EU Sanctions Against Russia Are Crumbling — But They're Likely to Remain

In the first few weeks of 2016, the Western sanctions regime on Russia has been coming under pressure as never before.

This had led to hopes that the sanctions may be finally lifted when they come up for renewal in July.  However at the moment such hopes look premature.

That there is growing unhappiness in Europe with the sanctions is indisputable.

The key country to watch - as always - is Germany.  

It seems the German business community was outraged the sanctions were renewed in December without discussion (see here) and has issued a strong statement saying as much. 

Moreover following the announcement of North Stream 2 there have been trips to Moscow by Sigmar Gabriel - the head of the SPD - and now by Horst Seehofer - the head of the CDU’s Bavarian sister party, the CSU.

I have previously discussed Sigmar Gabriel’s visit to Moscow and the quite remarkable things he said there here.

The Kremlin’s website has now provided a transcript of part of the conversation that took place between Putin and Seehofer when they met in the Russian Presidential residence in Novo Ogaryovo in the suburbs of Moscow.  It specifically quotes Seehofer as saying to Putin the following:

“We have come here from the free state of Bavaria, which traditionally has very intensive ties with Russia, and we want to maintain these ties.

Bavaria is part of the federal government. We are part of the government coalition, and we think it our duty, the duty of our hearts and souls, to put a bit more trust back into our relations. We think this is essential in today’s situation, looking at what is happening in the world.

I am very pleased that you said today that we are not coming here as plotters. Never in the run-up to any of my previous visits to other countries, have I heard as much untruthful and inaccurate information as I have this time.

What is most important for us is to deepen our relations, above all, of course, our economic relations, but this is not our only goal. I think we need to do the same in culture too, and in science. These are things we will discuss too.

In today’s globalised world, we in Bavaria, with our population of 13 million, are very much aware, of course, of what is happening every day in our world, whether in Syria or in Ukraine, whether refugees or crime. And we believe that only by acting together, and not in conflict with each other, can we solve these problems.

In this desire, we seek not to act against our federal government, but together with it, and we act not against Russia, but hope to work together with Russia.”

Not only is the tone of Seehofer’s comments exceptionally warm, but it contrasts sharply with the stern tone he uses to describe the neocon critics of his visit, whom he accuses of spreading “untruthful and inaccurate information” about it.

Importantly, Seehofer not only says that “what is most important for us is to deepen our relations, above all, of course, our economic relations” but he pointedly draws attention to the fact that “we are part of the government coalition, and we think it our duty, the duty of our hearts and souls, to put a bit more trust back into our relations”.

The leaders of each of the two parties that along with the CDU form Germany’s governing coalition - Sigmar Gabriel of the SPD and Horst Seehofer of the CSU - have both now travelled to Moscow within a few months of each other, and each whilst there has made clear his urgent wish for relations between Germany and Russia to be restored to their previous good level.  

Contrast the warm tone of Seehofer’s meeting with Putin - and previously of Gabriel's meeting with Putin - with the terse tone of the Kremlin’s report of Putin’s latest telephone conversation with Merkel, with the Kremlin saying “the conversation was business-like and constructive” - diplomatic shorthand for saying the two disagreed with each other. 

With two out of three of the leaders of Germany’s governing coalition now pressing for a rapprochement with Russia, it is Merkel who is increasingly looking like the odd person out.

Elsewhere in Europe, Italian Prime Minister Renzi has made clear Italy’s disagreement with the sanctions policy.

Back in December Italy managed to hold up the renewal of the sanctions by a few days - a striking fact in itself.   When - predictably - the EU Commission nonetheless went ahead and published an announcement that the sanctions had been renewed for 6 months - citing alleged unanimous agreement by EU member states at ambassador level - Renzi reacted by sacking Italy’s ambassador to the EU for failing to stand up for Italy’s interests.

Renzi then engaged for a few days in a quite extraordinary exercise of what can only be called deliberate trolling of Germany.  

He pretended to oppose North Stream II, though it quickly became clear that what he was actually doing was drawing attention to the Germany’s hypocrisy in insisting other EU states maintain sanctions on Russia whilst forging closer economic links with Russia itself.

