Diplomatic war between Russia and the United States is in full swing. Last month Moscow required the US to trim its diplomatic staff by 755 officials, bringing the overall size of its mission to 455 employees. In response, Washington ordered Russian foreign ministry to shut down three of its diplomatic facilities. Now the Kremlin is preparing a lawsuit disputing American decision.

How does this diplomatic tit-for-tat affect the US-Russia relations? The short answer is, “Not much”. Squabbles between the two countries’ foreign ministries are no more than an opportunity to blow off some steam in a low-stakes game. The same goes for economic sanctions. Contrary to what some pundits believe, the US-Russia relations have not ‘hit the bottom’.

In fact, what we are seeing is the end of the post-Cold War thaw in the bilateral ties, not a return to hostilities before the collapse of the Berlin Wall. Things can get worse. Much worse.

Take sanctions. Despite a flurry of media reports, their actual impact so far has been limited. According to research by Evsey Gurvich and Ilya Prilepskiy, between 2014 and 2017, Russian economy will have lost around 2.4% of GDP growth compared with what it would have otherwise been without Western penalties. Yet this is 3.3 times lower than the estimated damage incurred by the economy as a result fo the 2014 oil price shock.

The situation can easily become more destructive. As things currently stand, the EU companies could still rely on waivers or lax enforcement of the US sanctions to interact with Russia. However, the US could ignore the European Union’s objections and enforce a blanket embargo on the community’s joint projects with Moscow. This risks dealing an immediate damage to the ongoing ventures in the oil industry, like the Gazprom-backed Nord Stream 2 gas pipeline.

Moscow could retaliate. There are no guarantees that the Kremlin won’t hinder the operations of private companies selling consumer products in Russia, like Apple, Pepsi or McDonalds. The country’s parliamentarians also proposed imposing an embargo on pharmaceutical imports from the US.

True, Russian consumers will be hit hard by these measures. But that didn’t stop Moscow banning imports of western food in 2014. Humanitarian ties between the US and Russia are already underdeveloped compared to the sizes of their economies. Escalation in sanctions war will cut the precious access points that remain between the two countries’ elites.

Geopolitical stand-offs carry even greater risks. Russia and the US have up till now avoided engaging in proxy wars, as they often did throughout the Cold War. This may well change. For one, American decision to arm Ukraine will certainly cause a tough response from Moscow.

Then there is the Middle East. The region’s balance of the power is precarious. Russia could complicate things even more. Most obviously, it may hinder the process of bringing violence in Syria to a political resolution. Another risk in Syria involves incidental clashes the US-backed forces or American aircrafts and Russian soldiers. Beyond that, the Kremlin could bolster Iran’s influence in the region, something Washington is wary of.

Another point of contention is Afghanistan. The US administration is deeply suspicions of Russia supplying weapons to the Taliban. Should Moscow decide to up the ante on its support for the terrorist group, this will bode ill for the Western-backed government in Kabul. And for 11,000 American troops stationed there. Zamir Kabulov, Putin’s special representative in Afghanistan, already said the US should withdraw all of its soldiers from the region.

Russia doesn’t offer many creative solutions to global problems, that is true. Its potential as a geopolitical spoilsport, on the other hand, remains considerable.

Above all, there is an issue of strategic stability. Both INF and New START treaties, limiting the nuclear arsenal on both sides, are under threat. Last spring Pentagon accused Moscow of violating the INF agreement. In response, Congress proposed the US develop a new missile, thus automatically forcing it beyond the limits of the INF treaty.

Russian Federation flag

As regards New START, it is due to expire in 2021 and has to be either extended or renegotiated. The process is tedious. Most of the heavy-lifting in the negotiations will be done at the expert level, with political leaders having to sign the key documents.

Yet limiting military capabilities is an inherently sensitive process. When negotiating New START, Barack Obama came under heavy criticism from the GOP in the Senate. To calm the critics’ nerves, the president had to deploy Defence Secretary Robert Gates, who had a reputation of a Republican ‘hawk’.

Given current febrile atmosphere – anti-Western hysteria in Russia and suspicions around Donald Trump’s links with Moscow – discussions could prove even more acrimonious this time. At any case, failure to reach an agreement will have grievous consequences for the world’s security.

Many, including some in the Kremlin, expected Trump’s presidency to usher a new era in the US-Russia relations. Yet, in strategic terms, things remain largely the same. Like Barack Obama’s administration, Trump is not ready for any ‘grand bargains’ with Moscow. Indeed, Washington doesn’t wish to unite the Ukrainian problem with the issues in the Middle East and Afghanistan into one track.

On a personal level, Trump-Putin relations might have been more cordial than the Russian president’s dialogue with Obama. The Queens-raised former businessman appeared to favour a more transactional approach to relations with Moscow than Obama, who didn’t miss the opportunity to poke the Kremlin’s nose into its economic problems or poor human rights record.

Alas, the animosity and suspicions toward Trump on behalf of the US lawmakers means atmosphere in the US-Russia relations won’t improve anytime soon. The Congress’s decision to take away the off-switch on the Russian sanctions from the White House further limits Trump’s leverage to provide Moscow any giveaways.

Against this backdrop, the goals in the US-Russia relations should be minimalist. First, Russia and the US should minimize the disruption in business links. Second, operational cooperation must be kept as tight as possible in both Syria and the Baltics to avoid any collision, while preventing escalation in Ukraine. Third, strategic stability should be preserved.

Solving those objectives would be a win-win situation for both Washington and Moscow. For the former, it would mean neutralising Russia’s worst impulses to hurt America in the Middle East or Central Asia. For the Kremlin, that would help concentrating more on mending ties with the European states in an attempt to find consensus on Ukraine.

 

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