Friday, May 27, 2016

Washington’s Sanctions Against Russia Wreck Not Russia But Washington’s European Vassals

Washington’s Sanctions Against Russia Wreck Not Russia But Washington’s European Vassals

Washington’s Sanctions Against Russia Wreck Not Russia But Washington’s European Vassals



FINIAN CUNNINGHAM | 26.05.2016 | OPINION


Europe Revolts Against Russian Sanctions

Europe Revolts Against Russian Sanctions

From ministerial offices to barricades on the streets, Europe is in open revolt against anti-Russian sanctions which have cost workers and businesses millions of jobs and earnings. Granted, the contentious issues are wider than anti-Russian sanctions. However, the latter are entwined with growing popular discontent across the EU.

Germany’s vice chancellor Sigmar Gabriel is among the latest high-profile politicians to have come out against the sanctions stand-off between the European Union and Russia.


At stake is not just a crisis in the economy, of which the anti-Russian sanctions are symptomatic. It is further manifesting in a political crisis that is challenging the very legitimacy of EU governments and the bloc’s institutional existence. The issue is not so much about merely trying to normalize EU-Russian relations. But rather more about preserving the EU from an existential public backlash against anti-democratic and discredited authorities.

Gabriel, who also serves as Germany’s economy minister, said that relations between the EU and Moscow must be quickly normalized. And he called for the lifting of sanctions that have been imposed since early 2014 as a result of the dubious Ukraine conflict. The EU followed Washington’s policy of slapping sanctions on Russia after accusing Moscow of «annexing» Crimea and interfering in Ukraine’s internal affairs. The charges against Russia are tenuous at best and are far removed from the mundane pressing concerns of ordinary EU citizens, who are being made to bear a heavy economic price for a stand-off that seems unduly politicized, if not wholly unwarranted.

Russia responded to the sweeping sanctions by implementing counter-measures banning exports from the EU and the US. The stand-off has hit the European economies hardest, with the Austrian Institute of Economic Research estimating that the trade war will cost the EU over €100 billion in business and up to 2.5 million in jobs. By contrast, the US has scarcely felt a pinch from the trade impasse.

Germany, Europe’s biggest economy with the largest trade links to Russia, has suffered most from the sanctions rift. Up to 30,000 German businesses are invested in Russia, amounting to as many as half a million jobs in danger and €30 billion in lost revenues, according to the Austrian Institute of Economic Research.

In one German state alone, Saxony-Anhalt, the local economy minister Jorg Felgner says that exports to Russia have been slashed by 40 per cent, with the loss of €200 million to his state. Felgner is among the growing chorus of EU voices who are calling for the anti-Russian sanctions to be lifted when the EU convenes in July to decide on whether to extend its embargo or not.

The EU has been reviewing its sanctions policy on Russia every six months since 2014. To extend the measures, a unanimous decision is required among all 28 member states. It looks increasingly unlikely that the EU will maintain its hitherto unanimity. It can be safely assumed that if Brussels were to end the sanctions, then Moscow will respond in kind to promptly resume normal trade with the bloc.

In addition to the country’s vice chancellor, Germany’s foreign minister Frank-Walter Steinmeier has also expressed disquiet with the ongoing EU-Russian tensions stemming from the sanctions. Steinmeier noted that «resistance to anti-Russian sanctions is growing across the EU».

He also reiterated dismay over a fundamental contradiction in EU policy objectives. «How can we expect Russia’s help in solving the Syrian crisis while at the same time imposing economic sanctions on Russia?» asked Steinmeier.

It’s not just Germany that is growing leery with the deterioration in relations with Russia. Hungary and Italy, which have also strong historic trade ties with Russia, are increasingly opposed to the EU’s policy towards Moscow, according to a recent Newsweek report.

Added to the maligned mix is Greece. The country’s six-year economic crisis has been greatly exacerbated by the loss of a once-bustling agricultural export business to Russia. The country’s finance minister Dimitrios Mardas attributed major losses specifically to the anti-Russian sanctions, which have piled on fiscal deficits to the teetering Greek economy. Greece is no isolated problem. It threatens to undermine the whole EU from its chronic bankruptcy.

