Follow the Money to Putin Inc. to See Why U.S. Struggles With Russia

[Purveyor]

By Alan Katz, Jesse Drucker and Irina Reznik Jun 25, 2014 10:39 AM ET

June 24 (Bloomberg) -- Bloomberg’s Alix Steel and Ryan Chilcote examine the latest on Ukraine as Russian President Valdimir Putin calls for an end to the right to use force in Ukraine and rebels in the country match the cease-fire called by the Ukrainian government. They speak in today’s “Global Outlook” on “In the Loop.”

To see why U.S. economic sanctions against Russia are likely to have limited impact, follow the spending of a small Delaware-incorporated, Nasdaq-traded television company named CTC Media Inc. (CTCM)

While CTC Media has a market capitalization of just $1.7 billion, it’s a good example of the way Russia’s economy has become so closely intertwined with U.S. business that it’s difficult to separate them. And once you unwind any of the string, one end is likely to lead, with twists and turns, to Russian President Vladimir Putin’s inner circle.

The U.S. has issued five rounds of sanctions in response to Russia’s seizure of Crimea and its alleged backing of militants who have taken over part of Ukraine. The U.S. would be ready to issue further restrictions if Russia escalates tensions in Ukraine, Treasury Secretary Jack Lew said June 19 in Berlin.

The sanctions were designed to minimize harm to U.S. companies, which also leaves them open to some wide loopholes. Funds from U.S. firms flow legally through these gaps to companies linked to blacklisted entities or people. In CTC’s case, it is paying tens of millions of dollars to Video International, a Russian advertising firm part-owned by OAO Bank Rossiya. In March, the U.S. sanctioned the St. Petersburg bank and its largest shareholder, financier and media magnate Yury Kovalchuk, calling him Putin’s “personal banker.”

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http://www.bloomberg.com/news/2014-06-25/putin-pals-dealing-with-u-s-firms-make-sanctions-useless.html

[dipsydoodle]

1. Business at odds with Obama over Russia sanctions threat

Two top U.S. business lobbies are preparing to publicly break with President Barack Obama over the prospects of more sanctions against Russia after months of quietly raising their objections with the White House.

The U.S. Chamber of Commerce and National Association of Manufacturers plan to run newspaper advertisements June 26 in the New York Times, Wall Street Journal and Washington Post, warning that more Russia sanctions risk harming U.S. workers and businesses, said a person familiar with the plans, who asked not to be identified to discuss private deliberations.

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The business associations’ advertisements assert that “the only effect” of additional sanctions would be “to bar U.S. companies from foreign markets and cede business opportunities to firms from other countries,” according to a copy provided by the person familiar with the plans.

The ads, written as a joint statement from Jay Timmons and Thomas Donohue, respectively the presidents of the manufacturers association and the chamber, don’t name Obama. They instead address actions under consideration by “some U.S. policymakers.”

http://www.businessweek.com/news/2014-06-24/business-at-odds-with-obama-over-russia-sanctions-threat