Russian retaliatory sanctions?

RT has published an opinion piece by Bryan McDonald, wondering what the reaction to Washington’s sanctions might be. They have held off doing this until now.

Cut the Americans off from space? Here’s how Russia might respond to new US sanctions

Bryan MacDonald is an Irish journalist, who is based in Russia
3 Aug, 2017

Things boiled over on Wednesday evening when the Russian Prime Minister took to Facebook to chide Trump as “impotent.” A clearly angry Dmitry Medvedev writing how “the hope of improving our relationship with the new American administration is over,” adding the sanctions amounted to “a full-fledged economic war on Russia.” Medvedev held little back as he noted a change in “the balance of power in US political circles” with representatives dictating to the president in matters of foreign policy.

Medvedev’s invective seemed to confirm that the Kremlin will respond forcibly to the new measures. And Moscow has plenty of retaliatory options.

One favored by some opinion formers in the Russian capital is the idea of reducing diplomatic cooperation with the Americans to the bare minimum. After all, they say, if relations can’t be normalized, what is the point of both sides keeping hundreds of officials at their respective embassies? Such a proposal would see Russia pare back its staff levels in Washington to a few dozen essential personnel and force the US to operate within the same constraints at their locations here. A move like this would have significant repercussions for cross-cultural exchanges, visa issuing and, notably, espionage. But in a climate where even speaking to Russians is toxic in US politics, the Kremlin may feel it has little to lose.

Other analysts have suggested Moscow might withdraw cash invested in US Treasury securities and divert it to German or Chinese bonds instead. For instance, by May this year, Moscow held around $100 billion in T-bonds and might have more stored away in places like Switzerland and Luxembourg. However, a fire sale has potential risks for Russia itself and may prove financially foolhardy if alternatives prove less secure.

Another possible rejoinder is the prospect of canceling fertilizer exports to the US agriculture industry. That could damage Russian producers, who probably wouldn’t be able to divert all the excess to China. The same goes for notions of restricting uranium supplies where Russia is responsible for about twenty percent of American nuclear power plant needs. Here, Rosatom has previously said it wouldn’t countenance halting supplies based on “long-term contracts subject to strict implementation.”

There is one area where the Kremlin can markedly damage Washington’s interests, without much economic pain. And that’s in the realm of space. Because since the shuttle Atlantis staged its last flight, in 2011, NASA has been entirely reliant on Soyuz launchers to reach the cosmos. Should Putin decide to cancel agreements where Americans hitch a ride on Russian-led trips, for the first time in decades, US astronauts will be completely earth bound.

Also, the cost to Russia wouldn’t be much. At $80 million a seat, dropping Americans from the flights won’t break the bank. Plus, to make matters worse for the US, Boeing, which is developing its own proposed rival to Soyuz, is reliant on Russian rocket engines. But the implications for the International Space Station might rule this reprisal out.

North Korea is another area where Moscow can hurt Washington. Right now, the White House needs the Kremlin’s approval to punish Pyongyang through the UN Security Council. And while Putin agrees North Korea represents a danger, he has recently agreed on a joint approach to the issue with China which runs contrary to Trump’s plans.

There’s also the pharmaceutical industry, where the Kremlin could ban direct imports of American medicines, forcing the likes of Pfizer and Eli Lilly to use Russian-made options, or partner with more local firms to maintain market share. That would damage a $560 million trade-line, which favors the Western partner.

Of course, there’s another route Putin could take. And that’s do nothing. At least for now. Instead, taking the moral high ground and watching the chasm between Trump and his legislature widen. All the while, waiting and watching to see if a split emerges between the EU and the US on existing sanctions. However, Medvedev’s talk of a “trade war” makes this unlikely. We can probably expect a move from Moscow and, knowing Putin; it could be something completely unexpected, but biting.