TODAY.AZ / Analytics

Europe must increase sanctions on Russia

23 July 2014 [12:15] - TODAY.AZ
With their invasion of Crimea and their support for the violent -- and now murderous -- pro-Russian separatists in eastern Ukraine, the Russian government has grossly and blatantly violated international law, international treaties and international norms that have underpinned post-World War II and post- Cold War Europe.

In response, the United States quickly imposed travel bans and asset freezes on Russians and Ukrainian separatists; the European Union followed suit.

These targeted sanctions have demonstrated that the Americans and Europeans can act together.

Despite hitting the financial sector of the Russian economy hard, the sanctions have not yet deterred the Russian government from continued support of the separatists.

This support has now resulted in the deaths of nearly 300 civilians on board Malaysian Airlines Flight 17.

This tragedy poses a significant policy choice to European leaders: to fully implement sanctions adopted at their most recent meeting, such as suspension of some European Investment Bank activities in Russia, and then to adopt and implement their 'Phase 3' of tougher measures in the energy and banking sectors.

The day before the airliner was shot down, the U.S. imposed more punishing sanctions on major Russian banks, Russian oil and gas giants and Russian defense firms.

These now take on added meaning and leverage against Russian President Putin.

However, the Europeans have been reluctant to take these stronger measures.

Europe does more trade with Russian firms, depends on Russian natural gas and sells into Russian markets.

They have tried to look away from the Russian-sponsored turmoil in Ukraine, hoping their economic interests can be spared.

That is no longer a viable policy option. If Russia is to be moved to change course, coordinated intensification is needed.

France has been the prime example of European protectionism. The Russians are set to purchase two helicopter aircraft carriers from the French for about $1.6 billion.

President Francois Hollande said on Monday France will go ahead with the sale of the first of these two ships, although he said the delivery of the second carrier would depend on Moscow's attitude.

These Mistral-class warships are equipped with six helicopter landing zones, can carry 30 helicopters, 40 tanks and 500 marines. They are very capable weapons of mobile war.

No nation should be equipping Russian military forces in light of their newly demonstrated willingness to invade friendly nations.

Robert O'Brien has suggested an innovative approach: let the French provide these two ships to the US Navy in return for a 20 percent reduction in the $9 billion fine assessed by the U.S. authorities on the French bank BNP Paribas for violating US sanctions on Iran.

The British have been reluctant to impose financial sanctions on Russia out of concern for London as a hub for Russian investors moving their money abroad.

The Germans have been unusually close to the Russians based on historical connections and natural gas dependency. The Dutch have been especially sensitive to Russian influence. All this has now changed with the downing of flight MH17.

British and German statements in the past two days reflect a growing possibility for more strict measures. The Dutch have angrily condemned the Russian government's clear support for the murderous thugs in eastern Ukraine in the strongest terms.

But these verbal assertions must be backed this week by strong action.

In addition to outrage, European leaders should escalate sanctions, just as private European interests are already joining this embargo for business reasons.

In June both HBSC and Lloyds Banking Group withdrew a significant loan to Russia's largest oil producer Rosneft due to the uncertain economic climate.

And most data suggest the sanctions are having an increased impact.

Commodities sales from Russia are at unprecedented lows and Russian companies have no longer been able to extend the duration of loans held or cut their debt costs in a deteriorating climate.

Economic sanctions can work. We have seen their effect on Iran.

The international community united to impose harsh economic sanctions on Iranian oil exports, banking system and economic activity. As a result, the Iranians are now negotiating seriously in an attempt to lift these sanctions in return for assurances that their nuclear program is entirely peaceful.

Unified sanctions by the U.S. and Europe can give Putin two choices: double down on his support for the separatists in eastern Ukraine and face yet more sanctions and possible full scale isolation from the international community; or disavow these separatists and seal the Russian border so that further weapons, trainers, finance, security forces and volunteers can no longer flow into Ukraine.

But the latter, preferred choice will not come unless the European leaders act now to implement recent measures they have authorized and move to the 'Phase 3' sanctions they have available to them.



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