Who is to lose from the 6-month extension of the EU economic sanctions against Russia?

Ms Federica MOGHERINI, the High Representative of the EU for Foreign Affairs and Security Policy, at 3400th Foreign Affairs Council (TVnewsroom European Council, 22/06/2015)

Ms Federica MOGHERINI, the High Representative of the EU for Foreign Affairs and Security Policy, at 3400th Foreign Affairs Council (TVnewsroom European Council, 22/06/2015)

The European Foreign Ministers gathered in Luxembourg two days ago and decided to continue imposing economic sanctions to Russia for another six months. This shows the strong intention of Europe to weaken Russia’s power in Ukraine and thus put a stop on Russia’s imperialistic plans.

However, Russia claims these sanctions as “illegal and unfounded” and will fight back extending the ban on food and agricultural products that was imposed to the EU imports. The latter will have a great economic impact to the EU but Russia may have to reconsider excluding certain countries (e.g. Greece) with which Russia is lately getting very close to.

The fact that the pro-Russian separatists continue fighting in Eastern Ukraine supports that Russia considers this part as strategically important for its expansion and will do whatever it takes to keep it under its rule. What will influence the on-going situation is whether the West will continue imposing economic sanctions, the role that European countries like Greece can possibly play and Russia’s expansion further to the East.

EU expands sanctions on Russia

Without second thoughts, the EU Foreign Ministers convened in Luxembourg and came to an agreement to expand until January 31 the economic sanctions against Russia. The reason was obvious. Russia has not yet committed to the plan of cease-fire and peace signed by Kremlin in Minsk last February. It is apparent that Russia keeps on claiming Eastern Ukraine at the time that pro-Russian separatists continue fighting against Ukrainian forces.

The sanctions focus on certain exchanges with Russia in the financial, energy and defence sectors as well as dual-use goods. First, dual use goods and military technology exports in Russia are prohibited. Secondly, energy-related equipment that will be used for deep water oil exploration and production, arctic oil exploration or shale oil projects in Russia will not be exported. Thirdly, the EU sanctions cover an embargo on the import and export of arms that are listed in the EU common military list. Last, EU nationals and companies cannot provide loans to five-major Russian state-owned banks.

The two sides of rouble

It has been over one year now that the EU is imposing restrictive measures against Russia due to the escalation of the Ukrainian crisis and as an outcome we monitor that the Russian economy has been affected and slighted into a recession with the rouble and oil prices falling at very low levels. Those long-term measures have made Russia change its economic policies and target even more towards the East.

Thus, the search of Russia in currently finding alternative allies and business partners has proven constructive. China is one of the countries to substitute Europe. Russia has already signed a $400 billion energy deal with China that will start delivering as of 2018. China will import more Russian gas compared to Germany which means that Russia will be benefited in the medium and long-run with more agreements to be ready to be signed between the two vast countries. Apart from China, Russia recently signed an agreement with Greece for the creation of a joint enterprise that will construct the Turkish pipe line in Greece. The project will be concluded by 2019 and will cost 2 billion euros and is estimated to significantly increase Russian gas exports.

Another positive sign for the Russian economy, according to a top Russian official, is that the imposed sanctions have forced domestic production to increase in order to replace imports from the EU. More specifically, Alexander Brechalov, Russian Public Chamber Secretary, stated according to the Russian outlet TASS:  “Extension of sanctions by our Western partners is only positive for us so far. The longer the sanctions stay in place, the better it will be for businesses, especially those operating in the sphere of import substitution. Obviously, the process of import substitution is underway. Businessmen have felt chances and possibilities.”

Who will be the winner

The West (EU and US) has showed that is determined to drive Russia away from its economic growth. Even if Europe is not at its economic peak, it always remains a very strong contributor to the country in terms of gas and oil. By alienating Russia from the European and Western markets in general has as an outcome to push Russia further to the Eastern ones.

All in all, nobody can estimate at this point who will be the winner in this sanction “battle”. The European Sting will follow the matter closely to see evolutions on the matter hoping that stability in the region will be somehow ensured.

Follow Chris on Twitter @CAnyfantis

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Featured Stings

EU countries invested €5 trillion abroad

In dreams and in love there are no impossibilities

Italy’s rescue operation Mare Nostrum shuts down with no real replacement. EU’s Triton instead might put lives at risk

Lost in translation

Draghi: A bridge from Brussels to Berlin

Is Europe misjudging its abilities to endure more austerity and unemployment?

Regional policies slowed down by EU bureaucracy

Facts and prejudices about work

European Youth calls on European Council for urgent action on “humanitarian crisis” and questions the EU/Turkey deal respect of human rights

ITU Telecom World 2016: it’s all about working together

The US bugged Europe: Is this news?

What changes in the EU as from today

Digital business is Europe’s best hope to get back to growth

250 days until the European Parliament elections

The way to entrepreneurship in the developing world

Facebook wins EU approval for WhatsApp acquisition; just a sign of the times

“Hasta la vista” Google says to Spain and now Europe is next?

Youth unemployment: No light at the end of the tunnel

The three sins the EU committed in 2015

Imaginary Journeys Into Eternal China

European Investment Bank to borrow €70 billion in 2013

More bank bailouts at taxpayers’ expenses

The European Sting at the Retail Forum for Sustainability live from Barcelona

10 months were not enough for the EU to save the environment but 2 days are

My twin from Guangzhou

Medical Doctors in Industry 4.0: pure science fiction

A sterilised EMU may lead to a break up of Eurozone

An American duel in Brussels: Salesforce against Microsoft over Linkedin deal

COP21 Breaking News_05 December: Children Will Bear the Brunt of Climate Change: UNICEF

France: New labour laws for more competitiveness

EU Commission: The banks are not obliged to finance the real economy

Commission to decide on bank resolution issues

Memoirs from a unique trip to China: “my new old dragon” (Part I)

The EU learns about fishing and banking from tiny Iceland

Medicine in the 4th Industrial Revolution: the third entity of the new doctor-patient relationship

Cédric in India

EU Council: The US airlines may freely pollute the European air

The EU Parliament sidesteps the real issues about banks, while the US target the Eurozone lenders

Galileo funding: A ‘small’ difference of €700 million

Resolving banks with depositors’ money?

European Business Summit 2015: In search of a vision for the future

Commission’s action against imports from China questioned

Who is to pay the dearest price in a global slowdown?

Why youth unemployment is so difficult to counter

IMAGINATION, FACTS AND OPPORTUNITIES – THE UNLIMITED POWER OF CHINA

Eurozone: Economic sentiment-business climate to collapse without support from exports

“If the job market doesn’t exist, then even the most brilliant Youth Guarantee cannot ensure a job to these young people”, European Youth Forum Secretary General Giuseppe Porcaro on another Sting Exclusive

It’s a week dedicated to all EU budgets; seven days that can make or break the Union

Merkel, Mercedes and Volkswagen to abolish European democracy

Three countries losing ground and one new prime minister

Time to be welcome: Youth work and integration of young refugees

JADE Testimonial #3: Sebastian @ Fundraising

The EU tells the bare truth to the UK that there is no such thing as easy divorces

The Eurogroup protects Germany and blames others

The IMF sees Brexit’s ‘substantial impact’ while the world’s economy holds its breath

Education and Training: where do we stand in 2014?

ECB bets billions on Eurozone’s economic recovery

“Be aware where you put your I Agree signature on and something else”; now Facebook by default opts you in an unseen private data bazar

Europe rethinking its severe austerity policies

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s