Above: President Vladimir Putin of Russia signing the Treaty of Accession, officially annexing Sevastopol and the Republic of Crimea.
To: Ms. Federica Mogherini
High Representative of the Union for Foreign Affairs and Security Policy
From: Matthew Finkel, Strategic Analyst and Concerned Citizen
Date: January 17, 2017
RE: The Uncertain Future of Sanctions Against Russia
The European Union’s targeted sanctions against key Russian economic sectors, individuals tied to President Putin’s inner circle, and government-funded Russian companies operating in Europe have proved to be an effective tool of hard-power diplomacy. These sanctions, combined with the precipitous drop in the price of crude oil, have served to cripple an already enfeebled Russian economy and allowed Europe and the United States to project a message of strength and solidarity in the face of the illegal Russian annexation of Crimea in 2014. These sanctions’ exact impact is difficult to determine due to the coinciding of other several other events that have contributed to Russia’s economic downturn, they have allowed the European Union to adopt a tougher stance against Russia while avoiding the economic and political challenges of military mobilization. The loss of the United Kingdom, which has long been the staunchest pro-sanction voice in the European Union, as a result of Brexit, coupled with the softening of individual actors’ stances on Russia and concerted efforts by the Kremlin to undermine the unity of the EU member countries, threatens the long-term survival of the sanctions. With Brexit in the works and countries like Greece and Italy pushing for a Russian rapprochement, the unanimous vote required of the European Union members in order to renew the sanctions on Russia every six months appears harder and harder to push through. Without the ability to pursue sanctions as a policy direction, the European Union would be forced to consider a much softer tone with Russia.
Loss of a Pro-Sanction Voice
The United Kingdom has played a pivotal role in the implementation of these economic penalties against a revanchist Russia, acting as the strongest advocate for continued Russian economic isolation and taking steps to ensure a continued solidarity in the face of pressures from within and without to take a softer tone with the Kremlin. In many cases, the unanimity and consensus required in the case of key European Union sanctions has often depended on strong backing from the UK. As a consequence of Brexit, the UK will soon lose access to important EU forums through which to lobby for continuation of the sanctions. According to the European Council on Foreign Relations, “A Brexit-weakened EU sanctions policy is likely to intensify the need to employ other, more expensive, controversial or complicated forms of diplomacy, coercion or pressure. It is also likely strengthen [sic] Russia’s hand against Europe, as it benefits from a fragmented Europe with a weaker toolbox of security instruments at its disposal.” With the strongest advocate of sanctions no longer able to push for renewed sanctions within the EU, Europe will be forced to either tone down its rhetoric and policy direction despite having made no tangible headway with its demands in the Minsk Agreement or adopt a more aggressive approach in dealing with Russia. Neither option is desirable.
Working closely with the United States, members of the European Union initially displayed an impressive unity in adopting widespread and comprehensive sanctions against a newly aggressive Russia. Even countries with close business ties to Russia, such as Germany and Hungary, have lobbied for aggressive economic censure. The unanimous accord the EU reached, as well as the broad scope of its application, was applauded as a victory for a more cohesive Europe. However, despite the lack of change in the Russian policies that first provoked the sanctions, that unity has begun to break down. Russia has made no moves to adopt the Minsk Protocol or recall its “little green men” from eastern Ukraine, yet Italy, Hungary, Greece, and others are beginning to break ranks. Just recently, Italian Prime Minister Matteo Renzi was able to kill Germany’s push for harsher sanctions against Russia following the bombardment of Aleppo, despite the considerable political capital put in play by Germany, France, and the United Kingdom. Italy has important and broad trade ties with Russia and has on numerous occasions advocated for a softer diplomatic tone. In March, Hungary, a country with longstanding political and economic ties with Russia, was among the first to veto an automatic renewal proposal for the sanctions. Greek Prime Minister Tsipras has condemned the sanctions against Russia on numerous occasions, having recently signed a number of trade deals with the Kremlin following President Putin’s visit to Athens. Greece has also turned to Russia in recent months for aid packages and private investment. The prospect of unanimous support within the European Union for continued sanctions seems less and less likely as a result of increasing Euroscepticism, domestic political concerns, and economic incentives presented by Russia. Even Berlin, a staunch supporter of the sanctions, has begun to waver: Germany’s business community has pushed for a softer tone with Russia and the Social Democrat party has long called for a dilution of the sanctions. With Chancellor Merkel’s recent political losses, the pro-Russian factions within Germany have more leverage now than in years past.
