Russian President Vladimir Putin speaks at a joint news conference with Italian Premier Matteo Renzi at the St. Petersburg International Economic Forum in St. Petersburg, Russia, Friday, June 17, 2016. (Sergei Savostyanov/TASS News Agency Pool Photo via AP)
Russian President Vladimir Putin speaks at a joint news conference with Italian Premier Matteo Renzi at the St. Petersburg International Economic Forum in St. Petersburg, Russia, Friday, June 17, 2016. (Sergei Savostyanov/TASS News Agency Pool Photo via AP)

No winners in sanctions cold war with resilient Russia

By Elena Vanyna Time of article published Jul 24, 2016

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Western farmers and industries are hurting, but Russia’s are gaining, writes Elena Vanyna.

IN 2014, European countries and the US imposed sanctions against Russia after its decision to reintegrate Crimea into its territory, a decision that was approved in a referendum by the majority of the peninsula’s residents.

The sanctions were imposed against individuals and companies and later extended to sectors of the Russian economy. In response, Russia banned food imports from the countries.

Much has changed since.

People in the Crimea, which for many decades had been part of the former Soviet Union and before that of the Russian Empire, feel they are Russian, as many foreign guests, including MPs from France, Italy and a number of other EU countries, found in visiting the peninsula.

The military confrontation between Kiev and the self-proclaimed republics in the east of Ukraine has subsided into a frozen conflict with the help of Russia, Germany and France.

Crimea will obviously not be Ukrainian again.

Kiev has stalled implementation of the Minsk peace agreements, signed by officials from Russia, Ukraine, France, and Germany.

The West has been adamant that the lifting of sanctions is conditional on the fulfilment of these agreements.

Russia has been learning to live under sanctions that shield its industry and business, primarily farmers, from foreign competition, spurring their development.

Western European countries that kowtow to Washington have been sustaining heavy economic and financial losses because of Russia’s counter-sanctions.

Russian Prime Minister Dmitry Medvedev has said although the sanctions are obviously outliving their effects, the West is bent on carrying them out further.

“Unfortunately, we do not see any attempts to meet us halfway. On the contrary, decisions have been adopted to extend the sanctions,” Medvedev told journalists after the Asia-Europe meeting in Ulan Bator last weekend.

“Everyone I talked to were certain that these sanctions were harmful to economic relations.

“According to international experts, the countries that introduced the sanctions have lost about $100 billion (R1.4 trillion)Âover the past couple of years. But we will not ask for the sanctions to be lifted, because we did not impose them.”

According to CEPII, the French research centre in international economics, by June the sanctions had cost Western countries about $60.2bn in losses.

“Not only have the sanctions against Russia failed, but they have also adversely affected the German economy,” Andreas Maurer, head of the Die Linke party caucus in the Quakenbrück City Council, Lower Saxony, Germany, told Russia’s Sputnik Radio.

“The sanctions have failed in principle. This is obvious here, whereas they are practically unnoticeable in Crimea.”

Maurer acknowledged the West was “punishing” the residents of Crimea for their referendum result by barring them from travelling abroad.

Germany, too, has been affected by the sanctions.

“No sector of the German economy can afford to ignore such a market as Russia in the long term,” Maurer said.

Italian MP Paolo Grimoldi, the secretary of Lega Lombarda - Lega Nord (Northern League, a regional party in Lombardy), said: “The sanctions are an utterly stupid measure that harms the economy of Italy and the European Union.”

The Lombardy Regional Council has passed a resolution recognising Crimea as part of Russia and calling for the sanctions to be lifted.

Earlier, two other Italian regions, Veneto and Liguria, adopted similar decisions.

On June 8, the French Senate urged the national government to start easing the sanctions.

The French parliament has said repeatedly the sanctions will no longer be extended automatically. On April 28, its lower house supported an opposition motion calling for them to be lifted.

“Those who conceived these sanctions miss one important thing: for at least 15 or 20 years Russia has been part of the world economy with objectively established complex interconnections rooted in the need to have normal exchange relations,” said Yevgeny Yasin, academic supervisor at the Higher School of Economics, who served as minister of economics in 1994-1997.

“This is why administrative barriers to force Russian and Western European goods out of the market impact manufacturers and consumers in Russia and the European Union.”

Messages from Western sources signalling the need to restore constructive relations with Moscow clearly show that EU countries are reassessing the efficacy of their sanctions against Russia.

At the same time, experts note that hardliners are standing their ground, despite mounting pressure from the public and businesses interested in economic ties with Russia.

It is worth noting that more than 120 000 delegates from 130 countries, including 30 ministers from 21 states, attended the St Petersburg Economic Forum last month.

They signed 332 contracts, for a combined 1 trillion rubles (more than R220bn).

“Only minor political forces have called for the lifting of the sanctions,” said Maxim Bratersky, a professor at the Higher School of Economics in Moscow.

“These, as a rule, are opposition forces that somewhat want to spite the ruling parties.

“These are internal political squabbles which in most cases do not influence the EU’s decisions to extend the sanctions.

“However, they create a different background. Now the sanctions have been extended, but they will have to be extended again in six or maybe 12 months.

“By that time this background of discontent and dissent may expand so much that the EU will have to correct its policy.

“I do not expect any short-term effects. But if this protest keeps growing, let’s see what will happen in a year.”

Vyacheslav Kholodkov, head of the department of international economic organisations at the Russian Institute for Strategic Studies, said: “The United States plays first violin in extending the sanctions.

“The goal of the US policy is completely different from the one that is declared publicly.

“In other words, the purpose of the sanctions is not to settle the crisis in Ukraine, but to remove President Vladimir Putin from power by creating economic difficulties they hope will precipitate public protests in Russia.”

Foreign Bureau

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