Europe’s Russian dilemma as Moscow hit by more US sanctions

Europe’s Russian dilemma as Moscow hit by more US sanctions

Further US sanctions against Russia, which were announced on Aug. 8, came into force on Wednesday. They were passed in response to the poisoning of former Russian spy Sergei Skripal and his daughter in Salisbury with the nerve agent Novichok. The UK secret service traced the poison back to Russia.

The sanctions are limited and not biting: They include restricting foreign assistance to Russia and prohibiting the sale of defense articles, as well as the export of goods and technologies sensitive to national security.

The US stood by the UK and drafted new sanctions. Earlier in the year, the State Department also expelled 60 Russian diplomats in response to the Skripal incident. Congress and the White House are fully behind these latest measures. Several senators and congressmen from both sides of the aisle would like to see more far-reaching sanctions, but steps in that direction can realistically only be taken after the mid-term elections on Nov. 8.

It is noteworthy that the administration stands behind these sanctions despite the rhetoric of President Donald Trump, who clearly favors dialogue with Russian President Vladimir Putin and is hesitant to criticize him. In June, Trump had been quite vocal about his desire to see Russia return to the G-7 framework (it was expelled from the G-8 in 2014 as a result of annexing the Crimean Peninsula). Trump was also heavily criticized for being too lenient on Putin during their summit in Helsinki in July.

While the latest set of sanctions may not be far-reaching, the overall effect of the sanctions imposed since 2014 have had a big effect on the Russian economy. According to US Assistant Secretary of State Wess Mitchell, foreign direct investment in Russia has fallen by 80 percent since 2013.

The new sanctions came into force as Microsoft warned that Russian hackers had launched cyberattacks on the servers of the Senate and two conservative Russian think tanks. These warnings are being taken very seriously by US lawmakers in the run up to the mid-term elections.

British Foreign Secretary Jeremy Hunt is on his first official visit to the US and has applauded the administration for upping the sanctions on Russia. The UK would like to see all EU members follow suit. Some have, while others have not. Alas, Europe stands divided on the issue. While the EU has a tough stance against Russia’s involvement in Ukraine and the annexation of the Crimean Peninsula, there are other considerations for the likes of Italy, Austria and Germany.

While the latest set of sanctions may not be far-reaching, the overall effect of the sanctions imposed since 2014 have had a big effect on the Russian economy

Cornelia Meyer

Germany for one is investing billions in Nord Stream 2, a gas pipeline financed by Russia’s Gazprom along with ENGIE, OMV, Uniper, Wintershall and Shell. The project is designed to carry gas to Germany and beyond, circumventing Ukraine, with whom Gazprom has had many disagreements about outstanding bills. Opinions in the EU about the necessity of Nord Stream 2 are divided, but it is creating new realities, making Ukraine financially less attractive as a transit nation. Angela Merkel is moderately supportive of the project. Former German Chancellor Gerhard Schroeder is chairman of the pipeline operator’s board, firmly putting him in the driver’s seat.

Italy’s new government is friendly to Russia, as is Austria’s. Last weekend, Putin even attended the wedding of Austrian Foreign Minister Karin Kneissl. Her cosying up to Putin was met with some controversy. He then moved on to Germany to hold talks with Merkel. They discussed Ukraine, Syria and Nord Stream 2.

Russia is a near neighbor to many EU countries. It has made big strategic inroads into the Middle East, which is important to Europe in terms of what will happen to the flow of refugees going forward. This is the context of Putin’s latest charm offensive. Via Merkel, he is asking the Europeans for help in rebuilding Syria. But the EU is concerned about Ukraine and the status of Crimea and those conflicts are geographically closer to Central Europe than they are to the Anglo-Saxon world.

It is clearly not acceptable for the Russian government to meddle in the elections of Western democracies or to poison people in their streets in broad daylight. NATO countries should also worry about the offensive capabilities of Russia’s armed forces. This being said, the case can be made that there are sufficient issues where dialogue might achieve more results than a refusal to engage. For Central Europe, Russia remains a big country on its borders — spanning 11 time zones and with enormous nuclear capabilities.

  • Cornelia Meyer is a business consultant, macro-economist and energy expert. Twitter: @MeyerResources

 

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