If the sanctions imposed by the West over Russia’s annexation of Crimea start to hit the Russian economy, it could lead Moscow to consider a set of strong retaliatory measures.

Participants of a flashmob event in Moscow are holding up boxes to make a portrait of U.S. President Barack Obama on March 28, 2014. The slogan reads, "Sanction against Russia are sanctions against me!" Photo: ITAR-TASS

The recently concluded summit on nuclear security in the Hague did not produce a thaw in Moscow’s relations with the EU and the U.S. At the same time, NATO has moved to suspend cooperation with Russia and beef up its defensive posture in Europe. In this politically charged atmosphere, sharp retaliatory sanctions from Russia could become a reality.

It is not just about the West’s refusal to recognize Crimea as part of Russia, which in itself is not dangerous. Suffice it to recall that from 1940 onwards the U.S. did not recognize the Baltics as part of the USSR. Instead, it is the rapidly accelerating war of sanctions that is provoking real fears.

Within the American elite, the overwhelming feeling is that Russia will ignore the pressure to launch counter-sanctions. Two arguments are presented to substantiate this thesis. First, the Russian economy is too weak for Moscow to deliver a credible response that would impact the West. Second, the Russian side will try to maintain a limited partnership with the U.S.

If Western sanctions remain purely symbolic, the Kremlin may actually consider them an acceptable price to pay for the return of Crimea. But if they hit the Russian economy hard, Moscow could reply with some genuine countermeasures.

That could create some real problems for Washington. Russia’s retaliatory sanctions could be extremely painful for the West, and cast a shadow of doubt over the very nature of modern international relations.

Creating obstacles to NATO withdrawal from Afghanistan

The first victim of serious Russian sanctions will be the transit of NATO supplies to Afghanistan — not only by land, but by air, too. The Russian route is extremely important for the alliance as an alternative to the vulnerable Pakistani corridor. The northern transit route is becoming increasingly critical ahead of the forthcoming withdrawal of NATO troops from Afghanistan this year.

Russia may denounce the 2008-09 agreements with NATO, closing off its air and land space to Brussels. In addition, Moscow may begin to exert stronger influence over the countries of the Collective Security Treaty Organization (CSTO), which, in addition to Russia, includes Armenia, Kazakhstan, Kyrgyzstan, Tajikistan, and Belarus, encouraging them to reduce cooperation with NATO on Afghanistan.

Jettisoning nuclear and chemical weapons deals

The next step could be Russia's withdrawal from START III, and a complete rejection of transparency in the field of strategic offensive arms. Such a step would be especially painful for Washington, because Russia is the only country in the world technically capable of destroying the U.S.

The U.S. State Department expressed concern over the appearance of reports in early March that Moscow intends to suspend the admission of U.S. inspectors to Russian nuclear facilities. It is not difficult to imagine how the White House would wince at the collapse of START III — the main symbol of the "reset" and nuclear disarmament.

Moscow can take advantage of the favorable circumstances to jettison some agreements not to its liking. The first to go could be the Comprehensive Nuclear Test Ban Treaty (CTBT). Of the world’s main nuclear powers, Russia, Britain, and France have ratified it; the U.S. and China have not. Keep in mind, however, that in June 1996, Russia stipulated that it reserves the right to withdraw from the treaty in case of a threat to its national interests.

Meanwhile, speaking in Prague in April 2009, U.S. President Barack Obama described the CTBT as the most important instrument of nuclear disarmament. A resumption of Russian nuclear tests would negate America’s financial outlays on the construction of the International Monitoring System for nuclear tests.

Another “reject” could be the 1993 Chemical Weapons Convention. In respect of this document, there is a conflict of law: It expired in 2012, but the process to eliminate chemical weapons is not complete. Russian military experts like to contend that chemical weapons could be an effective means to compensate for NATO's conventional arms superiority. Deployment of Russian tactical missiles with chemical warheads in the vicinity of Central and Eastern Europe could ruffle some NATO feathers.

