The current challenge for U.S. policymakers is to deploy the tactics of international isolation and economic pressure without sacrificing long-term business interests or encouraging, whether intentionally or not, a form of commercial disengagement from Russia. Stepping back from large markets that take years to penetrate carries with it tremendous costs—when market share is ceded to competitors, it is difficult to regain, both in terms of access to opportunities or of consumer brand loyalty.

Following the first round of asset freezes, Russian lawmakers quickly realized that an upper house proposal to confiscate assets of U.S. and European firms was short-sighted and ultimately harmful to Russia’s investment climate. If the U.S. implements further sanctions, we can expect to see a concrete but measured Russian response—for example, temporary bans on U.S. participation in Russian government tenders. In view of the first two rounds and the possibility of sectoral sanctions, President Putin has further encouraged Russian energy firms to purchase Russian equipment and services rather than entering into contracts with Western suppliers.

These are considerations for U.S. officials as they brief the investment community on increased Russian risk or discuss with American companies the extent of their participation in economic forums such as that held in St. Petersburg in May. Both tactics pose a contrast to typical business-government consultations in European capitals, and they further demonstrate the challenge of a coordinated multilateral approach to limiting collateral fallout.

Though there exist some ambiguities and differing interpretations in the narrative of the past six months, it is clear that Russia’s role in the crisis warranted a Western response. The nature of the response (and the Russian response to the Western response) has put the U.S. business community in a difficult position. Corporate executives understand the dilemma, but many of them also recall previous sharp differences between the U.S. and Russia over Kosovo and Georgia, among others. During moments of heightened political tension, and especially during those episodes involving the use of force, commercial interests on both sides point to the economic dimension of the bilateral relationship as a ballast when other ties are frayed. Corporations obviously seek to preserve and advance their own interests in growing new markets. However, from a strategic standpoint, more robust economic ties and further integration of Russia into the global economy will quite likely alter the context for adventurous pursuits, competition, and conflict in the future.

Blake Marshall is a leading specialist in U.S.-Russia economic relations based in Washington, DC. His experience advising Western companies over the past twenty years includes positions as Senior Vice President and Managing Director of PBN Hill+Knowlton Strategies and Executive Vice President of the U.S.-Russia Business Council. He has worked closely with a broad range of American companies on their investments in Russia and other markets of the former Soviet Union, with an emphasis on market entry and expansion, business strategy, government relations, and stakeholder outreach.

[1] Rebecca Shabad, “U.S. ‘finalizing’ new sanctions against Russia,” http://thehill.com/policy/international/217133-us-finalizing-new-sanctio....

[2] David Jackson and Oren Dorrell, “Obama team unveils new Russia sanctions,” http://www.usatoday.com/story/news/nation/2014/09/12/obama-russia-sancti....

[3] Eli Lake, “NATO Plans New Military Outposts to Stop Putin—Just Don’t Call Them Bases,” http://www.thedailybeast.com/articles/2014/09/03/nato-plans-new-military....

Image: Kremlin website