To Understand Putin's Policy, Dissect The Kremlin's Inner Circles

AUDIE CORNISH, HOST:

Yesterday, the U.S. and the European Union announced new economic sanctions against Russia because of its involvement in Ukraine. And today, E.U. made its sanctions more specific - published a list of Russian banks and other institutions that it's targeting. The goal is to put pressure on Russian president Vladimir Putin by putting economic pressure on his closest allies. But so far, Russian officials have shrugged off the impact. Some critics say, that's because Putin's inner circle is dominated by men for whom power is more important than money. Here's NPR's Corey Flintoff in Moscow.

COREY FLINTOFF, BYLINE: One feature of Vladimir Putin fourteen-year rule of Russia is that decision-making power has been concentrated among a very small circle of his trusted advisors.

NIKOLAY PETROV: Putin's political elite looks like the board of a large corporation - Russia, Incorporated, with Mr. Putin being CEO and chair of the board. But there are pretty influential shareholders.

FLINTOFF: That's Nikolay Petrov, an analyst and professor at Moscow's Higher School of Economics. He says, Putin has been able to consolidate power by balancing the competing interests of his shareholders. On the one side were the so-called siloviki, or men of power - those who, like Putin himself, came from the Soviet spy services, police or the military. On the other side were people with legal or economics backgrounds.

SAMUEL CHARAP: What's happened over the last two to three years is that the others, besides siloviki and the highest echelons of power, have been weakened significantly, particularly the economists.

FLINTOFF: Samuel Charap of the Institute for Strategic Studies in Washington says, the hardliners always called the shots about Ukraine because the Russian leadership saw it as a question of national security. Nikolay Petrov says, those decision-makers are men who are willing to accept a certain amount of economic pain in order to keep their monopoly on power.

PETROV: They are wealthy enough, but they do think about the opportunity to keep being the most powerful guys in the country which can do whatever it wants without being restricted from outside.

FLINTOFF: Samuel Charap says, Putin's closest advisers are people for whom the pain of sanctions is less important than dealing with a perceived national security threat. That means that Putin can't allow the pro-Russian seperatists in eastern Ukraine to be crushed militarily by Ukrainian forces.

CHARAP: At the moment, it's politically unacceptable. It would be seen as a humiliating defeat and not something that, I think, the Russian dealership would willingly allow.

FLINTOFF: Charap says that Putin can only withdraw support from the separatists if there's a political settlement that can be seen as protecting Russia's interests. Petrov says, tough sanctions may have the opposite effect on the Kremlin decision-makers.

PETROV: The mentality of these guys and of Mr. Putin, especially, is not necessarily rational. Mr. Putin will be eager to demonstrate that his behavior is absolutely not influenced by the sanctions, and he can escalate the situation in eastern Ukraine.

FLINTOFF: According to NATO, Putin already has the means at hand to escalate if he and his advisers want to, in the form of 15,000 Russian troops near the Ukrainian border. Corey Flintoff, NPR News, Moscow. Transcript provided by NPR, Copyright NPR.