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G7 and Sanctions: Doubling Down on a Failed Policy

The G7 summit ends with a demand to extend sanctions which are achieving none of the objectives for which they were imposed

This post first appeared on Russia Insider

As we predicted (see Why EU Sanctions On Russia Will Be Extended In June, Russia Insider, 5th June 2015) the G7 summit has ended with a commitment to continue the sanctions against Russia.

Though the decision to continue with the EU’s sanctions is supposedly made by the EU and not by the G7, no one should be under any doubt that at the forthcoming EU summit the G7 decision to extend the sanctions will be carried out.  

<figcaption>Cut outs of the G7 leaders meeting in Germany</figcaption>
Cut outs of the G7 leaders meeting in Germany

The arrogant tone of the G7 summit’s communique, essentially taking the extension of the sanctions for granted, all but confirms it.  

These are the precise words:

“We recall that the duration of sanctions should be clearly linked to Russia’s complete implementation of the Minsk agreements and respect for Ukraine’s sovereignty. They can be rolled back when Russia meets these commitments. However, we also stand ready to take further restrictive measures in order to increase cost on Russia should its actions so require. We expect Russia to stop trans-border support of separatist forces and to use its considerable influence over the separatists to meet their Minsk commitments in full.” 

The supposed link in the “duration of sanctions” to “Russia’s complete implementation of the Minsk agreements” ignores the fact that the text of the Minsk Memorandum places the burden of its implementation on Ukraine, not Russia. It is Ukraine that has failed to implement the Minsk Memorandum’s provisions, not Russia.

The real question is not whether the EU summit will carry out the G7’s orders by extending the sanctions. It is why the G7 is persisting with a policy that has failed, and why it continues to blame Russia for its failure.

The sanctions have made the recession in the Russian economy deeper than it otherwise would have been.  However a recession would have happened anyway because of the fall in the oil price.

It is a recession not a collapse, and forecasts suggest (see Russian Central Bank Forecasts End of Recession in Final Quarter, Russia Insider, 8th June 2015) it may already be coming to an end.  Obama’s claim at the G7 summit that Putin is “wrecking the Russian economy” because of the sanctions, is therefore quite simply nonsense.

The sanctions have ensured that the blame for the recession has been diverted from Putin to the West (see our comments  at the end of our lengthy discussion of the recession Russia's Recession: A Necessary Re-Balancing, Russia Insider, 5th June 2015). In consequence, the sanctions have not reduced Putin’s popularity, which has grown to stratospheric levels. There is no sign of the political challenge to Putin’s leadership the West assumed would happen when they imposed the sanctions (see our lengthy discussion What the Story of Putin's "Disappearance" Says about How the West Misunderstands Russia, Russia Insider, 23rd March 2015)

Nor have the sanctions changed Russian policy or improved Ukraine’s situation, which in all respects remains dire.

The Ukraine economy remains in crisis. The G7 made no specific promise of more money to help Ukraine. Instead its final communique talks of “financial and technical support” rather than money, speaking of the G7’s “commitment to working together with the international financial institutions and other partners to provide financial and technical support as Ukraine moves forward with its transformation” — in effect kicking the ball back to the IMF, the international financial institution in question.

Crimea remains Russian and the West has quietly accepted the fact despite words to the contrary in the G7 communique, which however does not link the ending of the sanctions to the return of Crimea to Ukraine.  

All the biggest defeats the Ukrainian army has suffered (in the Southern Cauldron, at Ilovaisk, at Donetsk airport and at Debaltsevo) have happened after the sanctions were imposed.

Though Ukraine refuses to negotiate with the Donetsk and Lugansk People’s Republics as the Minsk Memorandum required it to do, their de facto independence from Kiev is increasing, facilitated by the blockade the Ukrainian government, contrary to the commitments it made in Minsk, continues to impose on them. That independence has now almost certainly gone beyond the point of no return, with even the Economist, in an otherwise deeply mendacious article, now grudgingly admitting that “after a year-long war, people in Donbas are not prepared to be governed by Kiev”.

So why if the sanctions have failed is the G7 persisting with them, and indeed threatening even more of them?

The short answer is because lifting the sanctions when none of their objectives have been achieved would be to admit their failure, something the G7 leaders cannot bring themselves to do.

This inability to admit failure, with the result that US and Western leaders persistently reinforce failure by doubling-down on failed policies, is the besetting vice of US and Western policy making.

Thus, to cite just two recent examples, the US persists in supporting the anti-Assad insurgency in Syria, causing the rise of the Islamic State there, and the EU persists in demanding Greece pay debts it cannot afford to pay, causing the prospect of a disorderly Grexit to grow.

Meanwhile disagreement with the sanctions policy in Europe is now so strong the G7 leaders cannot allow them to be relaxed even a little so as to appease their increasingly restive business community, since they know that if they were, there would be no possibility of their ever being tightened up again.

The reality - which the Russians are fully aware of and upon which they have based their economic plans - is that there is no prospect of the sanctions being lifted any time soon.  

Most probably they will never be formally lifted at all, but will simply be allowed to melt away, as happened to the sanctions the West imposed on China after the Tiananmen affair. 

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