THE RELATIONSHIP BETWEEN EU AND RUSSIA
Are the Sanctions Working?[1]
Dr. Kåre Dahl Martinsen
The Norwegian Institute for Defence Studies
May 2017
The Ukrainian challenge
Implementing the sanctions
When do sanctions work?
The sanctions debate
Russia as the common glue
References
The Ukrainian challenge
In early 2014, Ukraine and the European Union signed an Association Agreement. After close to a decade of dead-end negotiations, this was a significant step forward. The Agreement differed in its strategic importance from those signed between the EU and smaller countries like Moldova or Georgia; Ukraine moving closer to the EU meant an explicit rejection of its bond to the Russian-led Commonwealth of Independent States. Western European governments saw this as a proof of EU’s soft power, that the Union was an attractive symbol of political transparency and economic freedom (BBC, 2014; dpa, 2014; Le Monde, 2014). In the current Western debate on Russia, this aspect has long been overlooked (Davies, 2015; Welt, 2014). Instead, the efficiency and the future of the sanctions regime dominate, understandably since trade is easier to discuss than values.
Just in the course of the recent weeks, this has changed. This was best illustrated in the recent meeting between Chancellor Merkel and President Putin in Sochi where European values made an unexpected strong return to the agenda. As I will outline in the conclusion, perceptions of Russia have changed in tandem with revelations of Russian interference in US and European politics. European values, what used to be a concept only referred to routinely in EU speeches and documents, have suddenly been given a concrete meaning. Whereas academics long have portrayed Europe as Russia’s ‘constituting other’, Putin has provided Europe with a mirror of contrasting values.[2]
In this change, Germany has played a key role. The role played by Germany in the Minsk negotiations leaves no one in doubt. A role that would have been impossible had it not been for the country’s economic clout. Before the sanctions were imposed, almost a third of all EU exports to Russia were German-made (Günther, Kristalova, & Ludwig, 2016, p. 7). Germany was also a leading investor. Had Merkel opposed the sanctions, or opted for a watered out version, Russian impressions of the EU as little more than a paper tiger would have been confirmed,. An opinion shared by many Americans in both the former and present administrations.
Implementing the sanctions
The initial Western response to Russia’s annexation of Crimea and military involvement in Eastern Ukraine bordered on the reluctant. The press photo of the British PM’s advisor heading for a Downing Street meeting with a sheet proclaiming the need to protect the City from any adverse effects seemed to set the tone for a lukewarm reaction (Shipman & Tomlinson, 2014). The problems of finding common ground embracing all EU member countries was difficult, and would possibly have been impossible had not Angela Merkel used her position to achieve a common policy.
Coordinating the measures with Washington turned out to be a smooth process, not least because it was Merkel who was in charge, and not the EU.[3] Her standing in the US Congress was high. Both in the US and in Germany, politicians wanted to re-establish the traditional close relations. They had suffered after it had become known that the NSA had bugged her mobile phone.[4] Additionally, the Obama administration had long pushed for stronger European leadership on issues that were of greater concern to Europe than to the US; Merkel’s role was therefore welcomed. Yet despite the co-ordination, there were some distinct differences between the two sides of the Atlantic. The initial list of names published by Brussels was shorter than that of the US. Only after the downing of the Malaysian airplane in the summer of 2014 did the differences diminish on this point (Neuwirth & Svetlicinii, 2015). Both sides singled out specific enterprises and individuals that had played a key role in the takeover of the Crimea and the war in Eastern Ukraine. The EU list was more specific than the US’s where the possibility of barring from the US market banks engaged in financing Russian energy projects was left open. This has had a distinct preventive effect in countries rejecting the sanctions – most notably China. Chinese banks prefer not to enter into new Russian projects for fear of being shut out from the far more lucrative US market (Kommersant.ru, 2016).
Parallel with the sanctions, talks and later regular negotiations seeking to end the hostilities have taken place. The first round, aimed at reconciling the Ukrainian government and opposition forces, took place in Kyiv under the leadership of the EU High Representative Catherine Ashton. After violent clashes erupted in February 2014, the Weimar Triangle (Poland, France and Germany) drew up a deal to which both Ukrainian President Yanukoych and the opposition could agree. Using the Weimar Triangle ensured French involvement; but above all it meant Polish participation in a crisis directly affecting its national security. After Crimea was annexed in March 2014, it became imperative to include Russia. The solution was the Geneva talks where Russian representatives met with their Ukrainian, US and EU counterparts. Negotiations stalled because of Russian insistence on including representatives of the separatists. At the same time, Moscow’s opposition to having the EU on board remained strong. The Union had long been framed by the Kremlin as the main culprit behind Ukraine’s refusal to join the Russian-led Commonwealth of Independent States. The Geneva Talks, the only talks where Germany was not at the table, soon ended. Instead, the Normandy Contact Group, consisting of Ukraine, Russia, France and Germany, became the agreed setting for negotiations named after the first meeting at the D-Day commemorations in June 2014. Significant was the exclusion of the EU, and no less significant the very limited response it has occasioned within the EU. One reason may well have been the EU Foreign Affairs Council’s non-paper on EU–Russian relations issued in January 2015 (EU, 2015), widely perceived as being far too conciliatory towards Russian ambitions to realize a zone of influence covering Ukraine.
