What is clear though is that Moscow is now pretty desperate to get sanctions lifted. At first, when they were rolled out in the spring of 2014, after the annexation of Crimea, they were an embarrassment, and were something of an irritation to Russia’s economic ambitions. But as the drop in oil prices has increasingly weighed on the broader Russian economy, I think the impact of sanctions has become much more noticeable and painful.
I have previously argued that Russia’s intervention in Ukraine, in Crimea and then Donbas had at its heart economic issues – i.e. Vladimir Putin’s ambitions for the Commonwealth of Independent States Customs Union/Eurasian Union to become a powerful economic bloc to rival the European Union, the United Staets and China, and this was also aimed at breathing life into the already moribund Russian economy as was the reality in mid-2013, even prior to the EuroMaidan Revolution in Ukraine.
But I think Putin has since moved on and with oil prices where they are it is no longer a case of discovering the new big Russian economic idea to take growth on from 1 percent per annum, to perhaps 4-5 percent, but averting economic collapse, with the economy now set for another year of very significant recession.
Recession and the weak performance of the Russian economy have taken this a step further now to real concern over domestic politics in Russia and the prospect of social protest.
I am not saying that the Putin regime faces a near and present danger therein from a home-grown “colored” revolution (Putin’s poll ratings are still in the 80s and the envy of any Western politician), but the regime is ultra-sensitive about preserving its domination of the domestic political space – leaving nothing to chance and of always remaining in control of events.
And therein there is a real danger that on the back of the weak performance of the economy the ruling United Russia party could do poorly in Duma elections – as voters express frustration in the Russian government’s performance while still supporting the individual persona of Putin.
This would be unacceptable for the “controlling” Putin regime, and hence trying to ease the pressure felt on the economy from low oil prices is now centre stage and foreign “adventures,” such as in Ukraine, have been put on the back burner – they are even now seen as providing leverage for sanctions reduction.
I think the sense is still that once oil prices stabilize and even rise, and pressure on the domestic Russian economy ease back, that Moscow can return to the agenda of delivering on its longer term strategic objectives in Ukraine which really have not changed and, arguably, under Putin are unlikely to do so.
Indeed, with the prospect of an anti-establishment victor in the U.S. presidential election, and the EU being pulled apart by the migrant issue, and centrifugal forces more generally (e.g. Brexit) I think to some extent Moscow feels that time might actually be on its side as the Euro-Atlantic alliance is pulled apart from within and is on decline after over-reaching itself in the Middle East, Emerging Europe and elsewhere.
But the view that sanctions on Russia will inevitably “fall aside” in mid-year, as EU support erodes in the face of the migrant crisis and new focus on the war against ISIS, might also be somewhat jumping the gun just yet.
True, support in some parts of Europe clearly for the maintenance of sanctions is moderating.
Unsurprisingly in France in particular, after the Paris terror attacks, there is a desire to unite with the mutual foes of ISIS, including Russia to fight the common enemy. A French minister this week spoke of the need to boost economic cooperation with Russia – an incredible comment given that the EU is still maintaining economic sanctions against Russia.
Germany’s finance minister, Wolfgang Schauble, also wrote a pointed op-ed this week in Frankfurter Allgemeine calling for cooperation in areas of mutual interest with Russia, including Syria, in the security field and more broadly in the Middle East.
And then there were the comments made late last week by the U.S. Secretary of State, John Kerry, at Davos which some saw as indicating a softening in the U.S. approach and an effort to reach out to wavering European allies over sanctions on Russia.
But I do not really see that in the Kerry comments: “With bone-fine legitimate intent to solve the problem on both sides, it is possible in these next month’s to find those Minsk agreements implemented and to get to a place where sanctions can be appropriately, because of the full implementation, removed.” (Financial Times, Jan. 22).
My read is that Kerry was just restating the U.S. position, that if there is full Minsk II implementation from Moscow that the U.S. would then be willing to pull sanctions, and relatively quickly. But full Minsk II implementation means the withdrawal of Russian troops and is proxies from Donbas, and allowing Ukraine full control over to borders – which in effect means a near total back down by Moscow.
The “softening” was signalling to Moscow that if they do indeed fully implement Minsk II that sanctions could be quickly lifted, this year, without much “hanging about.” In a sense I think this was the US administration being opportunistic, in recognising the current difficulties faced by the Putin regime with lower oil prices – “hey, we know low oil prices are hurting you and we can really help you by pulling off sanctions quickly, but we want you to fully comply with Minsk.” This was an effort to reach out to Moscow, but without signalling a softening in the conditionality.
I also think a pretty clear signal that there has not really been a significant shift in the underlying stance by the US towards Russia came in the fairly remarkable BBC documentary revealing allegations of corruption in the Putin regime.
See http://www.bbc.co.uk/news/world-europe-35385445
For me it was absolutely remarkable in my mind that a senior US Treasury official would go on record (clearly well thought out), in a BBC televised interview screened on Jan. 25 and in effect accuse the leader of another former G8 country and “potential” ally in Syria of corruption.
This also came after the very damaging comments made against the Putin regime in the UK’s Alexander Litvinenko inquiry. Perhaps the only way to read this messaging, particularly from the U.S. administration, is that while it might be possible to cooperate in limited areas of mutual interest – e.g. Iran, Syria, that the U.S. understands clearly what the Putin administration is and that there needs to be a sea change in behavior to substantially reset.
The direct allegations over corruption are also a warning perhaps to allies over rushing back into cooperation in the economy field with the Putin regime, and to hold back from pulling sanctions without a quid pro quo on the Russian side, which is perhaps full Minsk II implementation.
Hence my read of all the above is that the U.S. is still encouraging European allies to think clearly before rolling over on the Russian sanctions front, and ensure Minsk II compliance in full. But also I think there is a high probability that the U.S. maintains sanctions again Russia, even if the EU fails to roll them later in the year, if Russia fails to show full Minsk II implementation.