Russia’s Efforts to Undermine Solidarity
The Russian government has actively sought to subvert politically or economically vulnerable members of the European Union from the combined sanctions effort. Russian diplomats have made their strongest appeals to their Mediterranean counterparts, stressing Russia’s roles as a partner in trade, product market, energy supplier, and a political force in Syria. Radio Free Europe described President Putin’s official state visit to Athens, just weeks before an EU head-of-state summit meeting, as a “thinly disguised quid pro quo,” with the Russian leader offering Greece much-needed future investment opportunities in return for support for lifting EU sanctions on Moscow. Russian Foreign Minister Sergei Lavrov visited Budapest this year to push for an easing of the sanctions, promising the acceleration of projects like the Paks II nuclear power plant in Hungary through the supply of key equipment and substantial loans. Hungary has traditionally been Russia’s strongest supporter in the European Union. Russia’s response to sanctions, a series of import-export counterpenalties, has been especially damaging to Italian business exports already hurt by a collapsing ruble. Italian exporters have lost a combined $4 billion in revenue from 2013 to 2015, a drop of 34%, according to the CGIA, the Italian small business association. This has prompted Italy to adopt a much softer tone with Russia, advocating for more diluted sanctions and blocking attempts to expand the sanctions regime following Russian action in Aleppo. Through coercive soft and hard power measures, Russia has been able to leverage cultural, economic, and political divides among European Union members to undermine support for continued sanctions. It is worth noting that, according to Radio Free Europe, Moscow has reportedly not asked Kremlin-friendly European Union members for the politically impossible act of standing alone against the renewal of sanctions for the coming six months. “It is quite unlikely to have just one or two countries deciding to veto the prolongation of the sanctions, because they would really isolate themselves inside the EU and would face a lot of pressure from the other EU member states,” according to Paul Ivan of the European Policy Center in Brussels. Rather, Russian diplomats hope that, by sapping the unity of the bloc, they will be able to dilute sanction measures or veto a renewal of sanctions at a later date.
● The European Union should seek to extend the current sanctions renewal period from six months to one year. As it stands, the need for a continuous reinforcement of sanctions on a biannual basis allows Russia the opportunity to undermine European Union solidarity without changing its own behavior in accordance with the Minsk agreements. The extension to a yearly renewal process will serve to make the political process behind the prolongation vote more transparent and will help to preserve the integrity of the sanctions.
● The European Union should push for a greater degree of energy diversification in its member states. EU energy independence acts as a leverageable diplomatic and economic tool and diminishes Russian influence in countries like Hungary and Germany. Increased energy independence serves to amplify the power of existing energy sector sanctions and a greater reliance on American and Caspian oil and natural gas limits Russia’s ability to poach sanction votes.
● The European Union should seek to mitigate the effects of Russian counter-penalties on economically vulnerable and export-dependent countries like Italy through its codified subsidy program or by facilitating growth in other sectors. Moscow’s food import ban and other such punitive economic measures have hurt agricultural producers throughout the Mediterranean and generated a great deal of political will aimed at killing the sanctions, as evidenced by Italian Prime Minister Matteo Renzi’s most recent comments.
● The European Union should continue collaborating with Britain on the sanctions following Brexit. The United Kingdom is the fifth largest economy in the world and contributes materially to the impact of the sanctions. Economic penalties imposed separately will be less coherent and may undermine the European Union’s mediation efforts and long-term goals with Russia. While the UK will lose its formal vote in the sanctions renewal process and access to certain key foreign policy forums, its endorsement of the sanctions paired with a close degree of cooperation with the EU will send a strong message of economic and political solidarity to countries wavering on the sanctions issue.
Matthew Finkel is a sophomore at Wesleyan University, majoring in Government and Latin American Regional Studies with a minor in International Relations.