When do sanctions work?
The sanctions have failed in achieving peace in Eastern Ukraine or the return of Crimea to Russia. Only one of the 13 points in the Peace Agreement has been achieved: intensifying the work in the contact group (Stewart, 2016). Other points, like exchange of prisoners and the withdrawal of heavy weaponry from the warzone, have been only partially fulfilled.
Had the sanctions worked, it would have been exceptional. Despite their frequent use, sanctions rarely do. Looking back at the record of Western sanctions against the Soviet Union, all failed. The punitive measures introduced after the Soviet invasion of Hungary in 1956, Czechoslovakia in 1968 and Afghanistan in 1979, after the introduction of martial law in Poland in 1981, the shoot-down of KAL 007 in 1983, were all quietly dismantled after a few years. At the beginning of the 1980s, USA introduced sanctions on the export of pipeline equipment needed for the export of Siberian gas to the West at the beginning of the 1980s. The fear was that the West would become too dependent on Soviet imports. Western Europe, in particular Germany, did not share this fear and the sanctions became a one-sided affair.
According to the US economist and leading expert on economic warfare Gary Hufbauer, for sanctions to have an effect three criteria have to be fulfilled (Hufbauer & Schott, 1985). They must be implemented quickly and decisively; the sanctioning states must act cohesively; and the sanctioning countries must be able to block the export of the commodities targeted. Held up against these criteria, the current regime falls short. Building consensus among the EU countries took time. Extending the sanctions was done gradually, not only because of Union cohesion but as a signal to Russia that any credible change would avert further punitive measures.
The few cases in which sanctions have made a difference they have targeted Third World countries (Liberia, South Africa, Myanmar) in deep economic crisis. This certainly accounts for the success of the sanctions imposed on Iran over its nuclear programme. In the majority of cases, they worked because the regimes were politically isolated and often without any popular support (Bierstecker, 2013). Putin’s Russia is neither. While almost the whole world joined in the boycott against the apartheid regime, large countries like Brazil, Indonesia, China and India have not introduced sanctions against Russia. That would not have mattered so much had the West had a monopoly on sensitive goods. Nor would it have mattered so much in the past if countries were on the outside of the sanctions regime if they had nothing to offer. Today, the West hardly has monopoly on any strategic commodity and Russia faces few problems diverting imports. The only exception is equipment needed for gas and oil extraction where the West still dominates. The West could have excluded Russia from using the SWIFT interbank payment system. This was done against Iran in 2012 and the effects were serious. The possibility was discussed openly, possibly to let Moscow know that it was being considered (Lakshmanan & Mayeda, 2015). Had it been implemented, it would have had a detrimental effect on remaining trade, not least in key commodities like gas and oil.
As Hufbauer also observed, sanctions have very often been pushed onto the agenda by domestic interest groups (Hufbauer & Oegg, 2003). This was the case with the economic sanctions imposed on South Africa in the 1980s, the trade embargo imposed on Cuba, and the 1974 Jackson-Vanik amendment to the Trade Act whereby most-favoured status would be denied to countries preventing dissidents and Jews from emigrating. The sanctions against Russia are the reverse case: there are no domestic lobbies of any size supporting them (Davies, 2015). Calls for something to be done have mainly come from the political elite. What exactly this ‘something’ should constitute was only gradually spelt out to range from the suspension of talks with Russia, freezing of assets, banning of named individuals from entering the EU and Russia, and economic sanctions specifying services and commodities that cannot be exported to Russia (European Council, 2016). When the sanctions were agreed, the then US Congress attacked them for being too lenient (Archick & Mix, 2014). This was echoed on this side of the Atlantic by, for instance, the Polish government, which would have preferred a much stronger response. The need to show trans-Atlantic cohesion and the Obama administration’s wish to let the EU administration remain in charge can also be explained by the great difference in trade. The EU’s trade with Russia is ten times greater, and Germany’s twice as large as US–Russian trade (de Galbert, 2015). The potential for disagreement was greater on questions of permitting arms exports to Ukraine. Those in favour, and they were much more vociferous in the US, claimed that higher Russian losses would make Moscow more willing to negotiate a binding peace treaty (Steinhauer & Herszenhorn, 2015). Obama signalled that this option remained on the table, but so far only non-lethal equipment (e.g. night goggles, communication equipment) has been exported. With the Trump Administration sending mixed signals, the US policy has remained unchanged.
