Russia Sanctions: The Other EU Vote

EU representatives have been discussing the renewal of the EU’s economic sanctions against Russia, formally set to expire on 31 July 2016. While recent reports from Brussels indicate that EU leaders have agreed on their renewal for another six months, the process of reaching consensus has been neither easy nor reassuring. It has highlighted limitations in the EU’s capacity to strategically apply, calibrate and implement sanctions to ensure they fulfil their function as a credible tool for the encouragement of behavioural change in Moscow.

Emerging Fractures

Since they were introduced in 2014, these sectoral sanctions have had damaging reciprocal effects on European business interests and the pursuit of new business opportunities in Russia. This damage has been exacerbated by Russian counter-sanctions. The blow has not been evenly felt across Europe, with some countries and companies suffering more than others. For example, Germany, as the largest EU exporter to Russia, felt the effects immediately, suffering a 15% drop in its Russian exports in the first half of 2014, as reported by the Financial Times. There is concern that EU companies will in the long term lose competitive edge whilst companies from other jurisdictions not bound by the sanctions regime gain commercial advantage. One business representative told Handelsblatt, a German newspaper, ‘US companies can obtain exemptions from the American sanctions against Russia that our companies don’t receive’. Hungarian Prime Minister Viktor Orban summed up one attitude towards sectoral sanctions by saying they have harmed the West more than they have hurt Russia and ‘in politics, this is called shooting oneself in the foot’.

Feeding this resentment is a growing belief that sanctions are still unlikely to fundamentally alter Russia’s political calculus. There is no sign that Russia is any closer to implementing the measures it agreed to in September 2014, as a signatory of the Minsk Protocol, the accord drawn up to halt the war in the Donbass region of Ukraine. In May 2015, EU leaders determined that the yardstick for the success of sanctions against Russia should be the full implementation of Minsk. Although hostilities may have slowed, it is clear that little concrete progress has been made towards the targets outlined in the Minsk accord. And Putin shows little sign of shifting as a consequence of the EU’s efforts at coercive diplomacy.

In addition to those who resent sanctions primarily because of their blowback on European trade, a wider chorus is emerging that questions their political value. This sentiment was highlighted when France’s Senate voted on 9 June in favour of ‘gradually and partially’ lifting the restrictions, regardless of whether progress on Ukraine materialises. Although the vote was non-binding and adamantly opposed by France’s governing Socialist party, it reflects the scepticism surrounding, in particular, linkage to Minsk.

Mixed Messages and Russian Opportunism

One of the products of EU divisions has been mixed messaging on the future trajectory of multilateral sanctions against Russia. In particular, some have suggested (in a manner not entirely dissimilar to the proposals from the French Senate) that there should be a more phased approach to Russia-focused sanctions, whereby some progress on Minsk would yield some sanctions relief. German Foreign Minister Frank-Walter Steinmeier was the most recent senior figure to advocate this ‘little-for-little’ approach.

Although this might appear to represent a reasonable compromise in Europe’s eyes, from a Russian perspective it indicates that consensus on a full rollover of sanctions will be progressively harder to secure. Steinmeier himself expressed concern about his issue prior to suggesting partial sanctions relief.

Russian President Vladimir Putin is savvy enough to take advantage of some of the opportunities presented by this divergence of opinion among EU leaders to show that the spirit of sanctions is being undermined. He received a warm welcome in Greece in May 2016, where he allegedly signed a ‘range’ of co-operative agreements on energy, tourism and agriculture. Meanwhile, Italy’s Prime Minister Matteo Renzi, who recently attended the St Petersburg Economic Forum, announced that Italy wants to strengthen its economic presence in Russia. Such actions are not in themselves problematic. For sanctions to be both ‘targeted’ and strategic, lines between licit and illicit business must be drawn and observed, but they must also be communicated appropriately: a task which some European leaders appear to have forgotten. By attending the St Petersburg Economic Forum, the main business event in Russia, Renzi and EU President Jean-Claude Juncker are messaging Russia that business is where the real priority lies. There have been few caveats in the messages coming from Greece, Italy and elsewhere that Moscow must alter its conduct in Eastern Ukraine if bilateral trade with Russia is to be enduringly broadened.

Can the EU Apply Sanctions Strategically?

Competing national views over the application of sanctions in contexts such as the Ukraine crisis cast doubt over the EU’s ability to use them strategically. They give the impression that such measures could be relaxed without requiring any remedial action on the part of the offender, and that in time Brussels will blink first as EU fatigue leads it to compromise without requiring further Russian concessions. Recent EU politicking over Russia sanctions implies a degree of apathy towards the very security developments they are designed to address.

Changes to the EU’s current approach to sanctions on Russia could help manage some of the risks of fragmented debate around commitment to sanctions, albeit temporarily. In the short term EU nations are likely to vote to extend existing measures by only another six months, so that they can be revisited in more depth in December. When December arrives, EU nations should make every effort to return to the year-long sanctions mandates that initially characterised the sectoral measures against Russia when they were introduced in 2014, and indeed the decision to roll over sanctions on doing business with Crimea for a year in June 2016. Doing so would alleviate the need to have such frequent public votes and avoid politically damaging displays of disunity.