International

EU sanctions on Russia seen limited for now

Britain's Prime Minister David Cameron leaves Downing Street in London July 21, 2014.REUTERS/Luke MacGregor

BRUSSELS: For all the tough talk, Europe is unlikely to punish Russia over last week’s downing of an airliner over Ukraine beyond speeding up the imposition of already agreed individual sanctions when the bloc’s foreign ministers meet on Tuesday.

The severity of future European Union sanctions could depend on the Netherlands, which suffered the greatest loss of life when the Malaysia Airlines flight was brought down.

U.S. President Barack Obama has piled pressure on Europe for a more forceful response and the three leading EU powers – Britain, France and Germany – said they should be ready to ratchet up sanctions.

British premier David Cameron warned Russian President Vladimir Putin in a phone call that action would follow unless there was “a radical change” in Russian behavior.

But diplomats said Tuesday’s meeting in Brussels was not expected to go much further than agreeing on people and possibly companies to be hit with asset freezes under a more aggressive framework agreed last week. Previously, they had only said they would decide on the list by the end of July.

Several diplomats said moving toward more sweeping economic sanctions could be raised but could only be decided by heads of government. The attitude of the Dutch, who lost 193 people in the incident, would be critical, diplomats said.

The next scheduled summit of EU leaders is on Aug. 30, although EU members could call for another emergency meeting.

“The impulse must come from The Hague because they have the moral mandate to demand a resolute, firm reaction. Everything depends on that,” one EU diplomat said on condition of anonymity.

“I think the events will serve to speed up sanctions, but as long as no new European council [of leaders] is called, ministers cannot go further even if they want to,” another EU diplomat said.

A summit of EU leaders on July 16, the day before the airliner was shot down, agreed the EU would sanction Russian companies that help to destabilize Ukraine and block new loans to Russia.

The wording was deliberately vague as the meeting agreed to target “entities, including from the Russian Federation, that are materially or financially supporting actions undermining or threatening Ukraine’s sovereignty.”

Adding companies to any sanctions list is more complicated than naming individuals because of the risk of legal challenges.

The U.S. and its allies have blamed pro-Russian rebels and Moscow itself over the downing of the plane. Russia has denied involvement.

Speaking in parliament Monday, Dutch Prime Minister Mark Rutte said the EU would impose further sanctions on Russia if it were proved that Russia had been directly or indirectly responsible for bringing the plane down.

Analysts say it could be extremely difficult to prove responsibility for the disaster, which has been viewed as a potential turning point for international pressure to resolve the crisis in Ukraine.

Hundreds have died in the pro-Russian insurgency in eastern Ukraine which broke out after Russia annexed the Crimea peninsula following the toppling by pro-Western protests of the Moscow-backed president in Kiev in February.

Britain has said it is ready to pay the price of moving toward a new phase of European economic sanctions because much bigger costs were at stake.

“Think of the economic hit ... of allowing international borders to be ignored, of allowing airlines to be shot down – that’s a much greater economic hit for Britain and we’re not prepared to allow that to happen,” British Finance Minister George Osborne told BBC radio’s Today program Monday.

London is a prime destination for Russian businesses and Russian oligarchs are major property owners in Britain.

Britain’s energy major BP already faces the prospect of fallout following the U.S. decision to sanction Russia’s largest oil firm Rosneft, of which BP owns a fifth.

EU diplomats made clear sectoral sanctions would still be extremely difficult for many EU nations. They are especially nervous about the energy sector, central to the Russian economy, but also to the European Union.

EU nations rely on Russia for about 30 percent of their gas demand and have intertwined interests based on decades of energy reliance.

According to U.N. data, excluding Russian pipeline gas exports to the EU – around $60 billion a year – the Netherlands was Russia’s biggest export destination last year, mostly oil and metals.

“Energy sanctions would most likely derail the fragile European recovery in general and could even lead to a complete economic collapse in certain member states,” one diplomat said. “I don’t see how collective economic suicide serves us or the Ukrainians.”

While some member states, such as Britain, do not rely on Russian gas, others are 100 percent dependent on Russia, having no other suppliers. In volume terms, Germany and Italy have the biggest exposure.

Diplomats said that if energy had to be part of any sanctions regime, the European Union would have to agree ways to share the financial burden.

Another sensitive area is defense. France has said so far it is going ahead with a 1.2 billion euro ($1.6 billion) contract to supply Mistral helicopter carriers to Russia because cancelling the deal would do more damage to Paris than to Moscow.

A French Defense Ministry official said Monday that any decision on whether to suspend the delivery of the first warship would only take place in October.

 
A version of this article appeared in the print edition of The Daily Star on July 22, 2014, on page 6.

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