Given how modest those sanctions are, pretty much not at all is the answer for the moment. But what of possible future sanctions? And what about Russian retaliation?
About 100 CEOs with the Business Roundtable are meeting with Defense chief Chuck Hagel in Washington today, and the sanctions situation will no doubt be discussed, according to the group's president John Engler:
“The CEOs are obviously very concerned about what is happening in Russia,” Engler said in an interview. “For some companies, it’s a substantial bit of their business. They are watching it very intently, trying to understand what will happen and what the next steps will be.” [...]While pundits and reporters talk about the prospects of a new Cold War, or at least a chill, it's rarely mentioned just how entangled the U.S. and Russian economies have become in the nearly quarter century since the old Cold War expired. According to a 2013 report by Ernst & Young, the largest source of foreign investment in Russia today comes from U.S.-based companies, mostly those engaged in technology and financial services. With Russia now part of the World Trade Organization, that investment is increasing.
“Hopefully the industry can weather it out, avoid heavy sanctions,” said Norm Liu, chief executive officer of GECAS, General Electric Co.’s aircraft leasing unit in an interview yesterday at an International Society of Transport Aircraft Trading conference in San Diego. “This is a unique situation for all Western businesses.”
If the conflict between President Vladimir Putin and the West is confined to diplomatic circles, he said he’s less concerned. “If it crosses beyond that, it’s a different story,” he said.
Please read below the fold for more analysis.
And while other observers ponder how much influence the ultra-nationalists and worse in the new Ukrainian government will have, as well as whether Russian President Vladimir Putin has designs on territory beyond Crimea and perhaps beyond Ukraine, none of that matters to the corporations as long as the flow of dollars continues.
ExxonMobil, whose investment in Russia is the corporation's largest outside the United States, has a deal with Ukraine to drill off Crimea in the Black Sea. Government revenue in Russia is heavily dependent on fossil-fuel exports. If additional (and actually effective) sanctions were imposed, it could very well mean that Exxon's and other U.S.-based corporations' on-going projects would be stifled because Kremlin officials would be compelled to cut back on energy-related infrastructure projects needed to make a go of those projects.
ExxonMobil's CEO Rex Tillerson signed an agreement with Russia's state-owned petrochemical giant Rosneft in 2012. It was one oligarch shaking hands on one side with the chief of oligarchs, Vladimir Putin, on the other side:
"I’m pleased that you were here to be part of the signing today, and very much appreciate the strong support and encouragement you have provided to our partnership," said Tillerson. "[N]othing strengthens relationships between countries better than business enterprise."In an analysis that ought to be read in full, Steve Horn at DeSmogBlog has dug deep into ExxonMobil's specific relationship:
In 2012, ExxonMobil and Rosneft signed an agreement "to share technology and expertise" with one another. Some of the details:As Paul Pillar wrote in a review of Steve Coll's book on ExxonMobil, Private Empire:
• Forming of a joint venture to explore offshore oil and gas in the Kara Sea and the Black Sea
• Rosneft acquiring a 30 percent stake in 20 ExxonMobil-owned offshore oil and gas blocks in the Gulf of Mexico. [...]
• Rosneft obtained a 30 percent stake in ExxonMobil’s share in the La Escalera Ranch project in the Permian Basin Shale in West Texas. It also gained a 30 percent stake in a portion of ExxonMobil's stake in Alberta’s Cardium Shale formation.
In 2013, ExxonMobil and Rosneft announced a partnership to conquer the Arctic for oil and gas, creating the Arctic Research and Design Center for Continental Shelf Development.
ExxonMobil put down the first $200 million for the initial research and development work, while Rosneft threw down $250 million later. Officially, Rosneft owns 66.67 percent of the venture and ExxonMobil owns 33.33 percent.
The clout, reach, and mission of ExxonMobil mean that it runs what amounts to its own foreign policy, raising the question of how that policy relates to the foreign policy of the United States.Geopolitics has always been driven by money as much as ideology and territorial ambition even though the politicians will define it all under the category of "national interests." Corporate chieftains, whether in Russia or America (or elsewhere), weigh those interests rather differently than the rest of us mortals.