Russian and Crimean Officials Joke About Sanctions, Wall Street Not Worried

Andrew Klips |

Russian President Vladimir Putin has done little to show any concern about what the European Union or the United States will do to impact his country for their efforts to officially plant a Russian ensign in Crimean soil. Only hours after Crimea reportedly had 97 percent of voters say that they want to secede from Ukraine and once again become part of Russia and the US and EU imposed sanctions, Putin formally recognized the referendum vote, signing a decree dubbing Crimea as a “sovereign and independent country.”

Token Sanctions

The US, EU and Ukraine do not recognize the referendum, calling the vote illegal and a violation of Ukraine’s sovereignty.

As a supposed first measure to penalize Russian and Crimean officials, President Obama inked an executive order to lay down sanctions against 11 prominent politicians, freezing their U.S. assets and revoking their visas. Members of the European Union took similar actions. Canadian Prime Minister Stephen Harper has said that his country will be imposing more economic and travel sanctions against Russian and Crimean officials in addition to earlier this month suspending nearly all its military relations with Russia.

With Russia as their largest trade partner and major gas supplier, Europeans have to be careful about how much they push, and Putin knows it. When it comes to the US, the trade balance is not a huge factor; it’s more about a battle of wills amongst world superpowers and the two biggest nuclear weapons owners in the world.

Still, it doesn’t take a PhD in political science to figure that the “first wave” of sanctions weren’t the type of repercussions that could be very damaging to Russia or Crimea. President Obama has made it clear that he still has room to maneuver to hit Eastern European officials or Russia a little harder, but the passive sanctions weren’t really worthy of his comment, “We’re making it clear that there are consequences for their actions.”  They may be the toughest sanctions since the Cold War, but they still were a far cry from harsh. 

Washington Post writer and Pulitzer Prize winning syndicated columnist Charles Krauthammer called the sanctions “humiliating,” criticizing Obama and saying that the President “is living in a different world” if he calls what was done a “sanction.”

 

A list of the U.S.-sanctioned individuals:

Russian Deputy Prime Minister Dmitry Rogozin

Russian Presidential Aide Vladislav Surkov

Russian Presidential Adviser Sergey Glazyev

Russian State Duma Deputy Leonid Slutsky

Russian State Duma Deputy Yelena Mizulina

Russian Upper Chamber Parliament Member (the Federation Council) Andrey Klishas

Head of the Federation Council Valentina Matvienko

Ousted Ukrainian President, Viktor Yanukovych (living in Russia)

Former Ukrainian Presidential Chief of Staff Viktor Medvedchuk

Newly declared Crimean Prime Minister Sergey Aksyonov

Newly declared Speaker of Crimean Parliament Vladimir Konstantinov

 

The list did not include Putin or any of his most influential compatriots in his inner circle. The EU sanctions included these people and 5 other individuals from Ukraine and Russia, such as top military figures.

Putin apparently finds the sanctions laughable and other Russian and pro-Russian figures do as well.  Putin said this morning that the West has crossed the line with its involvement in the Crimea/Russian affair, is engaging in Cold War rhetoric and has lost its political sense. Putin has also said that he does not want, or need, anything more than Crimea, and Washington has yet to respond to these latest comments.

Yesterday, Russian Deputy Prime Minister Dmitry Rogozin, who acknowledged the sanctions as flattering, took to Twitter (TWTR) to say, “I think some prankster prepared the draft of this Act of the US President” and to thumb his nose at the sanctions, apparently claiming that he doesn’t have any U.S. assets to be frozen anyway.

 

RogozinTweet.png

 

RogozinTweet2.png

 

Brazen Mockery via Tweet

Rogozin tweeted three hours ago that today is the most important day of his life, a day a national consciousness.

Vladislav Surkov reportedly called the sanctions an honor, also saying that he doesn’t have any accounts outside of Russia and that he loses nothing by the slap on the wrist and visa restriction.

A television news reporter in Russia boldly commented that Russian “is the only country capable of turning the US into radioactive dust.”

Sergey Aksyonov took to Twitter as well, sending out a picture of President Obama in a Russian colonel’s uniform with the (translated) message “I wonder if Barack will be promoted to colonel after the successful campaign to return Crimea?”

Interim Ukrainian President Oleksandr Turchynov said in a televised statement yesterday that the country is not just giving up Crimea and that it is willing to open up negotiations. At the same time, Turchynov activated about 20,000 members of the Ukrainian military reserve and mobilized another 20,000 members of its national guard.

What’s next?  Who knows?  Crimeans want to return home to Mother Russia and the estranged maternal country wants Crimea back.  Former Soviet leader Mikhail Borbachev says that the Crimean referendum has righted a mistake made by Soviets years ago when it allowed Crimea to become part of Ukraine. How far the rest of the world wants to go to stop it is anyone’s guess.

Meanwhile, Markets are Regaining their Indifference

The markets don’t seem to be paying much attention at this point, somewhat akin as to what went on in Syria last year after the country used chemical weapons on its own people. President Obama said the U.S. was going to penalize Syria for its actions with a limited military action, but nothing came of it as U.S. lawmakers voted against an attack. Incidentally, Russia stood on Syria’s side the whole time.  After some initial market volatility over a potential conflict, concerns were quickly forgotten.

The markets were cautious late last week ahead of the Sunday vote in Crimea, but now with the results in and Russia moving forward despite any looming threats, Wall Street apparently doesn’t foresee anything drastic happening.  After a Monday rally, the Dow is up again in Tuesday morning trading, adding 89 points, while the S&P 500 has gained 9 points and the Nasdaq has climbed 33 points.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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