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G-8 Suspension Tops Limited Toolkit to Sway Russia

Photographer: Thomas Samson/AFP/Getty Images

People wave European and Ukrainian flags as they demonstrate against Russian intervention in Ukraine in front of the Russian Embassy in Paris on March 2, 2014. Close

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Photographer: Thomas Samson/AFP/Getty Images

People wave European and Ukrainian flags as they demonstrate against Russian intervention in Ukraine in front of the Russian Embassy in Paris on March 2, 2014.

The U.S. and other Group of Eight nations suspended preparations for a June summit in Russia because of the military action in Ukraine, as Secretary of State John Kerry signaled Russia may be pushed out of the G-8.

It wouldn’t be hard to remove Russia from the elite group, analysts said, if the other seven members banded together to do so. These same analysts were divided on what effect such a move would have, with some saying it could sting Russian President Vladimir Putin and others saying he would shrug it off.

The U.S., U.K., Canada, France, Germany, Italy and Japan condemned Russia’s “clear violation of the sovereignty and territorial integrity of Ukraine.” The group said in a statement yesterday that it was suspending its participation in preparing for the summit in Sochi “until the environment comes back where the G-8 is able to have meaningful discussion.”

What Caused Ukraine's Crisis?

The statement said Russia’s actions “contravene the principles and values on which the G-7 and the G-8 operate.”

It came after Kerry said on CBS Television’s “Face the Nation” program that “if Russia wants to be a G-8 country, it needs to behave like a G-8 country.” On NBC’s “Meet the Press,” he said if Putin’s approach continues he “is not going to have a Sochi G-8” and “he may not even remain in the G-8.”

President Barack Obama spoke with the leaders of the U.K., Germany, France, Canada and Poland over the weekend to discuss potential responses to Russia and the situation in Ukraine. The G-8 operates by consensus of the members, so Russia’s suspension from the group could be accomplished quickly. More complex responses, including sanctions designed to isolate Russia economically and a NATO answer, are also options.

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U.S. companies PepsiCo Inc., Alcoa Inc., Abbott Labs (ABT), DuPont and General Dynamics (GD) Corp., along with European retailers and energy and commodities companies, are among those with significant revenue from Russia and Ukraine.

House Intelligence Committee Chairman Mike Rogers, a Michigan Republican, said on Fox News yesterday that Obama should “start the process to remove them from the G-8.”

Senator Lindsey Graham, a South Carolina Republican who has criticized Obama as weak on foreign policy, said on CNN that the president should also try to suspend Russia from the broader G-20 for at least a year, “starting right now.”

Analysts are split over how much effect that suspending Russia’s G-8 membership would have.

‘No Impact’

“The threat to toss Russia from G-8 will have no impact,” said Andrew Kuchins, director of the Russia and Eurasia Program at the Center for Strategic and International Studies in Washington.

Putin’s decision to skip a G-8 meeting that Obama hosted two years ago reflects how little the Russian leader cares, Kuchins said, while it would be “an exercise in futility” to try to get the G-20, whose members include China, to suspend Russia.

Ariel Cohen of the Republican-leaning Heritage Foundation in Washington said Russia’s G-8 status “does matter” in conjunction with sanctions.

“They crave legitimacy,” Cohen said of Russia. “They can destroy their attractiveness as a business-investment target, and they can pay tens of billions of dollars of capital that is fleeing Russia as we speak.”

Cohen said the U.S. and allies should focus on economic and banking sanctions. Sanctions on Iran, he said, have “demonstrated that banking is indeed a very strong tool.”

“There can be signaling done through military deployments, but what really will get their attention is money,” he said.

‘Wimp-in-Chief’

Kuchins said in an e-mail that the U.S. should deploy vessels near the Ukrainian coast, NATO should move troops and go on higher alert, and the U.S. should support Ukraine’s economy.

Putin thinks Obama is the “wimp-in-chief,” Kuchins said. “Obama must change that perception immediately.”

The U.S. and other nations are likely to suspend Russia from the G-8 even if the impact is minimal, said Charles Kupchan, a fellow with the Council on Foreign Relations.

“If Sochi is canceled and if Russia is suspended from the G-8 it will not be done under the assumption that these moves will induce Putin to back down,” Kupchan said.

“It would be done under the assumption that there is a rules-based system that makes the world a safer place, and when that system is threatened, countries need to take steps to punish the violators and say to the international community that such behavior will entail costs.”

“The United States has very few sources of leverage if the question is what can it do to get Russia to undo what it has just done in Crimea,” Kupchan said.

“The question now is what can the United States do to make it clear that what happened is way over the line and unacceptable and send a message any further acts of aggression by Putin would be unacceptable and quite costly.”

To contact the reporter on this story: Margaret Talev in Washington at mtalev@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net

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