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Anti-Russia Sanctions Are Only Hurting Europe More Than Russia

EU member states should lift them unilaterally – before Russia becomes fully self-sufficient

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This post first appeared on Russia Insider

The author is an Italian industrialist and Honorary member of the Academy of Science of the Institut de France

For the United States and now brainless Europe, initially, the Russia-EU Summit in Sochi in March 2014 was cancelled due to the Ukrainian crisis, but later, after the formal referendum that saw the peaceful annexation of Crimea and Sevastopol, relations between Russia and the West continued only at the G7 level.  

Russia cannot join the OECD and the International Energy Agency, of which it had been a founding member as early as the time of the USSR.

Ironies of fate and memory.

146 Russian citizens and 37 federal "entities" cannot have relations with the European Union, enter EU territory or do business within it with anyone.

On March 10, 2016, the EU extended the measures, which also regard the partial ban/restriction of oil trade but, above all, related technological materials, until September 15, 2016. Nevertheless the Minsk agreements reached in 2015 between President Poroshenko, France, Germany and Russia were clear: immediate and full "ceasefire" in Donetsk and Luhansk, the districts of pro-Russian "separatism"; pullout of all heavy weapons by both sides to equal distance; effective international monitoring of the forces’ separation lines; a significant constitutional reform in Ukraine, based on "decentralization" and hence on a substantial weakening of the pro-Russian insurgency.

All the Minsk II package of measures has been complied with - hence there is no lawful reason to keep enforcing sanctions. On the basis of the Russian signature of the "Minsk II" agreement, it was not possible and it is not possible today - without obvious Russian countermoves - to maintain or accept sanctions against the Russian Federation, which also include some oil and gas products - at least with reference to the EU.

Not to mention the severe banking and corporate bans, as if the issue were not the annexation of a territory which has been Russian since the time of Peter The Great, but an entire continent conquered by Russian "fascism" (a word that fits all contexts and circumstances).

Just to be brutally clear, with the Ukrainian issue - manipulated to an almost comical degree, with EU recognition of the phantom "Tatar parliament", composed from scratch among a minority population who had been deported by Stalin in 1944 - a naïve (albeit wicked, as often happens) attempt was made to turn a great power such as the Russian Federation into a ''marginal area" subject to the geo-economic will of the Western powers.

These powers, however, have neither the strength nor the ability, and not even the strategic alliances, to manage all the disputes with Russia. Meanwhile, in April 2016, fifty-five French members of Parliament (versus 44) voted to lift sanctions against Russia.

It has been estimated that the cost to European farmers of the sanctions against Russia is equal to 5.5 billion euro a year. The Slovakian and Italian Agriculture Ministers, the Austrian Vice-Chancellor, as well as Hungarian Prime Minister Orban, have all spoken against maintaining sanctions against the Russian Federation.

Moreover, Russia has been very clear: if the EU lifts all sanctions, Russia will remove all its counter-sanctions. If the situation goes on like this, with subsidies to farmers and new technologies again subsidized by the government, we can fear that in the near future, the Russian Federation could largely achieve food autonomy, leading to a huge crisis in the EU agri-food sector.

Putting it brutally, the sanctions are tantamount to an unlawful restriction of international trade, absolutely illegal in terms of agreements already signed and implemented by Russia, Germany, France and Ukraine, leading to a reduction of European trade for no other reason than to reduce EU trade potential in view of the agreement and the current TTIP negotiations between the EU and the United States.

Russia is the third largest EU trading partner, and Europe is Russia’s major commercial area.

Gas was partially excluded from sanctions owing to many EU countries’ dependence on Russian natural gas, but not all Russian oil and gas products have been spared the sanction regime. Banking operations are still banned, although there are some examples of “triangulation". Meat exports are also prohibited.

Thanks to the counter-sanctions imposed by President Putin in March 2014, EU trade with Russia fell to 12.1% of Russia’s total trade, thus providing the opportunity - that a careful geopolitician such as the Kremlin leader has not missed - of a new economic correlation with China and the States of the Shanghai Cooperation Organization, which are all growing significantly, unlike the European Union.

According to some Swiss analysts, the macroeconomic effect of sanctions against Russia are worth at least 43 billion euro in added value, and as many as 92 if sanctions were to continue in the coming years. This is not a matter of crippling Russia, but rather of destroying Europe economically.

As a result of sanctions, over 1.1 million jobs have been lost across Europe, and the EU’s GDP growth will decrease by 1.1%, due to the collapse of trade with Russia. A huge folly, based on Russia’s full right to own the old naval bases of Sevastopol and the Russian Crimea, accepting to annex it as an "autonomous region" after an overwhelming majority vote, confirmed by 57 observers from 41 countries, (later disowned – no one knows why - by the UN Secretary General).

The reduced interest payments are worth at least a loss of 10 billion euro, while Italy is losing at least 42% of its export of freight materials. Not to mention the tourist sector (Russia ranks fourth in terms of international tourist flows to Italy) and the agribusiness sector (which fell by 16%) and, above all, “Made in Italy”, the primary asset of our country which has now become a  marginal budget item of bilateral trade.

And all this, once again, to justify a false, and often illegal version of the facts and situations which took place in the long "Donets war" and the clash between the Ukrainian Maidan and the pro-Russian forces in the region.

Nevertheless, only 147 billion euro worth of Russian debt are held abroad, Italy being the second largest creditor, with 27 billion euro, followed by Germany and Great Britain. The bungling supporters of sanctions had to know that there was no room for maneuver.

As a result of Russian counter-sanctions, the agri-food sector was hit to the tune of 43% of its potential across the EU, with Italy having to monitor entire economic sectors (fruit and vegetables, meat, poultry). This is the geopolitical masterpiece of the moralist supporters of sanctions: the economy of a country such as the Russian Federation has been directed eastwards; a disaster hard to solve has been created in key economic sectors of the EU and Italian production systems. And everybody agrees on the fact that all this has been done without achieving any strategic result other than the smart, effective and strong presence of the Russian Federation in Syria.

What solutions can be envisaged? First and foremost, even one single country, such as Italy - possibly with Austria and Hungary – should lift bilateral sanctions in the agribusiness and tourist sectors. Secondly, a group of EU countries should denounce the substantially groundless nature of the whole architecture of the Minsk I and Minsk II agreements, as well as create a sort of European-Russian bank to fund bilateral trade.

Thirdly, the UN and other "inner sancta" of global power (by the way, former Italian President Cossiga dismissed the UN as "a useless organization") should be reminded of the fact that, from now on, sanctions, counter-sanctions, their lifting and all the other multilateral and bilateral trade issues will be the prerogative of States, not of some unreliable "experts".

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