The most drastic step Moscow could take would be a symbolic withdrawal from the Treaty on the Elimination of Intermediate-Range and Shorter-Range Nuclear Forces (INF) of 1987. Renewed production of SS-20 “Pioneer” missiles would enable Russia to make hostages of EU targets and, if necessary, destroy them in 5-8 minutes. Europe’s "nuclear hysteria" of the 1980s would repeat itself.

If NATO responded through the deployment of U.S. medium-range missiles, Moscow would receive a great bargaining chip. In exchange for signing a new INF treaty, the Kremlin could ask for a lot — right up to recognition of the changes to the boundaries of the post-Soviet space.

Destabilizing world energy prices

Photo: Reuters

A realistic energy countermeasure could be Russia’s game to raise world energy prices. The Obama Administration is reportedly considering the possibility of reducing oil prices by increasing production and exports. Russia has a cheaper option in the form of fomenting instability in the Middle East — a key oil and gas region.

Russia’s arsenal of potential countermeasures is diverse. Moscow could pull out of talks on Syria and start supplying arms to the regime of Bashar al-Assad. It may also withdraw from negotiations on Iran's nuclear program and begin shipping defensive and offensive weapons, nuclear materials, and technologies.

Moreover, as a co-sponsor of the Middle East peace process, Moscow could recognize the independence of Palestine. It could conclude contracts for the supply of arms to the Gulf monarchies. In the extreme case, it could even hold talks with Iraq’s Shiites and Kurds on recognition for their quasi-state entities. These measures would lead to a sharp hike in energy prices.

The arguments for energy sanctions against Russia are based on a flawed evaluation of the U.S. experience during the 1980s. The statement by President Ronald Reagan in September 1985, on the need to increase domestic oil production, is often interpreted as a shot across the bow at the Soviet Union. 

In actual fact, it was a gesture of despair over the regular sinking of oil tankers in the Persian Gulf during the Iran-Iraq war of 1980-1988. Oil prices began to fall in 1987 following U.S. military action to unblock the Strait of Hormuz. Would this effect have been achieved if the Soviet Union had provided military assistance to Iran or Iraq?

Imposing economic sanctions against the EU

Russia’s array of possible economic counter-sanctions is also great. The more radical options, such as removing the dollar from foreign trade or restricting the supply of hydrocarbons to the EU, are unlikely. But a sharp escalation of tension could prompt Moscow to deploy them.

A more realistic strategy would be a strike against the "weak links" — the EU countries most dependent on Russia. Those vulnerable to Russian counter-sanctions include Finland, whose economy is focused primarily on the Russian market, the Baltic countries, whose budget is largely based on the transit of Russian goods through their ports, Spain and Greece, whose tourist markets hinge on the influx of Russian vacationers, and Slovakia, Romania, and Bulgaria, whose economies need Russian energy.

Russia does not need to impose EU-wide sanctions. In contrast, the selective use of sanctions against some members could cause a split within the union. Each EU member would be forced to ask itself: "Why should we bear the burden of sanctions alone, and not collectively?”

The EU lobby calling for less sanctions pressure on Russia will intensify. If Angela Merkel’s cabinet stands firm, it will widen the schism inside the EU.

Not the Cold War, but maybe more dangerous

The media often compares the Ukrainian crisis to the Cold War. The current situation, however, could be more dangerous. During the Cold War, the confrontation between the superpowers was of a largely symbolic nature. 

Even during the military-political crisis of the mid-1980s, the Soviet Union did not seek to impact global stability, for example, by denouncing the NPT or the Outer Space Treaty of 1967. The Soviet leadership made every effort to counter U.S. sanctions by supporting, for instance, the “left wave” in Western Europe and stoking tensions in the Persian Gulf, but the prevailing view was that global stability in itself is valuable, even at the cost of serious concessions.

Now the situation has changed. Russia’s changed circumstances since the Soviet era is impelling Moscow to look at tougher retaliatory measures. The Soviet leadership felt more secure in its superpower status and could afford not to respond to provocation. The Russian leadership has no such safety margin.

For a list of measures the international community has taken against Russia over Crimea see the next page.