Europe’s Sanctions against Russia coming to an End

Earlier this month I wrote a piece for The Duran in which I said that the sanctions policy forced on the EU by Angela Merkel and the US is cracking.  At SPIEF 2016 the evidence of that was everywhere.

The Russians hosted at SPIEF 2016 three EU heavyweights: EU Commission President Jean-Claude Juncker, Nicolas Sarkozy- the past and possibly future President of France – and Matteo Renzi, the current Prime Minister of Italy.

Juncker had little to say in public though he held extensive discussions with the Russian leadership.  However Sarkozy and Renzi both made clear in their very different ways their utter exasperation with the sanctions policy.

The person who stole the show was Renzi, the most important politician present and the leader of what was by a fair distance the strongest European delegation at the Forum.  The Russians treated Renzi as the main guest and together with Putin and President Nazarbayev of Kazakhstan Renzi delivered one of the speeches at the plenary session.

This speech was a most peculiar affair.  Supposedly it was delivered impromptu, with Renzi claiming to have put aside his prepared text after being overwhelmed with emotion at hearing Putin speak.  What Putin and the grizzled veterans of Russian officialdom made of that I have no idea.

Perhaps not surprisingly it then took some time for Renzi to say anything meaningful but when he eventually did it was clear enough.  This was that though the lifting of the sanctions is linked to the full implementation of the Minsk II Agreement, it was incumbent on all parties to the agreement to implement it.  In order to reinforce the point Renzi returned to it several times, occasionally even breaking into Latin to give his point added emphasis.

The key point about this, as I discussed in my earlier article, is that as everyone knows it is the Ukrainians not the Russians who are failing to implement the Minsk II Agreement.  The Russians cannot by themselves implement the Minsk II Agreement because – as Renzi of course knows – technically they are not even parties to it. 

Renzi never referred to the Ukrainians in his whole speech.  However his meaning was clear enough.  His patience with them is wearing thin and he is not willing to have Italy and Europe held hostage indefinitely to their obsessions.

What was said in public by Renzi in the plenary was being repeated by European businesspeople throughout the Forum.  Even The Financial Times has admitted as much:

“European business leaders were also pressing for political détente. Stefan Schaible, deputy chief executive of consultancy Roland Berger, called for a modern-day Ostpolitik. “The business community is ready; politics has to go by a ‘change through rapprochement’ in high-speed mode. I hope my country will take a central role.””

The single most eloquent European voice I heard demanding the lifting of sanctions – which he criticised in the most scathing terms – was that of Jean-Pierre Thomas – an acknowledged friend of Russia’s, but someone who is also known to be close to Nicolas Sarkozy who was of course also present at the Forum.

Here I will record my view that the recent NATO exercises in the Baltic States and along the borders of Russia were a serious mistake.  Instead of reassuring Poland and the Baltic States – who had no need for such reassurance – they have caused widespread alarm in Germany, where memories are still fresh of battles fought with Russia in the two World Wars on precisely this ground.  For me one of the most striking – and moving – moments of the whole Forum came when a German businessman – an arch-typical owner of a Mittelstand business and certainly no radical – stood up at the end of one of the panels to demand an explanation of how the exercises could possibly be conducive to peace.  German Foreign Minister Frank-Walter Steinmeier’s now famous interview with Bild-Zeitung, in which he condemned the exercises as “warmongering”, followed directly after and reflect this alarm in Germany.

Even the Financial Times is now picking up on the growing demands in Germany for the sanctions to be lifted and on the increasing exasperation there at Ukraine’s foot-dragging:

“More than two years after the outbreak of the Ukraine crisis, and two weeks before a key Nato summit in Warsaw, the social democrats (in Germany) are seeking to ease tensions with Russian president Vladimir Putin — and are finding support in other western capitals, especially in southern Europe.

Mr Steinmeier has become frustrated with the slow progress in implementing Minsk, for which he blames Kiev at least as much Moscow. The party (Merkel’s coalition partner the social democratic SPD to which Steinmeier belongs – AM) is also responding to calls for an easing of sanctions from German business, which knows that it has a more sympathetic hearing from the SPD than Ms Merkel.

The Eastern Committee, industry’s main lobby group on Russia, this month renewed its call for lifting sanctions warning of the damage to the German economy. While Russia now accounts for less than 2 per cent of Germany’s total exports, companies that bet heavily on Russia are suffering badly following a one-third drop in exports to Russia.”

Meanwhile the Brexit referendum has removed from the European Council the one powerful voice – Britain’s – which could be relied upon to support Merkel’s hard line sanctions policy.  With the British gone and with opposition to the sanctions mounting in Germany and with southern Europe in open revolt, Merkel risks finding herself isolated both in Germany and in the European Council with only the Poles, the Swedes and the Baltic States supporting her.

It is known that Renzi and the southern Europeans made it a condition for the latest renewal of the sanctions that this would be the last occasion this would happen without a full and proper discussion of the subject at the European Council.  It looks like opposition within the EU to their further renewal may now be close to achieving critical mass.  At SPIEF 2016 I heard comments that the sanctions were unlikely to be extended beyond December 2016.  The Financial Times also reports such comments:

“Many international investors, Russian executives and government officials are more optimistic than at any time since western sanctions plunged Russia into isolation and economic crisis two years ago. “The forum is full of expectation. The expectation that the situation will be getting warmer,” said Andrei Guriev, chief executive of fertiliser producer Phosagro.  Kirill Dmitriev, chief executive of the $10bn state-run Russia Direct Investment Fund, said that he expected the EU and US sanctions to expire by the end of 2016. “It was just unrealistic to think that Russia would have been broken by sanctions, because it just wasn’t. Russia is an important player, it really cannot and should not be isolated, it has a certain point of view that needs to be understood.””

All the indications are that whilst the tipping point for the sanctions policy has not yet quite been reached, it is in sight and for the first time since they were imposed it is now possible to speak of a likely end to them.