EU-Logos

The Council of the European Union can impose autonomous sanctions for fighting against terrorism and the proliferation of mass destruction weapons, supporting human rights, democracy, the rule of law and good governance. This is done in compliance with the foreign and security policy, as set out in Article 11 of the Treaty on European Union (TEU) [1]. Indeed, according to the article 29 of the EU Treaty, the Council adopts a CFSP decision (Common Foreign Security Policy) which must be approved unanimously. Based on the Council’s CFSP decision, the High Representative and the Commission present a joint proposal for a Council regulation. This proposal is examined by the RELEX group (Working Party of Foreign Relations Counsellors) and transmitted to Coreper and the Council for adoption. As a general legal act, the regulation is binding on any person or entity within the EU[2]. Following the illegal annexation of Crimea by Russia, the European Union (EU) adopted restrictive measures. However, while Member States agreed to adopt sanctions, they maintained and even improved bilateral economic relations with Russia. In this article, first of all, the nature of the relations between the EU and Russia and the introduction of restrictive measures will be shown. Then, the relationships that Italy, France and Germany will continue to have with Russia will be highlighted. Finally, the opinion of the experts will underline that there are actually two parallel lines, one followed by the EU and the other by member states. That undermines the effectiveness of sanctions.

1.Background

Until the
outbreak of the crisis in Ukraine, the EU and Russia developed a “strategic
partnership” that covered issues related to trade, the economy, energy, climate
change, research, education, culture and security, including the fight against
terrorism, nuclear non-proliferation and the resolution of the conflict in the
Middle East[1]. At the political level, the
current legal basis for EU-Russia relations is the Partnership Cooperation
Agreement (PCA) which came into force in 1997, initially for 10 years. Since
2007 it has been renewed every year. The PCA is complemented by agreements in
the political, commercial, scientific, environmental and energy fields. In 2012
Russia joined the World Trade Organization further expanding opportunities for
economic relations with the EU and other foreign partners[2]. The EU is Russia’s main commercial
partner, while Russia is the EU’s fourth largest trading partner. In the field
of energy, in 2000, the EU and Russia launched the EU-Russia Energy Dialogue which focused on the oil and natural gas
sector, energy efficiency, EU interconnection cooperation and electricity grids
of Russia, trade and the safe use of nuclear materials[3]. In March 2014, following the
illegal annexation of Crimea by Russia, the EU imposed restrictive measures,
including targeted economic measures, against Russia. In turn, Russia imposed
restrictions on imports of agricultural products and food from the EU[4]. However, Russia remains an
important partner and strategic actor for the EU.

Following
the referendum and illegal annexation of Crimea (February-March 2014), the EU
imposed several types of restrictive measures:

·        
diplomatic measures,

·        
individual restrictive measures (blocking of activities and travel
restrictions),

·        
restrictions on economic relations with Crimea and Sevastopol (tourism,
investment, technology export),

·        
economic sanctions (exports, imports, access to markets),

·        
restrictions on economic cooperation[5].

Since
March to July 2014, EU leaders condemned Russia’s actions in Ukraine and
decided to start elaborating individual restrictive measures (freezing assets
and bans to enter the EU), suspending bilateral talks with the Russian
Federation. Therefore, the EU decided to introduce a first round of measures
against 21 persons responsible for actions that threatened the territorial
integrity of Ukraine and 12 names are added to the list of people from Russia
and Crimea who are banned from entry into the EU and to which assets are frozen[6]. On 16th July 2014,
the EU adopted a series of economic sanctions which limited access to EU
markets to the five largest Russian financial institutions, to three defense
and energy companies, while imposing a ban of export and import on the arms
trade. Furthermore, Russian access had been reduced to certain technologies and
services that could have been used for oil production and exploration[7]. During 2015, the Council frozen
150 people and 37 entities assets, banning from entering EU territory[8]. The following year, the EU
added six members of the Russian Federation Duma elected in the Autonomous
Republic of Crimea and the city of Sevastopol, annexed illegally, to the list
of persons subject to restrictive measures in relation to the actions
compromising the territorial integrity, sovereignty and independence of
Ukraine, and extended economic sanctions aimed at specific sectors of the
Russian economy until 31 January 2017[9]. Throughout 2017 and 2018, the
EU extended sanctions every six months against Russia, adding six entities
involved in the construction of the bridge over the Kerch Strait between Russia
and the Crimean Peninsula[10].

