If Mr Putin doesn’t move to end the war in Ukraine in the wake of last week’s downing of a Malaysia Air jet in rebel-held territory, he risks becoming an international outcast like Belarus’ Aleksandr Lukashenko, whom the US famously labeled Europe’s last dictator, one Russian billionaire said on condition of anonymity.
“The economic and business elite is just in horror,” said Igor Bunin, who heads the Centre for Political Technology in Moscow. Nobody will speak out because of the implicit threat of retribution, Bunin added. “Any sign of rebellion and they’ll be brought to their knees.”
The downing of the Malaysian airliner, which killed 298 people, led to renewed threats of deeper penalties by the US and EU, who have already sanctioned Russian individuals and companies deemed complicit in fuelling the pro-Russian insurgency in Ukraine.
US secretary of state John Kerry said the available evidence suggests Russia provided the missile used by the rebels to down the airliner. UK defence secretary Michael Fallon, meanwhile, was cited of accusing Mr Putin of “sponsored terrorism”.
While the EU has so far imposed less punitive measures against Russia than the US because of opposition from countries such as Italy and Austria, the UK and the Netherlands are leading the push for bolder action at a meeting of foreign ministers today. Of the victims onboard the plane, 193, were Dutch; 10 were British.
The US has already imposed penalties on state-run companies and members of Putin’s inner circle, including billionaire investor Gennady Timchenko and gas piplines supplier Arkady Rotenberg. Last week President Obama aimed a direct blow at Russia’s economic heart with sanctions on Rosneft, the flagship oil giant that generates more than 4pc of the world’s crude and over 8pc of the country’s GDP.
The measures were tailored to slowly starve the state-run energy firm of US dollar funding rather than bar it from doing business with oil buyers such as BP or stymie multibillion-dollar ventures with firms like ExxonMobil, experts said.
The result is likely to be an increase in the cost of financing for Rosneft, which has grown increasingly reliant on pre-financing oil supply deals with firms including Glencore and BP. It may need to seek out new banks for loans, and could eventually slow investment in new projects.
Additional US measures may be imposed in the next few weeks, with industry-wide sanctions probable in September if investigators determine the rebels carried out the attack, with Europe taking less wide-ranging steps because it has closer business ties with Russia, according to New York research body Eurasia Group.