The new round of US sanctions slapped on Russia over Crimea Thursday may already be taking a toll on Russia's economy. But how effective the measures will be in curbing Russia's aggressive policies remains a controversial question.
In fact, the Kremlin leadership could have planned for the sanctions in a way that would mute their immediate impact on their intended targets, Russian President Vladimir Putin and his closest associates.
The true effects of the measures, as they percolate through the Kremlin-centric financial and business circles, will sting with growing force in the long term. Yet in the short term, they might play into Putin's hand as he continues to centralize power at home.
Russia's stock market plunged by around 3 percent Friday, after slumping 10 percent in the past month. The beleaguered ruble rallied slightly, but projections show it continuing its recent dramatic downward slide.
The rating agency Standard & Poor’s downgraded Russia's credit outlook to negative, citing "heightened geopolitical risk." And the US-based companies Visa and Mastercard stopped processing payments for cardholders of at least four major Russian banks, a move that could hit ordinary Russian consumers.
"Society is very nervous. Ruble depreciation and the suspension of Visa card services is going to hit a lot of Russians hard," says Alexei Vedev, a senior economist at the Gaidar Institute in Moscow. "There is no doubt that these political tensions, and the sanctions, have brought a lot of uncertainty that will seriously worsen Russia's economic position."
About two dozen top Russian officials involved with Crimea face visa bans and asset freezes. These restrictions are largely symbolic, and some targeted individuals are reveling publicly in their new status as bêtes noires of the US.
For one, Deputy Prime Minister Dmitry Rogozin has kept up a steady stream of defiance on Twitter, writing, among other things, "All these sanctions aren't worth a grain of sand of the Crimean land that returned to Russia."
Whether a coincidence or not, a sanction strategy nearly identical to the one pursued by the US was suggested in this week's New York Times op-ed by Russian anti-corruption crusader Alexei Navalny, currently under house arrest in Moscow. Mr. Navalny argued that instead of hurting average Russians, "Western nations could deliver a serious blow to the luxurious lifestyles enjoyed by the Kremlin’s cronies who shuttle between Russia and the West. This means freezing the oligarchs’ financial assets and seizing their property."
Mr. Navalny's list of inner-Kremlin tycoons to be sanctioned tracks very closely with those subsequently called out by the US.
But there are serious doubts among some experts over what seems to be the main prong of the US strategy: to hit members of President Vladimir Putin's inner circle with targeted measures.
In fact, the US may be providing a boost to the Kremlin’s tactic to centralize power. Since returning to the presidency for the third term, Putin has pressured Russia's rich oligarchs to bring their money home and divest themselves of foreign property — a message he pounded again this Thursday in a room full of leading Russian businessmen. Laws passed last year restricted Russian officials from having bank accounts or real estate abroad, and now their implementation will be strengthened.
"I think Putin can actually benefit from these sanctions," says Nikolai Petrov, a professor at Moscow's Higher School of Economics.
"He has designed a kind of 'besieged fortress' model for Russia, and he realizes it's necessary to compel the elite to bring their assets home. Their loyalty can only be assured if they have no escape hatches, such as bank accounts and property in the West. Until now they have found all kinds of ways to avoid doing that, but if the West itself now drives them back to Russia, they will have no choice," Mr. Petrov says.
The key targets of Thursday's sanctions, according to a Treasury Department statement, are a leading Russian bank and four wealthy associates of Putin, whose vast business empires may be linked to his own fortune.
They include Gennady Timchenko, Russia's 12th richest man and the founder of the Swiss-based commodity trading company Gunvor. “Putin has investments in Gunvor and may have access to Gunvor funds," the statement said.
But news reports suggest that Mr. Timchenko may have already dodged the sanctions bullet by selling his 43-percent stake in Gunvor to his business partner, Swedish tycoon Torbjorn Törnqvist.
Also listed are the Rotenburg brothers, Arkady and Boris, former judo sparring partners of Putin who have amassed enormous fortunes in state contracts, many of them in Sochi.
Yury Kovalchuk, main owner of the US-sanctioned Bank Rossiya, is a Russian media magnate who has been described as "Putin's banker."
Putin shot back by announcing that he would immediately open an account at Bank Rossiya and pledging that its other customers will be protected.
What about Russia’s top dog?
One key issue — which could make or break the sanctions’ effectiveness — is whether Putin himself actually holds a vast personal fortune in foreign assets that might be targeted.
The scant evidence for Putin's private wealth always comes back to statements made by a leading Kremlin-connected analyst, Stanislav Belkovsky, to Die Welt and The Guardian, in which he estimated Putin’s accumulated fortune to be about $40 billion, including huge personal stakes in several state corporations.
And even Mr. Belkovsky, reached by the Monitor by phone, no longer sounded so sure. He said he was preparing to leave the country and couldn't talk. But "the only thing that I can say is that I assume that there is no division, nothing formal, between Putin's own property and finances and the property of his inner circle."
In other words, the link, if it exists, will prove a difficult target to hit.
"Russian oligarchs are unlikely to suffer much, because they have long since insulated themselves," says Igor Kovalyov, deputy dean at the Higher School of Economics in Moscow.
Most big companies have joint capital, making it difficult to injure Russian wheeler-dealers without hurting their foreign partners, he adds: "I think these sanctions will turn out to be mainly symbolic."
Meanwhile Putin, whose popularity rating is spiking, may be reaping big political rewards, says Olga Kryshtanovskaya, a leading expert on the Kremlin elite.
"I have never seen a time when the Russian elite and public were so united as they are now," in the wake of Crimea’s takeover, she says.