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Unites States adds to the list of "surgical sanctions" targeting Russian elites. Why haven't the sanctions been tougher and imposed more widely?  Kert Davies (The Climate Investigations Center) suggests it's about Exxon. Yesterday's Bloomberg report settles the issue: For $900 Billion reasons (yes, that's with a "B"), Davies is right.
“I am not a U.S. company and I don’t make decisions based on what’s good for the U.S.”  Recent Exxon CEO, Lee Raymond
Two days ago, President Obama announced a third round of sanctions aimed at "seven Russian government officials and 17 companies linked to Russia President Vladimir Putin’s inner circle."

This is the third round of sanctions since the Ukraine/Crimea diplomatic crisis boiled over last month.

The first round, instituted on March 10, "slapped sanctions on two top aides to President Vladimir Putin and nine other people" Three days later, the President Obama ordered the second round, targeting "16 Russian government officials, members of Putin’s inner circle and Bank Rossiya the bank used by many senior officials of the Russian Federation."

Media coverage of each iteration of sanctions has mostly consisted of dry factual reporting, sometimes accompanied by shallow and uninformative analysis.   This excerpt, from ABC, is typical of the media's obtuse coverage:

In the case of Russia, the White House is so far sanctioning individuals and entities in Putin’s inner circle, hoping to squeeze him to halting what the West says is a coordinated campaign to destabilize Ukraine. The White House has held off on what it calls sectoral sanctions, which could hit Russia’s critical energy, mining, and banking sectors.

The reason the White House may not have yet imposed those tougher measures illustrates exactly what makes this so difficult.

Despite Obama dismissing Russia as a “regional power,” it nevertheless occupies a strategic position. Its $2.5 trillion economy is the seventh largest in the world. Its gas exports are critical for American allies in Europe (a major reason they have been reluctant to go along with tougher American proposals). American companies like ExxonMobil and Boeing have massive investments in Russia that could suffer under broad sanctions.

[emphasis added]

But why has the Unites States chosen to levy narrowly-targeted sanctions on individuals, as opposed to the more traditional sanctions, similar to those imposed by Ronald Reagan and Jimmy Carter, that targeted the entire Soviet economy?  

A savvy news consumer would probably want to know more about Exxon's "massive" investments in Russia (Boeing's "massive" investment is $7 billion). A savvy news consumer would intuit that Exxon, as the second-largest corporation in the world and the largest fossil energy extractor/distributor, is probably the most politically powerful non-governmental entity on the planet. So what is/are Exxon's "massive" investment(s) in Russia? And again:  Why have we implemented a series of "surgical sanctions" targeting individuals? Presidents Carter and Reagan struck at the entire Soviet economy with sweeping sanctions; wouldn't that be more effective than singling out a few rich oligarchs?

Yesterday, finally, our savvy news consumer might have found a few clues in this Bloomberg report: Exxon’s $900 Billion Arctic Prize at Risk After Ukraine.

Exxon Mobil (XOM) Corp.’s dream of drilling in the Russian Arctic may risk running aground on the politics of Ukraine.

The company plans to start drilling in August in the Arctic’s remote Kara Sea -- the centerpiece of Exxon’s global alliance with Russian state-controlled OAO Rosneft. (ROSN) The partnership, which includes shale exploration in Siberia and joint venture fields in Texas, will come under greater scrutiny after the U.S. placed sanctions on Rosneft’s Chief Executive Officer Igor Sechin.


The Arctic well will be among the most expensive Exxon has ever drilled, costing at least $600 million. The spending is justified by the potential prize. Universitetskaya, the geological structure being drilled, is the size of the city of Moscow and large enough to contain more than 9 billion barrels, a trove worth more than $900 billion at today’s prices.

[emphasis added]

Yes. $900 billion.

How much is that? Well, at $10 a pop, you could wash your car 90 billion times with $900 billion dollars.


Well, the truth is that I had a really hard time coming up with any sort of meaningful frame of reference. I googled "largest business deal" and found a three tech mergers that exceeded $100 billion (Exxon's merger with Mobil came in at $80 billion), but the largest was only worth just over $200B.

I needed to look bigger. I realized that at the $900 billion range, I needed to start looking at national GDPs. So I googled it. Turns out there were just 15 nations with GDPs larger than Exxon's single deal with Rosneft.  (Saudi Arabia didn't make the cut. Indonesia, the world's 4th most populous country, didn't either.)

But that measure seemed a bit lacking too. Too esoteric...

I decided to look closer to home, and that's when I made the connection to the sequester.

You remember the sequester, right? It's had the beltway media pre-occupied for the better part of a year now. Secretary Panetta told us it would hollow out our military. The President, Senators, Congressman... they've all spoken at length about the challenges our nation and government will endure if the sequester isn't eliminated.

Yeah, that sequester.

As it turns out, that sequester compels $90 billion of budget cuts every year for the next 10 years. $900 billion. (Note that I subtracted the interest savings, which are not "budget cuts".)

$900 billion shaped the course of politics for the richest and most powerful country on the planet for well over a year. Could Exxon's $900 billion bet be influencing the way we deal with Russia? Is Exxon's $900 billion at stake driving the decision to sanction Russian oligarchs instead of the broader Russian economy?

I know what legendary Marine Corps General Smedley Butler (and two-time Medal of Honor recipient) would say:

War is just a racket. I wouldn't go to war again as I have done to protect some lousy investment of the bankers. There are only two things we should fight for. One is the defense of our homes and the other is the Bill of Rights. War for any other reason is simply a racket.

It may seem odd for me, a military man to adopt such a comparison. Truthfulness compels me to. I spent thirty-three years and four months in active military service as a member of this country's most agile military force, the Marine Corps. I served in all commissioned ranks from Second Lieutenant to Major-General. And during that period, I spent most of my time being a high class muscle-man for Big Business, for Wall Street and for the Bankers.

I suspected I was just part of a racket at the time. Now I am sure of it. Like all the members of the military profession, I never had a thought of my own until I left the service. My mental faculties remained in suspended animation while I obeyed the orders of higher-ups. This is typical with everyone in the military service.

I helped make Mexico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys. I helped in the raping of half a dozen Central American republics for the benefits of Wall Street. I helped purify Nicaragua for the international banking house of Brown Brothers in 1909-1912. I brought light to the Dominican Republic for American sugar interests in 1916. In China I helped to see to it that Standard Oil went its way unmolested.

During those years, I had, as the boys in the back room would say, a swell racket. Looking back on it, I feel that I could have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents.

Of course, we're speaking of sanctions, not war. And I am very happy that, so far, this has been a spat among oligarchs and no poor grunts have been sent to fight "for our freedom." But... Butler's larger point was that the Big Businesses of his day determined national policy.

Butler's military career coincided with the rise and peak of the American robber barons of the 20th century. What was true then is true today.

Meet the new boss...

PS: Always remember that Exxon is and has always been one of the largest contributors to climate change denial organizations and that they are probably more responsible than any other entity for the climate policy impasse we're stuck in.

It's also worth noting that Exxon's former CEO disclaimed any allegiance to the United States, saying “I am not a U.S. company and I don’t make decisions based on what’s good for the U.S.”

PSS: As usual, comments have my head spinning.  There's no end to this story. Truly, it's connected to everything we care about.

Here's one:  Put Citizens United and $900 billion in the same sentence... Go ahead, I'll wait...  OK, now start breathing again. Suddenly, all sorts of things are making more sense, like why Big Oil has retained its tax advantages, notwithstanding overwhelming public opposition...

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