Announcing new sanctions on Russia, President Joe Biden on Tuesday condemned Vladimir Putin’s reinvasion of Ukraine.
Biden’s opening round of sanctions seems designed to fire a warning shot off the Kremlin bow. Targeting the VEB state development bank and Russian access to Western sovereign debt markets, Biden avoided more significant Russian financial interests. VEB is not a top 10 Russian bank, and Putin has carefully stockpiled his foreign capital reserves. Still, Biden made clear that new sanctions would follow any further escalation by Russian forces. Linked to the VEB sanctions, this rhetoric serves as a warning to larger Russian banks such as VTB, Gazprombank, and Sovcombank. Biden also announced that U.S. sanctions would be imposed on certain oligarchs and their families. Again, however, it is unclear whether these sanctions will target major Putin allies such as Roman Abramovich, Alisher Usmanov, and Oleg Deripaska. These individuals hold significant financial interests in Britain, and sanctioning their assets would send shock waves through the Russian elite upon which Putin relies for his patronage-power networks.
More important was Biden’s announcement that additional U.S. military forces will be deployed to the Baltic NATO member states of Estonia, Latvia, and Lithuania.
This is particularly valuable to Estonia, a small nation sitting right alongside the Russian border. While the British army has recently reinforced an armored battle group in Estonia, and the United States has deployed an F-15 fighter squadron, the arrival of additional U.S. ground forces (likely a mechanized infantry brigade) will be welcomed. Until now, Biden had kept additional ground deployments limited to Poland and Romania. Biden’s explicit reference to the Estonia deployment also serves an additional symbolic purpose. That’s because it clearly repudiates Putin’s demand that NATO withdraws forces from member states that joined the alliance after 1997.
What happens next?
The most likely scenario is that the newly arrived Russian forces in southeastern Ukraine will engage Ukrainian forces along the Donbas contact line. Putin may hope to force Ukraine into more active defensive action so as to give himself a pretext for offensive operations against Kyiv.
