A summit of European Union leaders in Brussels on July 16 is being touted as a major opportunity for the 28-nation bloc to expand sanctions against Russia in response to its alleged promotion of instability in Ukraine. Nevertheless, few expect it to seize the chance.
The EU has levied asset freezes and travel bans against a number of
figures and two companies involved in the Ukrainian crisis. Another 11 names – mostly leaders of
the two self-proclaimed republics in Donetsk and Luhansk – were added to the
list on July 12, bringing the total to 72 individuals.
However, measures taken thus far have been dismissed as symbolic by
advocates of a tougher response, with the rebel leaders affected, few of whom
have bank accounts or real estate in Europe, shrugging off the most recent
round of sanctions.
“Let these Euro-bureaucrats stuff these sanctions anywhere. We are not
scared,” one separatist leader told Interfax on the day of the
announcement.
Russia’s leadership also continues to publicly brush aside threats of
further action, and recent events suggest Moscow has little to be concerned
about.
As a recent Washington Post editorial points out, the U.S. and EU have
set a number of ultimatums for Russia to deliver what official statements refer
to as “clear steps” towards de-escalation: halting the flow of arms and
personnel into Ukraine, facilitating ceasefire talks and negotiating the
release of some 150 hostages held by pro-Russian rebels. All have passed
without either party delivering on its promises.
Still, the threat of further measures has hit Russian markets and
investor confidence, undermining growth prospects for an economy already
suffering from capital outflow and currency devaluation connected with the
regional crisis. According to recent estimates by Russia’s Foreign Ministry,
sectoral sanctions could result in a further 0.2 to 0.3 percent drop in
Russia’s projected growth rate for 2014.
Moscow claims it is prepared to counter any fresh measures introduced against
it.
“If the situation develops further and sectoral sanctions are
introduced, then we will be forced to prepare more serious counter-measures,”
Russia’s Finance Ministry’s Facebook page cited deputy head Sergey Storchak as
saying on July 8.
A plan has been drafted for the implementation of so-called “stage 3”
sanctions, involving broader restrictions on specific sectors of Russia’s
economy, denial of access to debt markets and technological restrictions.
Stages 1 and 2 refer, respectively, to measures targeting specific individuals
and restrictions on companies.
In a conversation with European Council President Herman Von Rompuy on
July 14, Ukrainian President Petro Poroshenko requested that Ukraine be placed
on the agenda of the upcoming summit and urged a decisive response from the EU
to recent cases of military hardware and personnel illegally crossing the
Russian-Ukrainian border.
“The President assured that Ukraine would provide all documental
evidence for a proper international response,” a statement posted to the presidential website added.
Evidence of Russia’s complicity in the armed conflict continues to grow.
Judging by a four-page fact sheet released by the US embassy in Kyiv on July
14, few doubts remain on the official level of Russian military involvement in
Donetsk and Luhansk. The document lists all evidence in a series of
bullet-points before calling on Russia to halt its destabilizing activities.
Yet a phone call on July 13 between American President Barack Obama and
British Prime Minister David Cameron served merely to prolong the tide of empty
rhetoric, restating almost verbatim the West’s apparently unchanged stance
towards Russia.
“The President and Prime Minister expressed concern about the increasing
tensions and ongoing violence in eastern Ukraine and agreed upon the need for
Russia to take immediate steps to de-escalate the situation… Europe and the
United States should take further coordinated measures to impose costs on
Russia if it does not take immediate steps toward de-escalation,” reads a
statement on the White House website.
The meeting on July 16 is likely to be no exception. The fundamental
obstacle to any action being taken is the unanimity principle to which EU
policy is subject. With opposition to sectoral sanctions against Russia
expressed by a number of member-states, proponents of a more robust response to
the Kremlin’s destabilizing tactics have few reasons for optimism.
“I think what we’ll see tomorrow is another round of discussions and another
strongly-worded official statement from the EU. But I doubt there’s political
will at the moment to move forward with further sanctions,” said Igor
Burakovskiy, professor of economics at Kyiv National University.
Concerns about the repercussions of sectoral sanctions for EU states
with close ties to Russia are compounded by others’ fears of a gas cut-off by
Moscow. As a major hub for Russian capital, the UK has expressed misgivings
about the effect that broader measures will have on its financial sector, while
France’s $1.6 billion deal with Russia for the sale of two Mistral warships
would be off should any EU military embargo be levied against Moscow.
Among the states most actively lobbying against further sanctions are
Austria, Greece and Italy, which is Russia’s second largest trading partner in
Europe and this month assumed presidency of the 28-nation bloc.
“Italian companies are not lobbying the government directly as it is not
necessary. It is well understood that corporate Italy is extensively exposed to
Russia and would prefer not to see sanctions escalate,” a senior executive at a
major Italian company told the Financial Times.
The split among EU members is exacerbated by divisions within the Obama
administration, which make unilateral U.S. sanctions unlikely even in the event
that Washington abandons its policy of relying on EU cooperation in imposing
costs.
EU ambassadors were pressed to expand sanctions against Moscow during a
closed-door session at the White House on July 15, with the Obama
administration announcing its readiness to impose unilateral measures should no
consensus be reached in Brussels, Bloomberg reported.
It seems Moscow can bank on a typically muted EU response on July 16,
even as the situation in Ukraine’s Donetsk and Luhansk oblasts deteriorates
further.
“In recent days we have seen examples of direct military intervention by
Russia, and we are experiencing a mobilization of the international community
on this issue. If sanctions are further delayed then Russia will see this as
encouragement and will likely increase its involvement in eastern Ukraine,”
Burakovskiy said.
