For the United States and the now brainless Europe, initially the Russia-EU Summit in Sochi in March 2014 had been cancelled due to the Ukrainian crisis, but later, after the regular referendum which saw the peaceful annexation of Crimea and Sevastopol with over 4,000 votes, the relations between Russia and the West continued only at G7 level.
For the time being, however, Russia cannot join the OECD and the International Energy Agency, of which it had been a founding member as early as the USSR’s times.
Ironies of fate and memory.
146 Russian citizens and 37 federal “entities” cannot have relations with the European Union, enter the EU territory or do business within it and with anyone.
On March 10, 2016, the EU extended the measures which also regard the partial ban/restriction of oil trade but, above all, of technological materials for this purpose, until September 15, 2016.
Nevertheless the Minsk agreements reached in 2015 between President Poroshenko, France, Germany and Russia were clear: immediate and full “ceasefire” in Donetsk and Luhansk, the districts of pro-Russian “separatism”; pullout of all heavy weapons by both sides to equal distance; effective international monitoring of the forces’ separation lines; a significant constitutional reform in Ukraine, based on “decentralization” and hence on a substantial weakening of the pro-Russian insurgency.
All the Minsk II package of measures has been complied with – hence there is no lawful reason to keep on enforcing sanctions.
Therefore, precisely on the basis of the Russian signature of the “Minsk II” agreement, it was not possible and it is not possible today – without obvious Russian countermoves – to maintain or accept the sanctions against the Russian Federation, which also regard some oil and gas products – at least with reference to the EU.
Not to mention the severe banking and corporate bans, as if the issue were not the annexation of a territory which is Russian since the time of czar Peter The Great, but of a whole continent conquered by the Russian “fascism” (the usual word and concept fitting all contexts and circumstances).
Just to be brutally clear, with the Ukrainian issue – manipulated up to the almost comical EU recognition of the phantom “Tatar parliament”, composed from scratch of a largely minority population who had been deported by Stalin in 1944 – a naïve (albeit wicked, as often happens) attempt was made to turn a great power such as the Russian Federation into a ”marginal area” subjected to the geoeconomic wishes of the Western powers.
These powers, however, have neither the strength nor the ability, and not even the ecostrategic alliances to face and manage all the disputes with Russia.
Meanwhile, in April 2016, 55 French members of Parliament (as opposed to 44) voted to lift sanctions against Russia.
Moreover, it has been estimated that the cost for European farmers of the sanctions against Russia is equal to 5.5 billion euro a year in terms of lost business.
The Slovakian and Italian Ministers for Agriculture, the Austrian Vice-Chancellor, as well as Hungarian Prime Minister Orban, have all spoken against maintaining sanctions against the Russian Federation.
Moreover, Russia has been very clear: if the EU lifts all sanctions, Russia will follow suit and remove all its counter-sanctions.
If the situation goes on like that, with subsidies to farmers and new technologies again subsidized by the government, it is to be feared that, in the near future, the Russian Federation may achieve large food self-sufficiency and autonomy, thus leading to a huge crisis in the EU agrifood sector.
Just to put it in clearly brutal terms, the sanctions are tantamount to an unlawful restriction of international trade, absolutely illegal in terms of agreements already signed and implemented by Russia, Germany, France and Ukraine, leading to a pathological reduction of European trade, for no other reason and result than reducing the EU trade potential in view of the agreement and the current TTIP negotiations between the EU and the United States.
Russia is the third largest EU trading partner and Europe is the major commercial area for Russia.
As we have already seen, gas has been partially excluded from sanctions owing to many EU countries’ dependence on Russian natural gas, but not all Russian oil and gas products have been spared the sanction regime.
Banking operations are still banned, although there are some examples of “triangulation”.
Also meat exports are prohibited.
Thanks to the counter-sanctions devised and imposed by President Putin in March 2014, all EU trade with Russia fell down to 12.1% of Russia’s total trade, thus providing the opportunity – that a careful geopolitician such as the Kremlin leader has not missed – of a new economic correlation with China and the States of the Shanghai Cooperation Organization, which, inter alia, are all growing significantly, unlike the European Union.
According to some Swiss analysts, the macroeconomic effects of sanctions against Russia are worth at least 43 billion euro in added value, and as many as 92, if sanctions were to continue in the coming years.
This is not a matter of crippling Russia, but rather of destroying Europe economically.
As a result of sanctions, over 1.1 million jobs have already been lost across Europe, while the EU GDP growth will decrease by 1.1% only due to the collapse of trade between the EU and Russia.
A huge folly, based on Russia’s full right to own the old naval bases of Sevastopol and the Russian Crimea, which has accepted the annexation as “autonomous region” by an overwhelming majority, confirmed by 57 observers from 41 countries, later disowned – and no one knows how and why – by the UN Secretary General.
The reduced interest payments are worth at least a loss of 10 billion euro, while Italy is losing at least 42% of its exports of materials for freight.
Not to mention the tourist sector (Russia ranks fourth in terms of international tourist flows to Italy) and the agribusiness sector (which fell by 16%) and, above all, the so-called Made in Italy, the primary asset of our country which has now fallen down to become one of the marginal budget items of bilateral trade.
And all this, once again, to justify a false, and often illegal version of the facts and situations which took place in the long “Donetz war” and the clash between the Ukrainian Maidan and the pro-Russian forces in the region.
Nevertheless only 147 billion euro worth of Russian debt are held abroad, with Italy as second largest creditor, with 27 billion euro, followed by Germany and Great Britain. The bungling supporters of sanctions had to know that there was no room for maneuver.
As a result of Russian counter-sanctions, the agrifood sector was hit to the tune of 43% of its potential across the EU, with Italy which had to monitor entire economic sectors (fruit and vegetables, meat, poultry).
Hence this is the geopolitical masterpiece of the moralist supporters of sanctions: the economy of a country such as the Russian Federation has been directed eastwards; a disaster hard to solve has been created in key economic sectors of the EU and Italian production systems. And everybody agrees on the fact that all this has been done without reaching any strategic result other than the smart, effective and strong presence of the Russian Federation in Syria.
What are the solutions which can be envisaged? First and foremost, even one single country, such as Italy – possibly with Austria and Hungary – should lift bilateral sanctions in the agribusiness and, at least, in the tourist sector.
Secondly, even one single group of EU countries should denounce the substantial groundless nature of the whole architecture between the Minsk I and Minsk II agreements, as well as create a sort of European-Russian bank for funding bilateral trade.
Thirdly, the UN and the other “inner sancta” of global power (and it is worth recalling that former Italian President Cossiga dismissed the UN as “a useless organization”) should be reminded of the fact that, from now on, the sanctions, counter-sanctions, their lifting and all the other multilateral and bilateral trade issues will be the prerogative of States and not of some strange and unreliable “experts”.
Giancarlo Elia Valori * (@GEliaValori)
* Presidente della merchant bank “La centrale Finanziaria Generale S.p.A.”
– Presidente della “Cattedra sugli studi della pace, la sicurezza e lo sviluppo internazionale presso la Facoltà di relazioni internazionali della Peking University, nonché “professore straordinario” di economia e politica internazionale nello stesso Ateneo
– Honorable dell’Académie des Sciences dell’Institut de France