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Washington’s World: July 21st – July 27th, 2014

The shooting down of Malaysian Airlines Flight MH 17 has upended the debate about Russia in Washington. Having earlier in the week extended economic sanctions against Russia to include major banks, defense and energy companies, the Administration was settling for a surly Russian reaction (which materialized) and then a drawn-out period of pressure on Moscow to reconsider its policy on Ukraine. US officials now tell us that the new crisis has substantially accelerated this timetable.  There are two schools of thought in Washington. The first – which is prevalent in circles close to President Obama and which wants to view the incident as “inadvertent” – is that this will bring home to President Putin the enormous risks to Russia’s reputation and to the Russian economy of failing to reach a speedy settlement. This was the theme of the July 17th telephone conversation between the two leaders. The second school which is held widely in the foreign policy community and which will grow as evidence of direct Russian complicity emerges is that the aircraft destruction signals that Putin is fixed on a confrontational strategy, that the US should side unreservedly with Ukraine and that the US and EU should proceed without delay to so-called Stage 3 sanctions which would place whole sectors of the Russian economy under embargoes similar to those in operation against Cuba, North Korea and Iran. Our sense is that the White House still hopes that the former approach emphasizing non-confrontational diplomacy will bear fruit, but top officials acknowledge that the trend could move in the harsher direction. The key variable is Putin’s attitude. In terms of events in Gaza the US approach continues to spring from its unwavering support for Israel's right of self-defense. Secretary of State Kerry remains actively engaged in regional exchanges to bring about a cessation of the conflict, but will not seek to second-guess Israeli perceptions of its military objectives. As we expected, an extension of the Iran nuclear talks has been announced.  Explaining the background for this decision, US officials have highlighted the progress that has been achieved and, while not making light of the obstacles in the way of an agreement, have emphasized the positive. Our assessment is that US officials still feel an agreement is possible.  Finally, events in Ukraine have overshadowed the modest outcome of the latest round of the Strategic and Economic Dialogue, but US planners know that the issue of relations with China is only just being engaged.


Key Judgments

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