The EU to bear the cost of eventual sanctions against Russia

Catherine Ashton, High Representative of the EU for Foreign Affairs and Security Policy, speaking to the Press while heading for the Extraordinary Foreign Affairs Council which took place in Brussels, on 3 March 2014. (The Council of the European Union photographic library).

It’s easy for Washington and London to threaten Russia with far reaching economic sanctions, but very many countries and businesses in continental Europe don’t see it that way. The US and Britain after having actively supported the ‘Kiev revolution’ which ousted Victor Yanukovych from the Presidency, now insist that the West imposes tough economic measures on Russia for invading Crimea. Of course, the cost of the sanctions will be borne by those who can impose the measures that is continental Europe.

During the eleven month period of January-November 2013 the EU exported to Russia a wealth of goods of €111.6 billion and imported goods of a value of €189.6bn. Russia is the third trading partner. When it comes to energy dependencies, Russia covers around one third of continental Europe’s needs in natural gas. There are EU countries which depend almost entirely on Russian natural gas. The EU is Russia‘s largest trading partner by far, with 45% of all Russian external trade, and Russia is the EU’s third most-important trading partner, after the US and China. No need then to dig in intelligence reports to discover that continental Europe is lukewarm if not reluctant about imposing economic sanctions on Russia.

The high cost of sanctions

There is a lot more to it though. European financial markets have already felt the heat from the Ukrainian crisis. If the Kiev-Moscow standoff becomes uncontrollable, Europe will pay a dear price in many respects, let alone if this crisis leads to an EU – Russia impasse. For all those reasons, the EU had brokered a deal between the ousted President Yanukovych with the Ukrainian opposition. The pact was signed on Friday 21 February only to become a worthless paper the next day.

On 24 February the European Sting noted, “On Saturday, only hours after the agreement between Victor Yanukovych and the Ukrainian opposition party leaders had been signed and endorsed and also signed by three European Union ministers of Foreign Affairs (German, French and Polish) representing the EU Foreign Council, the Ukrainian Parliament rendered this pact void. In direct violation of the aforementioned pact, the legislative voted Yanukovych out of his office and appointed as interim President the speaker of the house Oleksander Turchinov”.

Pay for Tymochenko’s restoration?

The new Kiev rulers are practically appointed, by the ‘regiments’ of protestors in control of the city’s central Independence Square. Most of them belong Julia to Tymochenko’s Fatherland political party. No need to mention who Tymochenco is and who and what she represents in today’s Ukrainian stalemate. Her direct relations with the West, mainly with Washington, are well known. She was mixed up to her neck in the corrupt swamp of government-business relations, when she ruled the country as prime minister, under President Yushchenko in the aftermath of the ‘Orange Revolution’. She was then given the nickname of ‘gas princess’ after a lucrative agreement with the Russian natural gas monopoly Gazprom. For all those reasons, she is quite unpopular in Ukraine but very popular in the Washington and Brussels corridors of power. That’s why she governs Kiev by proxies.

It’s really a joke that the Anglo-Americans now demand that the Europeans put their relations with Russia in jeopardy, just to restore Tymochenko’s grip on Ukraine. The fact that the EU brokered an agreement between Yanukovych and the then opposition was trampled within 24 hours is very indicative of what happened in Kiev. The three EU countries who helped for this agreement to be concluded are Germany, France and Poland. Any major disorder in central Europe will primarily hurt those three economies and then the entire continent, while the Anglo-Americans have nothing to lose.

Given that nobody in the West talks seriously about a military intervention in Ukraine to stop Russia’s direct involvement, then it will be economic sanctions against Moscow. Unfortunately, the cost will be borne exclusively by continental Europe, at a time when the EU is struggling to restore its economy and rebalance the financial sector.