Anti-Russia Sanctions to Cause Major Rift in EU
Andrei AKULOV | 05.03.2016 | FEATURED STORY

Anti-Russia Sanctions to Cause Major Rift in EU

In the first few weeks of 2016, the Western sanctions regime on Russia has been coming under pressure as never before. This has led to hopes that the sanctions may be finally lifted as the European Union is preparing to take the decision this July.

Meanwhile, US President Obama has extended for another year US sanctions imposed on Russia.

The US has repeatedly told European allies it would move ahead on new sanctions only in co-ordination with the EU. Daniel Fried, the state department’s chief sanctions co-ordinator, has recently stated, the US-imposed sanctions could be lifted this year.

Now, with all promises and pledges forgotten, the US has taken a unilateral decision with no regard to the opinion of its European partners. It’s an open secret that the US silently exerts great pressure on EU decisions as the Union's dominant silent partner. Washington’s representatives regularly attend meetings of the EU’s Council of Permanent Representatives (ambassadors). Besides, Washington can rely on Great Britain and on some other EU countries like Poland, Romania and the Baltic States.

No doubt, this step taken by US administration will influence the EU decision making process. But this time it won’t move smoothly – there will be snags on the way.

Under the circumstances, preserving unity in the Union’s ranks appears to be a serious challenge. The organization faces a deep rift as Brussels is gearing up for a debate over the next few months on whether to continue broader economic sanctions on Moscow.

The sanctions renewed last September included 149 people and a group of 37 companies and organizations.

With ceasefire generally observed in the eastern part of Ukraine, a number of EU governments have said they would like to see the economic sanctions reconsidered.

The Wall Street Journal (WSJ) reported on March 2 that the number of EU countries wishing to cancel the anti-Russian sanctions has increased, and the July decision on their further extension may be if not at risk then in doubt.

According to Laurence Norman, the author of the WSJ article that has hit the radar screen, writes that the issue has just been discussed by senior officials from EU member states. The article says «a number of EU governments have said they would like to see the economic sanctions reconsidered».

It also says, European Commission President Jean-Claude Juncker was considering traveling to the St. Petersburg economic forum in June. That would be the first trip to Russia by one of the EU’s top leadership since the Russia-EU relations deteriorated in 2014.

Indeed, Europe is split between more hawkish and more dovish countries regarding Russia. Sanctions hawks including the UK, Nordic and Baltic countries want to rollover curbs on the Russian energy, finance and defence sectors that expire in July.

At the same time, business communities in Germany, Italy, Greece and other countries in the European Union have publicly protested against the continuing sanctions.

Germany, the uncontested EU leader, is currently on the forefront of new efforts to engage with Russia. Despite the fact that Chancellor Angela Merkel leans more towards the hawkish view, she has not vetoed plans to build a second pipeline in the Baltic Sea, Nord Stream 2. This has been pushed forward by vice-chancellor and minister for economics Sigmar Gabriel, the leader of Merkel's coalition partner the Social Democrats (SPD). Germany's OSCE presidency this year will also be devoted to attempts to reduce tensions with Russia. The leaders of each of the two parties that along with the CDU form Germany’s governing coalition – Sigmar Gabriel of the SPD and Horst Seehofer of the CSU – have both now travelled to Moscow within a few months of each other, and each whilst there has made clear his urgent wish for relations between Germany and Russia to be restored to their previous good level.

More and more European politicians start to speak openly about the need to repeal the sanctions imposed by the West against Russia in 2014, as well as the counter-sanctions. They speak not only about their ineffectiveness but also an enormous economic damage which has been caused to both parties since the sanctions were adopted.

Hungarian Prime Minister Viktor Orban, on a visit to Moscow, called for better relations between Russia and Europe. «We all are interested in normalizing relationship between Russia and Europe», Orban said at the start of talks with Russian President Vladimir Putin.

Orban told Putin that the EU would not «automatically» extend sanctions against Russia when they come up for renewal at the end of July 2016. 

Italian Prime Minister Renzi has made clear Italy’s disagreement with the sanctions policy. Back in December Italy managed to hold up the renewal of the sanctions by a few days – a striking fact in itself. When the EU Commission renewed the punitive measures for 6 months citing alleged unanimous agreement by EU member states at ambassador level – Renzi reacted by sacking Italy’s ambassador to the EU for failing to stand up for Italy’s interests. Then the Italian Prime Minister openly opposed North Stream 2 in an apparent attempt to draw attention to the Germany’s hypocrisy in insisting other EU states maintain sanctions on Russia whilst forging closer economic links with Russia itself. As a result, the relations between Merkel and Renzi have hit rock bottom. 

In France the government is coming under increasing pressure from France’s powerful farm lobby. The Russian counter-sanctions have hit the producers of these products especially hard. French President Francois Hollande has recently called for sanctions on Russia to be lifted.

The introduction of EU sanctions against Russia and countermeasures by Moscow may cost the French economy several billion euros and about 160,000 jobs.

The Russian import ban has also contributed to the over-supply of milk and dairy products across the whole EU, with prices plunging to levels that are putting the entire European milk and dairy industry under severe strain. The result has been demonstrations by dairy farmers in France, Belgium and even normally quiet Britain. Denmark is calling for the sanctions to be lifted.

Danish Foreign Minister Kristian Jensen has said that it was Ukraine not Russia which is not implementing Minsk II, and that sanctions on Russia will be lifted unless it does so.

Stefano Maullu, member of the European Parliament from Italy, Group of the European People’s Party member, said that the EU and US policy against Russia did not bring any positive results. «The US and part of the EU member states expected to influence Russia’s internal political decisions by imposing the sanctions, but they failed. Moscow reacted by imposing their economic counter-measures and the situation stalled», the politician reminded. The European Union lost, at least for a certain time, one among its most relevant partners, he said.

All in all, the EU suffered 90 billion euro losses in 2014-2015. Russian Deputy Economic Development Minister Alexey Likhachev has said that the anti-Russian sanctions and counter measures cost the European Union up to 40 billion euro in 2014 and another 50 billion euro in 2015 as a result of Russia sanctions over the crisis in Ukraine.

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Indisputably, it is the case that opposition to sanctions is mounting across Europe. The opposition will achieve a critical mass pretty soon to make the punitive measures unsustainable. With all the pressure the US exerts, there are limits to what it can do in Europe. With all the facts mentioned above, it is becoming clear that the issue of sanctions is a glaring example of exacerbating differences between the US and the EU as their interests diverge and goals differ. 

Tags: European Union  Russia  US