Saturday, September 6, 2014

The European Union’s Russian Sanctions: Not Economically Viable?

Even though there’s been an incremental ratcheting up of sanctions ever since Russian President Vladimir Putin unlawfully annexed Crimea after the Sochi Winter Olympics, are the EU sanctions against Russia economically viable? 

By: Ringo Bones 

Maybe the question could have been “economically viable to whom?”But ever since the E.U.’s economic sanctions against Russian President Vladimir Putin unlawfully annexing Crimea and secretly supporting the armed insurrection by ethnic Russians in the eastern part of Ukraine that eventually resulted in the Malaysian Airlines Flight MH17 as the “collateral damage” of the conflict had been incrementally ratcheted up in order to bring Putin’s regime back from the brink, it seems that not all of the European Union countries are unified against Putin’s ongoing military adventurism in eastern Ukraine. 

While the sanctions now centers on the ban of the Russian government exporting “dual-use” technologies that can potentially be used by its ongoing military adventurism in the eastern part of Ukraine, Russia will undoubtedly react to the E.U. sanctions by restricting the country’s natural gas imports to Western Europe given that the chill of winter is only a couple of months away. But many “well-off” E.U. states that are dependent of cheap Russian natural gas are still “sticking to their guns” when it comes to carrying on the economic sanctions until the rule of law returns to the Russian – Ukraine territorial dispute. 

Even though majority of E.U. countries favor economic sanctions against Russia despite of the resulting overall economic slowdown, the Czech Republic and Hungary seems to be leaning towards Vladimir Putin’s Russia. From the agricultural trade perspective, Russia comprises 10-percent of the overall purchase of all agricultural goods produced in the E.U. that’s worth around 15.8 billion U.S. dollars and it initiated a “slight” worry by Poland’s apple producers who exports most of their produce to Russia. By way of comparison, the United States only sells 1.3 billion U.S. dollars worth of its agricultural products to Russia. During the last few weeks, the E.U. Agricultural Commission had launched a task force to analyze the long-term economic impact of the Russian trade sanctions. Would the E.U. decide to continue to ratchet up the sanctions against Russia to bring it back from the brink – or will the E.U. decide to do a more pro-active response if it finds out that a decisive military strike is more economically viable to end the East Ukraine conflict than trade sanctions? 

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