Western Leaders in Denial on Ukraine Sanctions

[Purveyor]

Sep 5, 2014 10:17 AM EDT
By Leonid Bershidsky

The European Union appears determined to impose more sanctions on Russia, whether or not the warring sides in Ukraine can sustain a cease-fire. The doggedness might appear surprising, given the effect that previous injunctions, and Russia's response to them, are having on Europe's economic recovery -- and the lack of any contribution to resolving the crisis. All EU leaders really care about, though, are optics.

The Financial Times has obtained a draft document detailing the new sanctions: a ban on European debt financing for Russian state defense and energy companies, no dual-use technology exports, a prohibition on European energy-services companies participating in Russian projects, and a vague discussion of boycotting the 2018 soccer World Cup, to be held in Russia, and kicking Russian soccer clubs out of European competition.

It's safe to assume Russian President Vladimir Putin will want to retaliate. His previous response has already hit Europe where it hurts: Food prices are declining because Russia no longer imports European fruit, dairy products, meat and fish. According to Brussels-based agricultural lobby group Copa-Cogeca, milk prices in some parts of Europe are down by as much as 30 percent. Some fruit, such as apples and pears, is now so cheap that farmers are thinking of not harvesting. Copa-Cogeca says EU measures proposed so far, such as purchasing interventions and storage aid, are inadequate and direct subsidies are needed to keep farms afloat.

The farmers' plight is only part of the problem. Food accounts for 14 percent of the basket of goods used to calculate euro-area inflation, according to the policy site EurActiv, and European Central Bank chief Mario Draghi said in May that cheaper oil and food had accounted for 80 percent of the inflation decline Europe has seen since 2011. Those Russia sanctions may mean rate cuts and Draghi's efforts to drive down the euro's exchange rate will fail to reverse the deceleration in euro inflation.

It might be worth recalling that the initial goal formulated by the U.S. State Department was for sanctions to "send a strong message to the Russian government that there are consequences for their actions that violate the sovereignty and territorial integrity of Ukraine." The message has been returned to sender, unopened.

more...

http://www.bloombergview.com/articles/2014-09-05/western-leaders-in-denial-on-ukraine-sanctions

[Purveyor]

1. Leaked Russia Sanctions Paper: The Excerpts

As we reported in today’s dead-tree edition of the FT, we got our hands on the three-page Russia sanctions options paper circulated by the European Commission and the EU’s diplomatic corps to national delegations yesterday that, for the first time, raised the spectre of boycotting the 2018 World Cup, to be hosted by Moscow.

But the meat of the document is the actual sanctions that are likely to be agreed this week; the World Cup suspension is clearly mentioned as something that only would be considered in the future. So as is our tradition here at the Brussels Blog, we thought we’d provide readers a bit more detail, including excerpts from the document itself.

First, though, here’s the language on the World Cup, which also includes a mention of UEFA, the Union of European Football Associations which organises and runs all international competitions for European soccer clubs – including Russia’s.

Besides economic measures, thought could also be given to taking coordinated action within the G7 and beyond to recommend suspension of Russian participation in high-profile international cultural, economic or sports events (Formula 1 races, UEFA football competitions, 2018 World Cup, etc).

The paper, titled “Outline of proposals for a second round of restrictive measures on Russia”, weighs whether it would be better to deepen the economic sanctions levied in July or expand them into new sectors of the Russian economy. The paper argues that deepening the existing sanctions – which target the financial, energy and defence sectors – would be preferable both for speed and effectiveness:

more...

http://blogs.ft.com/brusselsblog/2014/09/03/leaked-russia-sanctions-paper-the-excerpts/?

[reorg]

2. According to TV station ARD, EU considers suspending sanctions

EU considers lifting sanctions

Due to current developments, the EU considers suspending sanctions against Russia if there is a significant easing of tensions in east Ukraine. For the truce to become real, a decision alone is not sufficient, said Merkel during the NATO summit in Newport. It must be determined whether the ceasefire is respected, whether Russian troops, in case they are on the ground, were to withdraw and whether buffer zones would be set up.

EU erwägt Sanktionen auszusetzen

Aufgrund der aktuellen Entwicklung erwägt die EU, Sanktionen gegen Russland auszusetzen. Dazu müsse es aber zu einer deutlichen Entspannung der Lage in der Ostukraine kommen. Für einen echten Waffenstillstand reiche ein Beschluss allein aber nicht aus, sagte Bundeskanzlerin Angela Merkel auf dem Nato-Gipfel in Newport. Es müsse geklärt werden, ob die Waffenruhe eingehalten werde, ob sich russische Truppen, so sie vor Ort seien, zurückzögen und ob Pufferzonen eingerichtet würden.

http://www.tagesschau.de/ausland/ukraine-650.html