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Wednesday 21 January 2015

EU Turning Cold on Russian Sanctions


This might be the beginning of a more assertive and independent EU (European Union) foreign policy, which is at odds with that of the US. A number of EU heavyweight officials have spoken out publicly against ratcheting up further economic sanctions on Russia.

Senior EU policy makers from the core member countries Germany and France, have recently, bluntly rejected implementing a policy which would impose more economic sanctions on Russia. The EU's opposition for more sanctions is likely to lock swords with the US who have been rallying the EU to implement tougher sanctions on Russia over its alleged military involvement in the Ukraine.

"The goal was never to push Russia politically and economically into chaos... We want to help solve the conflict in Ukraine, not to force Russia to its knees,” said Sigmar Gabriel, Germany's Economics Minister and also Vice Chancellor in an interview on Sunday with Bild am Sonntag, Germany's leading Sunday mass-tabloid.

More severe sanctions on Russia would be counter-productive and a threat to Europe, according to the senior Germany official.

"Anyone who wants that will provoke a much more dangerous situation for all of us in Europe," said Gabriel, pointing out that Russia is a nuclear power.

The EU initially agreed to sanctions with the aim to getting Russia back to the Ukraine negotiating table, explained Gabriel.

"Those who want to destabilize Russia economically and politically even more are pursuing completely different interests," said Gabriel, charging "some in Europe and in the United States" with wanting to force "the old arch-rival Russia to its knees.... That is not in Germany's or Europe's interest. We want to help solve the conflict in Ukraine, not to force Russia to its knees."

Sigmar Gabriel is a big gun in Germany politics, not only is he a cabinet minister but also lead the Social Democrats in the Coalition with Christian Democratic Chancellor Angela Merkel.

So if Merkel where to pursue a policy of tougher sanctions on Russia she would risk a coalition break up. The German coalition Government cannot have two separate foreign policies on a strategic issue like tougher sanctions on Russia-the constitution would not permit it. In other words, any US move to get Europe's political and economic heavyweight, Germany, to approve further sanctions on Russia is effectively in stalemate.

France has also spoken out against further economic sanctions on Russia. “If Russia has a crisis, it is not necessarily good for Europe”, said French President Francois Hollande, during a two-hour interview with radio station France Inter. “I'm not for the policy of attaining goals by making things worse, I think that sanctions must stop now”.

French President Hollande is wary of the impact economic crisis in Russia might have on Europe and is calling for sanctions imposed against Moscow to be lifted as soon as there is progress in peace talks over Ukraine.

The next summit will be in Astana, Kazakhstan on January 15 where Russian, EU and US delegates will aim towards finding a solution to the Ukrainian crisis. Russia’s Foreign Minister Sergey Lavrov has sarcastically described western sanctions, also announced in September, as “a ‘reward’ for Russia’s role in the Minsk agreements and more generally for its part in organizing the meeting.”

Hollande is hopeful there will be signs of mutual understanding and common interest reached at the summit, which is being hosted by Ukrainian President Petro Poroshenko. Russian President Vladimir Putin and German Chancellor Angela Merkel are expected to be among the delegation attending the summit.

Hollande said he understands that Kiev’s striving for NATO membership can hardly contribute to the peace process.

“Mr. Putin does not want to annex eastern Ukraine. I am sure. He told me so”, Hollande told France Inter. “What he wants is to remain influential. What Mr. Putin wants is that Ukraine does not become a member of NATO. The idea of Mr Putin is not to have an army at Russia’s borders.”

It is in France's economic interests that the Ukrainian crisis is resolved swiftly and diplomatically.

The Ukrainian crisis has perturbed relations between Russia and France, which has put on hold the delivery of Mistral helicopter-carrying amphibious assault ships to Moscow.

Hollande’s decision, most probably under US duress, suspended the delivery of the first such ship "until further notice" in late November. It was not an easy decision for Hollande to make, bearing in mind that the deal is worth billions of US dollars and desperately needed for the stagnating French economy.

France is also facing the prospects of a multibillion-dollar fine if it fails to deliver the ships under the terms of the contract. The delay of the warships’ delivery has already entailed additional costs for Paris.

So with Europe's economy in a quagmire and Russia, also enduring a collapse in the rouble and plunging state revenue from oil deflation, the likelihood of smoothing over the Ukraine crisis in the January 15 Kazakhstan summit and removing Russian sanctions seems like a real prospect.

Both parties have a real incentive to do so.

The EU Russian trade is worth 330 billion US dollars, so a breakthrough in Kazakhstan would be good news for EU commerce and the European equity markets.



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