to be a major force for good in
the 21st century, for those of us who understand these things it is just a
tragedy to see Russia taking this course. I don’t know what label to give it but it is unfortunate and I
believe that some days Russians will understand how unfortunate it is and that
we will get back to more constructive relations. But that day is not now.