Not surprisingly the Financial Times is now reporting that relations between Merkel and Renzi have hit rock bottom, with Renzi complaining that he is being locked out of EU decisions, and Merkel engaging in her usual game of getting her media allies and “anonymous German officials” to badmouth Renzi on her behalf.

Meanwhile in France the government is coming under increasing pressure from France’s powerful farm lobby.

Russia’s counter-sanctions on EU food imports are causing disproportionate hurt to some French food producers.  

In 2009 the US imposed high tariffs on certain French food products, causing their producers to look to Russia to fill the gap.  As a result, though only 5% of French exports of dairy products in 2013 went to Russia, it seems Russia accounted for a disproportionate share of certain specialised high-end dairy products, such as Roquefort cheese.  The Russian counter-sanctions have hit the producers of these products especially hard.

The Russian import ban has also contributed to the over-supply of milk and dairy products across the whole EU, with prices plunging to levels that are putting the entire European milk and dairy industry under severe strain.  

The result has been demonstrations by dairy farmers in France, Belgium and even normally quiet Britain.

Beyond these problems there is also anger and disappointment amongst French food producers that the heavy investment in time and money they had made to gain entry to the Russian food market -  which was starting to bear fruit - has gone to waste. 

In light of all this, in order to appease the farmers, the French foreign minister three weeks ago was reported to have said that the French government was doing all it could to get the Russian counter-sanctions lifted.  

Understandably enough this was widely taken as a hint that France would oppose extending the sanctions against Russia when they come up for renewal in July.  

Even tiny Denmark - a country that not coincidentally also has a large milk and dairy industry that is suffering from the price collapse caused by the Russian food import ban - is now warning Ukraine that EU sanctions on Russia may be lifted if Ukraine does not fully implement all the provisions of Minsk II.

This Danish warning is unusual because it reverses the standard Western formula that Russian Foreign Minister Lavrov says the US is trying to impose on Russia, and which the EU adopted when it extended the sanctions against Russia in December.

This is that it is Russia not Ukraine that is failing to implement Minsk II and which must implement Minsk II in order for the sanctions to be lifted.  

Reuters on the contrary quotes the Danish foreign minister as warning Ukraine that it is Ukraine not Russia which is not implementing Minsk II, and that sanctions on Russia will be lifted unless it does so.

That it is Ukraine not Russia which is failing to implement Minsk II is of course what the Russians are saying (see my recent discussion here).

In light of this mounting opposition to sanctions, and in view of the increasing demands for a rapprochement with Russia, what are the prospects of the sanctions being lifted in July?

The answer is they remain very low, and the high probability is they will on the contrary be renewed in July and will continue for some time thereafter.

Though the US is not a member of the EU, in reality it is the EU's dominant silent partner. 

I was in fact told recently that US representatives regularly attend meetings of the EU’s Council of Permanent Representatives (the forum where member states’ ambassadors to the EU meet and make their decisions) and that the minutes of the meetings of this Council are edited to conceal their presence.  

The US is insisting the sanctions remain in place.  

It is not alone in doing so.  It can count on the support of Britain and of some of the other EU countries like Poland, Romania and the Baltic States. 

It can also count on the support of the EU bureaucracy and of the bulk of the European media, which regularly takes a strongly pro-Atlanticist line. 

The US also has highly placed friends in every one of the political leaderships of all of the EU states except possibly Hungary.  

For the moment I believe this coalition of forces backing the sanctions is strong enough to prevail.  

That no doubt explains why the French government - after its comments were misconstrued as suggesting it opposes extending the sanctions - made it clear that this is not the case and that it continues to back the US position - which suggests France will back extending the sanctions when they come up for renewal in July.

Even if Merkel falls and Germany has a new Chancellor in the next few months committed to reversing the disastrous course of confrontation with Russia that Merkel has followed - which is very possible - the new Chancellor will need time to consolidate their position in Germany before taking risks in foreign policy.  

Such a new Chancellor’s priority will anyway be to reassure the US of Germany’s continued loyalty to the Atlantic alliance. 

That dictates a caution approach to Russia, with no dramatic changes of policy for the first months that the new Chancellor is in power.

It is nonetheless indisputably the case that opposition to sanctions is mounting across Europe.  

Sooner or later this opposition will achieve a critical mass.  At that point the sanctions will become unsustainable, just as the sanctions the EU previously imposed on China and Iran eventually did. 

However we are not at that point yet.