In many ways, New York
couldn't be more different in how they view sanctions. While the Washington foreign policy elites are pushing to ramp up
sanctions against Russia,
arm Kiev and ostracize Russia on the world stage, it’s a completely
different scene in New York, where
multinational managers, venture capitalists and institutional investors are
looking for ways to roll back sanctions, find new avenues for business
cooperation and integrate Russia
into the global economy.
At Russia Forum New York 2015, hosted at the Princeton Club in midtown Manhattan
by Russian Center New York and sponsored by the Gorchakov Fund, Ethnomir and the Congress of Russian
Americans, these differences between how the elites of Washington
and New York view Russia came into stark contrast.
The event, which focused on the current Russian
investment climate, consisted of a keynote by Russian Ambassador to the United
States Sergey Kislyak and a set of three panels, each focusing on a different
aspect of the U.S.-Russian business relationship: “Economic Cooperation,” “Commerce
and Innovation” and “Media and Business.”
The Russia Forum New York
followed the two-day World Russia Forum in Washington,
which was organized by Edward Lozansky, president and founder of the American University
in Moscow. This
year’s World Russia Forum marks the 35th annual meeting of the
US-Russia Forum, dedicated to constructive dialogue in the U.S.-Russia
As Ambassador Kislyak noted in his opening remarks, Russia is still “open for business” and there’s
no need to fear a return of the Cold War even if the U.S. is
attempting to isolate Russia
both diplomatically and economically. The good news, Kislyak says, is that Russia is
redoubling efforts at diversifying and modernizing its economy, including more
emphasis on diversifying by geographic region.
As a result, the ruble has stabilized, the Russian economy is
showing signs of positive growth in 2015 (even if it’s “miserably low”) and the
feared credit crunch of February 2015 (when Russian companies were scheduled to
pay back significant amounts of dollar-denominated debt) never materialized. In
fact, Kislyak says, trade between the U.S. and Russia
is still very much active, and actually increased by almost 5 percent
in 2014, despite the U.S.
economic sanctions against Russia.
And it’s not just that economic sanctions
are not having their desired effect. The U.S.
policy of isolating Russia
on the world stage may end up boomeranging and hitting the very people it was
not supposed to impact – multinational companies that have invested in Russia for the
long-haul, smaller companies, entrepreneurs, and young Russians who have
embraced both globalization and innovation.
This was a complaint voiced continually at the
forum, as speakers such as James Min of Deutsche Post DHL, Cyril Geacintov of
DRG International and Dmitry Akhanov of Rusnano USA explained how sanctions
have impacted their own businesses directly and why sanctions are hurting U.S.
small business owners and young Russian entrepreneurs far more than they are
hurting Russia’s largest state-backed corporations.
Even some Russian foreign policy insiders in Washington are starting
to make this point. The most eloquent case for re-thinking sanctions was
recently made by Samuel Charap, senior
fellow for Russia and Eurasia at the International Institute for Strategic
Studies, andBernard Sucher in an op-ed for the New
York Times: “Why Sanctions on Russia Will Backfire”.
Similar to the viewpoints expressed at the Russia Forum New York, Charap and
Sucher argue that sanctions are impacting the wrong people and that they
unfairly punish Russia for integrating into the global economy and embracing
the American-led global financial system.
So if sanctions against Russia don't
make any sense, why pursue them?
The short answer is that sanctions are a form of
low-hanging fruit for American politicians and diplomats, eager to show that
that they are doing something – anything – to punish Russia
for its annexation of Crimea and involvement in Eastern
In many ways, though, the logic for this
strategy can be traced back to a fundamental problem – there’s simply not enough
trade between Russia and the
to make business incentives outweigh political incentives. Yes, trade between
the U.S. and Russia may be
growing, but total annual U.S.-Russian trade is estimated at only $40 billion
by Russian Ambassador Sergey Kislyak. (By way of comparison, the Sochi Winter
Olympics cost Russia
$50 billion.) In terms of total annual U.S.
trade, $40 billion is a drop in the bucket and a very easy way to punish Russia in a
highly public manner.
In the end, though, trying to wreck Russia and
bring about regime change by using the economy as a foreign policy lever may
backfire. As Marcos Troyjo, director of BRICLab, pointed out during his
presentation at Russia Forum New York, we may
be on the cusp of a fundamental change in the global economy driven by factors
outside of the control of either Russia
or the United States.
now viewed as a geostrategic crisis, might one day be viewed more properly as a
geo-economic crisis brought on by changes in how the world thinks about “deep
In 2015, the world is likely to see a robust
period of “re-globalization” featuring entirely new trade blocs (including,
perhaps, the Eurasian Economic Union and the BRICS), the growth of an even more
and a shift from “comparative advantage” to “competitive advantage.” As Troyjo
noted, these factors could combine to create “new trade and investment
The hope in New York investment circles, of course, is
that these changing geometries of capital flows will lead to changing
geometries of political thinking. In other words, in a global financial system
no longer created, run and controlled by America,
there might be need to reassess where Russia stands in the global
economy. And, as Derek Norberg, executive director of the Russian-American
Pacific Partnership (RAPP) suggested in his presentation, that might be reason
enough to stop giving Russia “the silent treatment” when it comes to possible
But it will take time for any of this political
thinking to take hold. The Washington
foreign policy elites are still all dialed into the triumphalism of the Cold
War. None of the speakers at the Russia Forum New York seemed overly optimistic
that a fundamental mindset change could happen during the current Obama
administration - and maybe not even if Republicans win the presidency in 2016.
What it might take is a new, non-interventionist candidate such as Rand Paul and
an American electorate tired of endless wars in Afghanistan,
Iraq and Syria (and now Yemen)
for any attempt to rollback policies that punish Russia’s
business leaders rather than Russia’s
At the end of the day, it’s up to America’s business leaders to change the
narrative about Russia.
Natalie Sabelnik, chair of the Coordinating Council of Russian Compatriots in
the U.S., suggested at the
Russia Forum New York
that “this is the window of opportunity” for Russian and American business
leaders. In short, we’ve had one year to see that sanctions have not been
This potential mindset change, whether hopeful
or real, is highly evocative of Charles Dickens and his famous opening lines of
“The Tale of Two Cities.” How will leaders in New York and Washington choose to view Russia? When it comes to the
U.S.-Russian relationship, are we currently experiencing “the worst of times”
(as the Washington elite would suggest) or is
it the “best of times” (as Russia’s
investors, entrepreneurs and small business owners would suggest)? Is it the
“age of foolishness” or the “age of wisdom”? And, most importantly, will the
“winter of despair” be followed by a “spring of hope”?
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