Obama, Merkel Threaten Further Sanctions Against Russia

President Obama and German Chancellor Angela Merkel held a press conference in the Rose Garden, and one of the many topics was Ukraine. The two leaders vowed more sanctions if Russia does not stop making the situation worse in Ukraine.

“We will not have a choice but to move forward with additional more-severe sanctions” if Russia disrupts a presidential election in Ukraine scheduled for May 25, Obama said at a news conference with Merkel outside the White House.

“Further sanctions will be unavoidable,” Merkel agreed.

Neither leader specified what the sanctions would include and which sectors the sanctions would target.  

Merkel said the sanctions against Russia by the European Union show Europe is serious, but Europe’s sanctions are weaker than America’s. The EU imposed sanctions on the people in Ukraine directly causing the violence, while the US targeted more of Russian Vladimir Putin’s inner circle, including Rosneft’s President and Chairman Igor Sechin. Rosneft is Russia’s top petroleum company with heavily invested interests with ExxonMobil and British Petroleum. In fact, ExxonMobil’s $600 million deal with Rosneft to drill in Russia’s Arctic might be in jeopardy. The Treasury Department told ExxonMobil they can continue business with Rosneft, but the threat of more sanctions and exactly how sanctions work might provide a challenge. If a company with a large interest in the US is caught doing business with anyone on a sanction list, that company can face its own penalties.

Alexei Miller, the president of Russia’s state gas company Gazprom, is still not on any lists. Gazprom is one of the main suppliers of natural gas to Europe. In 1981, the CIA told President Ronald Reagan the US needed to warn Europe not to rely on the then-Soviet Union for energy. The CIA feared Russia would use it as a political tool and hold the energy hostage. Gazprom has threatened Ukraine and Europe the gas will be turned off if Ukraine’s debt is not paid.

On Friday, the EU met with Russian and Ukrainian energy officials in Warsaw to talk about gas. Gazprom raised the natural gas price to $485 per 1000 cubic meters from $268.50. Russia claims Ukraine owes Moscow around $3.5 billion, and if the EU does not help pay the debt, Russia will shut off Europe’s gas, which primarily is routed through Ukraine.