Soft on Putin? Blame big oil.

FINANCIAL TIMES Column: The latest sanctions against Russian officials, provoked by Russia’s ongoing violation of Ukraine’s territory, have sparked much criticism because of their perceived weakness. The U.S. is currently targeting wealthy and well-connected individuals, such as Igor Sechin, a crony of Russian President Vladimir Putin, but not companies such as the state-owned energy giant Rosneft, which is the source of Sechin’s wealth. This means that Sechin and other select members of Putin’s inner circle can’t personally travel to or invest in the U.S., but the companies they run can continue business as usual…

The U.S. economy ought, in theory, to be able to cut off trade relations with Russia if American politicians were committed to the task: U.S. trade with Russia is worth about $38 billion, a tiny percentage of U.S. GDP. But for certain well-placed companies, especially in the energy sector, the consequences could be drastic. Exxon’s deal with Rosneft, for example, could eventually be worth as much as $500 billion. That’s why the energy industry has made extensive donations to politicians in both parties, including the president.

The European Union does more than 10 times more business with Russia than the U.S. does, so the impact of sanctions would be more severe in Europe; it makes sense, then, that the EU has been even more cautious than the U.S. But this creates a domino effect: European reticence gives way to an even softer approach to sanctions from the American business community when companies become nervous about losing trade opportunities to their European competitors. The U.S. Chamber of Commerce has expressed opposition to unilateral sanctions against Russia, leaving the ball in Europe’s even less favorable court. In other words, business lobbies on both sides of the Atlantic are determined not to lose the profitable relationships they’ve developed with Russia’s notoriously corrupt elite, and their governments are happy to oblige them… (more)