Russian economy strained by sanctions: Obama

Washington - President Barack Obama said on Wednesday that US sanctions levied against Russia over its actions in Ukraine are working but that Washington would face a much different set of questions about how to respond if Moscow invaded eastern Ukraine.

Western officials warn that a Russian military build-up on Ukraine's border could herald a major incursion to protect the pro-Moscow separatists fighting Ukrainian forces.

Despite bipartisan pressure from lawmakers to send US military aid to Ukraine, however, the Obama administration thus far has said it doesn't believe US military assistance is needed.

"Keep in mind that the Russian army is a lot bigger than the Ukrainian army", Obama said at a news conference. "So the issue here is not whether the Ukrainian army has some additional weaponry."

The US and the European Union have accused Russia, which annexed Ukraine's Crimean Peninsula in March, of fomenting tensions in eastern Ukraine by supplying arms and expertise to the pro-Moscow insurgency.

"At least up until this point, they've been fighting a group of separatists who have engaged in some terrible violence, but who can't match the Ukrainian army", Obama said. "Now if you start seeing an invasion by Russia, that's obviously a different set of questions. We're not there yet."

Obama was asked about the impact of sanctions on the same day that Russian President Vladimir Putin hit back hard against the US for imposing sanctions against Moscow's moves in Ukraine.

Russian state news agency RIA Novosti quoted a Russian official as saying all agricultural products produced in the US won't be allowed into Russia.

According to USDA's Foreign Agricultural Service, US exporters shipped $1.2bn worth of food and agricultural products to Russia in 2013, which represents less than 1% of all US agricultural exports.

US poultry exports make up the largest portion of the total, with a little more than $300m in exports to Russia last year.

"Sanctions are working as intended in putting enormous pressure and strain on the Russian economy", Obama said.

"That's not my estimation. If you look at the markets and you look at estimates in terms of capital flight, if you look at projections for Russian growth, what you're seeing is that the economy has ground to a halt.

"It has presented the choice to President Putin as to whether he is going to try to resolve the issues in eastern Ukraine through diplomacy and peaceful means, or alternatively continue on the course he's on, in which case he's going to be hurting his economy, and hurting his own people over the long term."

Mark Harold Jones 2014/08/07 11:41:15 AM
Putin's response with these "counter sanctions" are a bit of a joke. Most sanctions relate to exports of a country, he can only respond by punishing his own people further by stopping imports of food. The fact of the matter is that as a third world country who's majority exports are unbeneficiated raw materials he has nothing that the world wants that he can hold back except energy. He can not threaten to withhold his energy exports because his economy will die in three months without them. His disastrous policies over the years have led to the uncompetitiveness if not complete collapse, of Russian technology and manufacturing, which is why they are very much the little brother of the big four in BRICS. Economically he is a toothless tiger, which frustrates him no end. His only strength in a local geographical context (certainly not globally) is military. Will he use this strength in a direct military intervention and risk losing whatever global influence he has left even within BRICS, or will he back down and risk losing face with his people. He is in a corner but as his ego has always been a primary driver I would not be surprised if we see direct military action soon. In this case the Russians will be alright but the consequences will bring about his downfall internally. I smell a well engineered regime change through politics, made all the easier by the victim's own egotistical ineptitude.
PRQBR 2014/08/07 01:20:31 PM
@MHJ. I see the point you are making, but Russia stopping imports from certain countries doesn't mean that imports are stopping. The Russians will just source it from somewhere else. The numerous trade agreements they signed the last few months will fill that gap. Yes the Russian economy has and will take a knock but the will of the Russians will prevail as proven throughout history. The western aggression the last decade is about containing the rising powers from the east for a reason, they are growing stronger every year and they are not towing the US imperialist line. With that said I'm not pro Russian, I'm actually anti all governments because they all play an ugly game where we are all expendable.
Knormoer Dwarstrek 2014/08/07 01:49:50 PM
What Russian build-up against the Ukraine border? The West is overlooking the fact that Ukraine ha 25 000 troops against the Russian border, heavily armed and actively fighting a war.
dunkie56 2014/08/07 02:36:25 PM
In fact they are doing Russia a great favor by sanctioning it.
Mark Russell 2014/08/07 05:55:47 PM
Of course the sanctions will hurt but only while they realign their focus to new markets. Russia will only be strengthened by this while the EU starts to pay the price for their lack of independent thought and analysis.
Aseza Ngozi 2014/08/11 02:30:30 PM
Truth is russia will be hurt a bit for now and what you may forget is that If the Russians invade ukraine its two weeks then the faccist government in ukraine is gone even worse they will then annex the two eastern provinces which will then mean humaliation for the states. Ask Georgia what happens when you poke Russia in the eye.Look at afghanistan and Iraq are still costly to the states do you think they will willingly go to Russia knowing they are not a walk over. Obama yes try and bait africa but we all know China and Russia can do better