Biden’s Russia, Saudi Sanctions Spark Grumblings of Weakness
(Bloomberg) -- Twice in the last week, the U.S. announced new sanctions against Russia and Saudi Arabia over what it called human rights abuses. Twice, critics said President Joe Biden pulled his punches.
Financial markets and rights groups were unimpressed by Biden’s move Tuesday to sanction senior Russian law enforcement officials over the poisoning and imprisonment of opposition leader Alexey Navalny. That followed similar criticism when Biden declined to target Saudi Arabia’s crown prince after releasing an intelligence report accusing him of approving the murder of Washington Post columnist Jamal Khashoggi.
U.S. lawmakers from both parties also knocked the Biden administration last week after it held off on sanctions against German entities involved in the construction of the Nord Stream 2 gas pipeline from Russia, despite arguing that the project undermines European security.
Critics argue that Biden has set the wrong tone early in his administration. After accusing his predecessor Donald Trump of weakness toward autocrats, they say Biden has failed to match his rhetoric with action against leaders like Saudi Crown Prince Mohammed bin Salman and Russian President Vladimir Putin. They say the U.S. could sanction Russia’s oligarchs or its sovereign debt, and fault him for declining to punish the crown prince.
“They castigated Trump for being weak on Russia, and they said they would be tough, and they’re doing the same,” said James Carafano, the director of foreign policy studies at the Washington-based Heritage Foundation. “The question is: What are you practically going to do?”
The Russia sanctions announced on Tuesday hit individuals with travel restrictions and asset freezes -- actions that won’t have a big impact because those targeted probably wouldn’t travel to America or have assets in U.S. accounts. It was the same with the Saudi sanctions. After releasing the report that said Prince Mohammed authorized the killing of Khashoggi, Biden declined to target him directly.
That approach was a disappointment to those who believe the Saudi crown prince deserves direct punishment for his role in Khashoggi’s murder, as it was to Navalny’s supporters. On Tuesday, Russia’s ruble rebounded, erasing earlier declines, after the narrow scope of the U.S. and European Union penalties became clear.
By Wednesday morning, the Russian currency was on track for its longest run of gains in almost a month amid relief the sanctions weren’t broader. Kremlin spokesman Dmitry Peskov said the ones imposed on law-enforcement officials merely duplicate limits in Russian law. Vowing a reciprocal reaction, he said the new sanctions “have no effect or purpose.”
Still, Navalny’s allies welcomed the moves. “That the U.S. and EU have imposed sanctions on people who were involved in jailing Navalny is wonderful and cool,” Maria Pevchykh, a close aide of the detained Russian activist, wrote on Twitter. “But the most painful sanctions, which neither Europe nor the U.S. imposed, are the ones against oligarchs.”
The Biden administration counters that the criticism is unwarranted. On a call with reporters on Tuesday, a senior official described the Navalny sanctions as a first step and suggested more would follow in three areas: Russia’s election interference; the SolarWinds hack that targeted the U.S. government and hundreds of American companies; and reports that Russia offered bounties for the killing of U.S. soldiers in Afghanistan.
Officials have also emphasized how they are working in tandem with other countries. They argue that by doing so -- whether in confronting Russia, China or Iran -- the U.S. actions gain strength and effectiveness from joint action, leaving the targeted nations isolated.
“The announcement we’re making today was done in harmony with the EU,” White House Press Secretary Jen Psaki told reporters. “It was not meant to be a silver bullet or an ending to what has been a difficult relationship with Russia.”
The focus on working with allies comes after Biden repeatedly criticized Trump for too often going it alone as part of his “America First” strategy.
“They feel strongly they need to do that to restore American credibility with our allies, so that limits what they can do because the Europeans are never going to go as far as the U.S. may want to,” said John Hughes, a vice president at Albright Stonebridge Group and former sanctions policy official at the State Department.
Instead the administration is trying a naming-and-shaming approach as it looks to isolate nations it considers bad actors. Its decision to declassify the report that implicated the Saudi crown prince was one such example, as was the decision to declassify the intelligence community’s assessment that Russia’s security services were responsible for Navalny’s poisoning. (The Kremlin called that allegation outrageous.)
“They want people to say, ‘Listen these are bad actors,’ and that allows them to have the moral authority to get allies on board to do other things,” said Hughes, “They’re really trying to figure out where sanctions can be effective and how they can leverage them for actual foreign policy goals.”
Those issues are being debated as part of a review of sanctions policy, amid accusations that the Trump administration imposed sanctions frequently around the world but didn’t back up those actions with a coherent strategy.
“He’s delivered the message: What they did was beyond the pale,” Kenneth Pollack, a resident scholar at the American Enterprise Institute, said of the administration’s new approach to Saudi Arabia. “We’re looking at them to recognize that human rights matters and there will be a price to be paid, but we’re not looking to destroy the relationship.”
And while markets may have been unimpressed with the latest actions, the U.S. does have other options, especially in Russia’s case. That includes targeting Russia’s sovereign debt.
Elina Ribakova, deputy chief economist at the Institute of International Finance in Washington, argues that while sanctions on the secondary bond market would be painful for Washington in the short term, in the longer term it would isolate Russia from the global economy, making future penalties easier to implement.
“It’s an important Rubicon,” Ribakova said “Once global markets calm down in about six months, the sky is the limit and they can try tougher sanctions.”
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