The
sanctions imposed by the EU on Russia and vice versa have had an impact on the
markets. In 2013, Russia is the EU’s fourth largest trading partner and the EU
was Russia’s main trading partner. As a result of the sanctions, but also
because of other external factors that have weakened the Russian economy, EU
exports to Russia decreased by 20.7% per year between 2013 and 2016[11]. Denmark (-28.9%) and Austria
(-27.9%) recorded the largest declines in exports to Russia in that period. The
biggest EU economies (Germany, France and Italy) faced the highest export
losses in absolute terms. In 2013, over 40% of the total exports of Lithuania,
Latvia and Estonia were delivered to Russia, but after the sanctions the export
quotas of these countries decreased considerably[12].

 

2. Italy, Germany and France among the best partners of Russia

In August
2014, Russia banned imports of certain agri-food particularly from the United
States, the EU, Canada, Australia and Norway (later extended to Albania,
Montenegro, Iceland, Liechtenstein and Ukraine). It is important to stress that
EU sanctions concern only a very small group of products, which have a smaller
share of EU total exports to Russia. The Russian embargo seems more substantial
both for the EU (because Russia is the second most important market for
agri-food products), and for Russia itself because the EU is the main supplier
of agri-food products[13]. However, in an increasingly
globalized and interconnected world, maintaining political and economic
exchanges seem essential. Indeed, despite sanctions, member states continued to
have open relations with Russia, concluding bilateral agreements.

Italy,
for instance, has always had a strong dialogue with Moscow. For Italy, Russia
remains an important partner despite the events in Ukraine. The two countries
maintained flourishing economic and energy relations, converging their
interests on important dossiers such as security in crisis areas, especially in
North Africa[14]. According to the Ministry of
Economic Development, in 2018, Italy was the sixth supplier country of Russia
and the data give reason to those who say that the sanctions have been very
harmful for the Italian enterprises. After 2013, Italian exports to Russia decreased
by three billion euros per year. In 2017, however, there was a turning point: Italian
exports to Russia recorded a +19.3% and investments increased from 27 to 36
billion euros. This positive trend is due to the fact that, having to adapt to
the system of sanctions, many Italian companies begun to export to countries
like Serbia or Belarus, which then sell their products to Russia; other
enterprises produced directly in Russia, taking advantage of tax breaks to
support local industries[15]. Furthermore, in 2016, during
the St. Petersburg Forum, Italy signed agreements worth over one billion euros
with Russia, and in 2017 the cooperation in the field of electricity resulted
in agreements between Enel and Rosseti on innovative solutions for high-tech
power networks. In 2018, important agreements were concluded in the energy
sector, wind energy infrastructures (between Eni and the Stavropol region),
research (between Eni and the Russian railways, between Rosneft and the
Policlinico di Torino) and technological development. Moreover, in September
2018, during the first official visit of the Prime Minister Giuseppe Conte in
Moscow, 13 agreements have been signed for an estimated value of about 1.5
billion euros[16].

Germany
did not approve the annexation of Crimea and adopted the restrictive measures
against Russia. From the beginning, Chancellor Angela Merkel wanted to
counteract the Moscow politic in Ukraine. The renewed coalition between the
Christian Democratic Union (CDU), the Christian Social Union (CSU) and the
Social Democratic Party (SPD) reaffirmed Germany’s priority for transatlantic
relations and European integration. Meanwhile, the most influential parties
outside the coalition – the Free Democratic Party, the Left and the Alternative
for Germany – tried to offer an alternative to the traditional conception of
relations with Moscow[17]. However, the situation in
Germany is quite difficult due to the Nord Stream 2 pipeline. The Nord Stream 2
will be the longest offshore gas pipeline in the world and will transport
natural gas (methane), along 1,230 kilometers, from the Baltic coast of Russia
to Greifswald, in Germany, not far from the outlet of Nord Stream 1. Once there
the pipeline will be connected to the distribution network of the EU. It will
then pass through the Baltic Sea in the territorial waters of Russia, Finland,
Sweden, Denmark and Germany. During the St. Petersburg International Economic
Forum, in June 2015, three European energy companies – E.ON (German), OMV
(Austrian) and Royal Dutch Shell (Anglo-Dutch) – reached an agreement with the
largest Russian energy company Gazprom to build the pipeline. EU’s eastern
countries always opposed the construction of the pipeline because according to them,
it was a Russia’s tactics to punish Ukraine, where gas pipelines were first
used to supply gas in the EU[18]. This German-Russian
collaboration not only affects Ukraine, but also promotes financial affairs to
the Kremlin. The Nord Stream 2 would help Moscow consolidate its position as
the main supplier of gas in Europe (41% of the gas imported into Europe already
comes from Russia). In 2017, German companies exported goods worth € 25.8
billion to Russia, more than in 2016, but still far from the pre-sanctions peak[19]. Germany is starting a gradual
abandonment of nuclear power, and now officially supports the construction of
this gas pipeline, which is essential to sustaining its energy needs.