The sanctions debate
With no change in Russian behaviour in Ukraine and Crimea firmly under Russian control, calls to dismantle the restrictions on exports have increased. If economic relations were normalised, political dialogue would thaw and the possibility of a peaceful solution to the conflict would be within reach. If the war is referred to, it is framed as a civil war, not as a conflict between two sovereign states (Liik, 2016). A variation on this theme is the line proffered by Die Linke in the Bundestag whereby Ukraine is depicted as part of the Russian sphere of interest and that the war was above all caused by the rise in direct Western engagement (Die Linke, 2014). In neighbouring France, Marine Le Pen has voiced similar opinions. Yet it should be added that politicians like former President Sarkozy or Defence Minister Jean-Pierre Chevènement have expressed broadly similar viewpoints (Maupoil, 2015; Zimmer, 2015). The Hungarian Prime Minister Victor Orbán, the Czech and Slovak Presidents Zeman and Fico have also at intervals voiced their critique of the sanctions imposed. Yet at no point have they been able to break with the unity imposed from Brussels. This also applies to various Greek politicians who have long denounced Germany’s domination. Common to all is that their economic dependence on the EU, or Germany to be more precise, leaves them no room to oppose the sanctions.
It should be added that although Germany has emerged as the undisputed leader within the EU, at the same time there is a tendency towards a bilateralisation of relations with Russia even on issues with a clear security impact. The German pursuit of a second Nord Stream pipeline illustrates this (Adomeit, 2016). The pipeline is not just an example of entering into a long-term agreement which will increase EU energy dependency on Russia at a time when the Union has declared it in its interest to reduce it, it will also weaken the strategically important role of Ukraine as a country of transit (European Commission, 2014; Rapoza, 2016; Szymanski, 2016). A recent analysis published by the SWP in Berlin, argues that Germany should aim for a deal whereby Russia guarantees continued usage of the pipelines crossing Ukraine (Lang & Westphal, 2016).[5] If implemented, it may go some way to assuaging Ukrainian concerns.
The regional impact of Nord Stream for Ukraine, Poland and Germany has been addressed by many, but as far as can be ascertained not by the German government in any great detail. The strategy of depoliticising the energy relationship is not new. This reflects, Russian political scientist Lilia Shevtsova has pointed out, German reluctance to use the power inherent in the close relationship (Shevtsova, 2016).
Many scholars have highlighted the imbalance between German power and the willingness to use it: “the reluctant world power”, in the words of the Bonner foreign policy scholar Jürgen Haacke (Hacke, 2003).[6] Compared to other Western countries, German–Russian relations differ in several respects from those between Russia or Germany and other European countries. Although the historical burden of the Second World War certainly played a strong role in the past, and many writers on Russian–German relations see it as indispensable for any understanding of the complexities of the two countries’ relationship, it remains difficult to say what history means today for the German side.[7] Of greater relevance is the fact that both Merkel and Putin knew the GDR from the inside gives Merkel an advantage over her European colleagues in assessing Putin’s mindset. This, it should be added, is not reciprocal. Putin’s knowledge of the GDR is of little help today.[8]
Although there is none of the friendliness towards Putin that his predecessor Yeltsin enjoyed in Germany, there is no public mobilisation against Russian aggression in Ukraine, or more recently Syria. Likewise, the stationing of missiles capable of carrying nuclear war heads in the Kaliningrad enclave failed to elicit any strongly worded public response from Berlin. The explanation may be that the SPD leadership simply vetoed any strongly worded protest (Herzinger, 2016). Alternatively, it may be simply a case of not being easily scared as Chancellor Merkel remarked at her recent meeting with Putin in Sochi (Frankfurter Allgemeine Zeitung, 2017).
Russia as the common glue
Merkel’s comment was a reply to a question of possible Russian hacking of the upcoming federal elections. This is not just a faint echo of the Russian meddling in the US presidential elections, but an issue that has surfaced in the current French presidential campaign where attempt have been made to hack the Macron campaign (Archambault, 2017). Increasingly, European politicians refer to this not just as a nuisance we have to live with, but as a direct attack on the democratic system. Another, no less dangerous has been the spreading of fake news. This remained for long a prime concern mainly in the Baltic states; yet their finger-pointing was too easily discarded in Western media as attempts to attract attention. Only when it was obvious that Russian propaganda fuelled political instability did the EU take concrete counter-measures (Bentzen, 2017). In Finland and the Czech Republic, the state is now funding centres to counter Russian propaganda.
One example of fake news was the Lisa story, which Merkel referred to in Sochi. This was the trumped-up tale of a Russian immigrant girl who had been abducted and sexually assaulted by immigrants in Berlin (Kade, Menkens, & Sturm, 2016). It was reported in detail by Russian media and found a willing reception in the Russian diaspora in Berlin whose members soon took to the streets. Although the story soon petered out, it added to the growing attention shown by politicians and media alike in Russian attempts to influence German opinion through the media.