The wounds the Ukrainian civil war has inflicted on Europe have now stopped bleeding and if not begun healing at least they claim no more fatalities. The Minsk II agreement is holding well and the Europeans, most of them, have made clear to the Americans that there is no chance of starting a new war in the Old Continent, this time between Kiev and Moscow. Unfortunately, the US found the opportunity to unload some hundreds of heavy artillery and tanks in the Baltic ports, while Russia has also been reinforcing its own military presence in this region.
Regarding the sanctions against Russia, the President of the European Council, Donald Tusk, after last Thursday’s meeting of the 28 EU leaders in Brussels, observed that it becomes increasingly difficult to continue upholding the injunctions unanimously. Their cost to a number of EU countries is estimated so far to have reached some tens of euro billions, while for the US the cost is quite insignificant. Let’s take one thing at a time.
Paying the costs
Now that the dust of the fight in eastern Ukraine is gradually settling, it becomes apparent that the West is obliged to assume the burden of keeping the war torn country afloat. On Wednesday 11 March Christine Lagarde, Managing Director of the International Monetary Fund (IMF), issued the following statement from Berlin, Germany: “I am pleased to announce that the IMF Executive Board today approved an Extended Arrangement under the Extended Fund Facility (EFF) of SDR 12.348 billion (about $17.5 billion, €15.5bn) for Ukraine, based on a comprehensive economic reform program supported by the Fund as well as by additional resources from the international community… this new four-year extended arrangement will support immediate economic stabilization in Ukraine and a set of deep and wide-ranging policy reforms aimed at restoring robust growth over the medium term and improving living standards for the Ukrainian people”.
One week later the European Union announced its own direct input to Kiev. The International Trade Committee of the European Parliament approved a plan to disburse €1.8bn in medium-term loans to help Ukraine confront its economic plight. The EU Parliament notes that those “loans will top up financial help from other donors under an economic program put together by the International Monetary Fund (IMF)”. The legislative committee approved the relevant EU Commission’s proposal, without amending it, by 30 votes to 7, with no abstention.
Money and natural gas
It’s not only with money that the West supports Kiev. In many ways natural gas supplies are more valuable to Ukraine, because they don’t only keep its citizens warm but they also keep its industry, or what is left of it, going. To this effect, last Friday 20 March, the European Commission hosted the inaugural meeting of the trilateral talks with Ukraine and the Russian Federation on the follow-up to the natural gas ‘Winter Package’. The ‘Winter Package’ on Russian gas supplies to Ukraine was signed between the three sides on 30 October 2014 and ends on 31 March 2015.
EU Commission Vice-President Maroš Šefčovič chaired the talks which brought together the Minister for Energy of the Russian Federation Alexander Novak and the Ukrainian Minister for Energy and Coal Industries Vladimir Demchyshyn. At the end of talks Šefčovič stated: “We have held a constructive first meeting on the follow-up to the Winter Package…On this basis we can work towards a bridging agreement until the Stockholm Arbitration Tribunal settles the disputed issues. I am also reassured that the transit gas flows to the EU will remain unaffected.” Obviously the EU had to pay special attention in making sure that the tri-lateral arrangement safeguarded the Russian gas deliveries to the West.
What about the sanctions?
But it’s not only the free flow of Russian gas that is of great interest to the EU countries. Most of them have a lot more at stake in Russia. The EU exports a large variety of products to this vast country ranging from any kind of foodstuffs to high value added industrial goods, not to say anything about a whole range of joint projects in the real and the financial sectors. All that has now come to a standstill, greatly disappointing a lot of Europeans.
That’s why last Thursday Donald Tusk overtly acknowledged that maintaining the sanctions against Russia is becoming increasingly difficult for the EU. In reality things are more critical than that. Well informed sources in Brussels say that last Thursday behind closed doors the majority of EU leaders adopted an attitude favoring some kind of relaxation of the Russian sanctions, despite the fact that ostentatiously “they unanimously endorsed the injunctions until peace reigns in Ukraine”. This means however that the very moment the Organization for Security and Co-operation in Europe (OSCE) is be able to verify that there are no more hostilities in eastern Ukraine and the two sides just hold their lines, the sanctions will have to go.
There is every indication then that the division of Europe may have ended here. If the two sides show good will in recognizing each other’s rights, the worst may be behind and Europe will be again able to start curing her wounds.