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U.S. signaled ‘very aggressive sanctions’ if Russia attacks Ukraine: Eurasia Group Practice Head

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Eurasia Group Practice Head Alex Brideau joins Yahoo Finance Live to discuss geopolitical tensions, energy issues, and whether the White House will impose tougher sanctions on Russia.

Video Transcript

[MUSIC PLAYING]

- Welcome back. Well, Russia just announced a flurry of military drills as tensions between Russia and the Ukraine rise. Here to break down next steps in diplomatic negotiations and potential geopolitical risk is Alex Brideau, Eurasia Group Practice Head from Eurasia.

Thank you, Alex, for being here. So Russia says it has no plans to invade Ukraine yet it just stepped up these drills. In your estimation, does it actually go through with a strike?

ALEX BRIDEAU: Well it certainly is developing the capability close to the Ukrainian border to conduct a military attack against Ukraine. I think the general sense is that President Putin has not made a political decision one way or the other as to what he will actually do when it comes to this. There are a number of demands that the Russians have made on the security front, not just relating to Ukraine, but also relating to broader Eastern European security. Russia is currently waiting for the US and NATO to send written responses to some proposals that they had made in December. There's an expectation that those will arrive over the next week, and that the Russians will then evaluate those and decide whether or not they want to continue with the negotiations that started a couple of weeks ago and initially didn't go very well.

- And then, you know, one of the tensions that sort of escalated things is that Russia Putin wants to make sure that Ukraine doesn't become a member of NATO. But how likely is that to happen anyway?

ALEX BRIDEAU: It's unlikely at this stage. And President Biden actually mentioned this in his press conference last week that there are various factors that mean that Ukraine is not going to become a member anytime soon. However, the Russian side has signaled that that's not sufficient as a security guarantee, that they want some sort of legally binding guarantee that Ukraine would never become a member, which for NATO and the US is a non-starter.

So a key question here for the negotiations is just how flexible the Kremlin really is on that point. Are they willing to take the assurances that Biden gave at the press conference last week? Do they need something more?

But I think also an important point here is that the Russian side and Putin over the last couple of months has talked about a number of different security issues throughout the region that he wants addressed in these negotiations. So the question will be whether or not there is a package of agreements that can be reached that will satisfy both Washington and Moscow. Now, that's a challenge, but it is not impossible. And actually we think that it is likely to happen but it will take some time.

- And then how aligned are the EU and the US when it actually comes to imposing sanctions because you know Europe is very dependent on Russia's natural gas and oil? So does this in any way sort of lead to an energy crisis. do you think?

ALEX BRIDEAU: Well, there are some key differences when it comes to their approaches on sanctions. The US has been signaling that it will be very aggressive from the outset with sanctions it imposes if Russia attacks Ukraine. With the EU, I think, it's harder to find a consensus amongst the 27 members about what is the best approach with France and Germany representing maybe one side of this argument, states closer to Russia like the Baltic states and Poland hoping for or expecting more confrontation. So the prospect of significant EU sanctions is more limited unless we see a very overt full-scale invasion of Ukraine and attempt to occupy a significant part of the country, which would really galvanize EU views.

I think there is some sensitivity certainly to energy issues when it comes to the Europeans. It does not appear at this stage like energy sanctions apart from the issue of the Nord Stream 2 natural gas pipeline that those energy sanctions would be a target. And I think it's also important to note that, you know, for Russia, just as much as for Europe, there is a dependency there in terms of the supply of energy, the revenues that Russia gets from energy supplies. They're going to be sensitive to these issues as well. And that potentially decreases the risk here that we might see Russia cut off natural gas supplies to Europe in a major crisis.

- Alex, how important is it the way that President Biden handles this, particularly in light of the fact that he has been criticized by some over his handling of Afghanistan and obviously coming up to midterm elections?

ALEX BRIDEAU: Well, I think it is important to the Biden administration. They actually have taken some risks here in terms of the outreach to President Putin that we've seen since June. The mood from many members of Congress is that the White House should be more confrontational in general, should be imposing tougher sanctions on Russia, should be stopping the Nord Stream 2 pipeline.

A message from the White House up to this point has been that dialogue with Moscow can lead to positive outcomes. That's really being put to the test in this case. Foreign policy in general probably will not matter a huge amount in the midterms. But certainly a major crisis would be a concern for the Biden administration and for Democrats as they're trying to keep the House and the Senate.

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