The Purpose of the Sanctions Is to Breakup Relations Between Europe and Russia
Paul Craig ROBERTS | 13.09.2014 | OPINION

The Purpose of the Sanctions Is to Breakup Relations Between Europe and Russia

The new sanctions announced by Washington and Europe don’t seem to make much sense. I would be surprised if Russian oil and military industries were dependent on European capital markets in a meaningful way. The Russian companies should be able to secure adequate financing from Russian Banks or from the Russian government. If foreign loans are needed, Russia can borrow from China.

If critical Russian industries are dependent on European capital markets, the sanctions will help Russia by forcing an end to this debilitating dependence. Russia should not be dependent on the West in any way.

The real question is the purpose of the sanctions. My conclusion is that the purpose of the sanctions is to break up and undermine Europe’s economic and political relations with Russia. When international relations are intentionally undermined, war can be the result. I think that Washington will continue to push sanctions against Russia until Russia shows Europe that there is a heavy cost of serving as Washington’s tool. 

Russia needs to break up this process of ever more sanctions in order to derail the drive toward war. In my opinion this is easy for Russia to do. Russia can tell Europe that since you do not like our oil companies, you must not like our gas company, so we are turning off the gas. Or Russia can tell Europe, we don’t sell natural gas to NATO members, or Russia can say we will continue to sell you gas, but you must pay in roubles, not in dollars. This would have the additional benefit of increasing the demand for roubles in exchange markets, thus making it harder for speculators and the US government to drive down the rubble. 

The real danger to Russia is a continuation of its low-key, moderate response to the sanctions. This is a response that encourages more sanctions. To stop the sanctions,

Russia needs to show Europe that the sanctions have serious costs for Europe.

A Russian response to Washington would be to stop selling to the US the Russian rocket engines on which the US satellite program is dependent. This could leave the US without rockets for its satellites for six years between the period 2016 and 2022.

Possibly the Russian government is worried about losing the earnings from gas and rocket engine sales. However, Europe cannot do without the gas and would quickly abandon its participation in the sanctions, so no gas revenues would be lost. The Americans are going to develop their own rocket engine anyhow, so the Russian sales of rocket engines to the US have at most 8 more years. But the US with an impaired satellite program for six years would mean a great relief to the entire world from the American spy program. It would also make difficult US military aggression against Russia during the period.

Tags: European Union  Russia  US 

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