In France, the National Assembly’s Lower House voted last week by 55 to 44 votes to end the EU sanctions on Russia. The vote is non-binding on the government of President Francois Hollande. Nevertheless, it demonstrates the growing popular opposition to what is widely seen as a self-defeating policy of trade antagonism with Russia.
The cancellation last year by the Hollande government of the Mistral dual helicopter-ship contract with Moscow epitomizes the self-inflicted pain on French workers. The cancellation – cajoled by Washington – cost the French government revenues of over €1.5 billion and has put thousands of shipyard jobs at risk. Paris claims to have since directed the ships’ order to Egypt, but that remains doubtful.

The economic losses from anti-Russian sanctions have rebounded severely on French farmers too. Dairy, meat, vegetable and fruit exports to the once lucrative Russian market have been pummeled. Hollande recently vowed to release €500 million in state aid to placate angry farmers. The absurdity is not lost on the French agricultural sector that such state handouts would not be necessary if the Hollande government hadn’t sabotaged Russian markets in the first place by following US hostility towards Moscow, as in the case of the Mistral fiasco.

France’s economic problems, as with the rest of Europe, are not entirely related to the downturn in relations with Russia. But there seems little doubt that the issues intersect and are compounded. And the public knows that.

Hollande – the most unpopular French president since the Second World War – is ramming through draconian labor reforms. The president and his truculent prime minister Manuel Valls claim that the retrenchment of workers’ rights will boost the economy and reduce France’s soaring unemployment rate of 10 per cent nationally and 25 per among French youth.

In opposition to the French government’s deeply unpopular assault on workers’ rights, the country is to observe nationwide strikes this week. The protests have been going on now for several months and seem set to escalate, as Hollande’s administration digs its heels in and refuses to relent.

Among students and farmers joining France’s nationwide strike are workers in the transport sectors of road haulage, rail, shipping and airports. With exports to Russia slashed due to the French government-backing of EU sanctions, the transport sectors are among the hardest hit. The Hollande government’s attempt to force through labor cuts, purportedly to reinvigorate the economy, is seen as it trying to offload responsibility for economic woes on to workers and businesses. If Hollande did not pick a fight with Russia – at Washington’s goading – then the country’s economy wouldn’t be under such duress.

Across Europe, the popular revolt against economic austerity is bound up with the EU’s self-defeating sanctions on Russia. And it is leading to a crisis of authority among EU governments who are held with increasing disdain by their citizens. More enlightened political leaders like Germany’s vice chancellor Sigmar Gabriel and foreign minister Frank-Walter Steinmeier are obviously aware of the geopolitical connection that citizens are making.

As Europe’s economic crisis deepens, the policy of anti-Russian sanctions is tantamount to the EU cutting off its nose to spite its face. The growing public disaffection is also fueling the electoral rise of anti-EU political parties in Germany, France, Britain, Netherlands, Hungary, Poland, Slovakia and other member states.

Mainstream EU parties like the ruling coalition government in Berlin realize that the EU’s trade war with Russia is simply becoming untenable. It is an ideologically driven and dubious antagonism that the EU can ill-afford. That policy speaks to EU citizens of a political leadership that is losing legitimacy from its fundamentally wrongheaded and anti-democratic governance. As well as from slavish pandering to American hegemonic ambitions.

Brussels, in following Washington’s hostility to Moscow, is inflicting further economic pain on the bloc’s 500 million citizens. Something has to give way if Europe is not to implode, or explode, from popular fury. Normalizing relations with Russia is not the whole solution to Europe’s economic and political crises. But such a move would certainly alleviate. And is long overdue.

EU governments are thus facing a stark choice. Are they to continue on the path of destruction at Washington’s reckless behest, or can they find an independent policy of pursuing mutual relations with Russia? Undoing the crass anti-Russian sanctions is taking on an urgency – before such a policy leads to the undoing of the EU itself.



Dr. Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. Roberts' latest books areThe Failure of Laissez Faire Capitalism and Economic Dissolution of the West



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