Bloomberg reports: Wall Street leaders including Lloyd Blankfein and James Gorman, who have courted business in Vladimir Putin’s Russia, are facing a dilemma as tensions over Ukraine escalate.

Their scheduled attendance at Putin’s annual investor showcase in St. Petersburg in May is in doubt as sanctions imposed by the U.S. in response to Russia’s annexation of Crimea — and retaliatory moves by Putin — threaten the ties between Russia’s leader and businesses including Goldman Sachs Group Inc. and Morgan Stanley. Spokesmen for the New York-based banks declined to comment on whether the executives will attend.

Wall Street firms that have pursued deals in Russia for years are being forced by the dispute over Ukraine to reexamine their bet on friendlier relations between Putin and the West. U.S. President Barack Obama yesterday added to the list of Russians targeted by financial sanctions and a June Group of Eight meeting in Russia was scrapped. Russia banned entry by U.S. leaders including House Speaker John Boehner.

“If you’re a head of a major U.S. financial institution, you say, ‘President Obama’s not going to the G-8 meeting, should I go to St. Petersburg?’” said Edwin Truman, a senior fellow with the Peterson Institute for International Economics who was an assistant Treasury secretary for international affairs in the Clinton administration. “If they don’t ask themselves that question, they’re not doing their job.”

Obama yesterday ordered financial sanctions on OAO Bank Rossiya, a St. Petersburg-based lender owned by Putin associates, and on an increasing number of Russian officials, saying the incursion into Ukraine and continuing military movements carry “dangerous risks of escalation” and must be met by unified global opposition. Russia responded by barring entry by nine U.S. officials, including Boehner.

At stake are investments made over years and sometimes decades by global companies in Russia, where economic growth had until recently outstripped the U.S.

Goldman Sachs has made at least $1 billion in investments in Russian companies and won a three-year contract last year to advise the Kremlin on improving the nation’s image overseas and to help the country attract more investors. [Continue reading…]