In
France, the annexation of Crimea had a very strong political impact. However,
the authorities maintain a very regular dialogue with Russia, especially for
the resolution of the crisis in Ukraine[20]. In the last years, in
accordance with the sanctions imposed by the EU, France has also significantly
increased its commercial trade with Russia. At the end of 2017, Russia imported
$ 9.6 billion of goods from France: 33.77% of this amount was allocated to the
acquisition of industrial chemicals, including fertilizers, dyes, plastics,
perfumes and cosmetics. During the same period, France imported Russian goods
for $ 5.8 billion:  84.56% was fossil
fuels, oil and distillates. In addition, France bought vehicles and equipment
(3.52%), metals and metal products (3.18%), wood and cellulose products (1.43%)
from Russia[21]. In May 2018, 50 agreements and
contracts were signed during the visit of the French President Emmanuel Macron to
Moscow. The most important is the announcement by Total of an investment of two
billion euros for a 10% stake in a new gigantic project of liquefied natural
gas in the Russian Arctic. The French company could also, according to Vladimir
Putin, be the sixth company to participate in the Russian project of the Nord
Stream 2 gas pipeline[22]. In December 2018, Bruno Le
Maire, French Minister for Economic Affairs and Finance, received in Paris
Maxime Orechkine, Minister of Economic Development of the Russian Federation,
at the session of the Economic, Financial and Industrial and Commercial Council
(CEFIC). During the CEFIC meeting, the main areas of Franco-Russian bilateral
economic relations were discussed and several cooperation agreements were
signed between the two governments, but also between the companies. Ministers
signed several declarations of intent containing 30 concrete projects to
strengthen economic relations[23].

 

3. The opinion of the experts

The
scientific community poses several questions concerning the relationship
between the EU and Russia, trying to understand if nowadays the latter
represents a real threat. Judy Dempsey, researcher and editor at the think tank
Carnegie Europe, in her column “Strategic Europe” gave voice to several
researchers and analysts of European foreign policy, showing that the
scientific, political and academic world has divergent opinions. According to
Federiga Bindi (Johns Hopkins University), Anna Maria Kellner (Friedrich Ebert
Foundation), Stefan Meister (Robert Bosch Center), Gianni Riotta (Council on
Foreign Relations) and Stephen Szabo (American Institute for Contemporary
German Studies) Russia is not the main threat of the EU[24]. They underlined that the main
threats of Europe are immigration from the south and the lack of economic
growth. Thus, Europe’s greatest threat is Europe itself, increasingly
vulnerable to any attack. The Western liberal world is experiencing a
fundamental crisis, not because of Russia, but for its incapacity and sluggishness
to adapt to a changing environment, in the context of digitization,
globalization and social changes. They stressed that Russia is fighting for its
own security and for maintaining its status. Through its policy in Georgia and
Ukraine Moscow wanted to stop the further enlargement of NATO in the east and,
at the same time, through its intervention in Syria, it regained its prestige
in the international arena[25]. However, this vision is not
shared by Ian Bond (Center for European Reform), Fraser Cameron (EU-Asia
Center), Andrew Michta (George C. Marshall European Center for Security
Studies), Jonas Parello-Plesner (Hudson Institute) and Pierre Vimont (Carnegie
Europe) who claim that Russia still poses a threat in both the military and
cyber arena. According to them, Russian President Vladimir Putin aims to weaken
Western democracies, and the annexation of Crimea showed that he doesn’t respect
the international order. They underlined that Russia has systematically tried
to undermine European values ​​and sow distrust even within NATO. Russia’s
geo-strategic assertiveness continues to grow and its expanding military
capabilities pose a threat to the security of NATO and Europe. To ensure its
security, the EU must find sufficient political will to spend resources on real
defense capabilities within NATO[26].

At the
same time experts wonder if the EU is pursuing a coherent policy towards Russia
and if sanctions are therefore an important means of deterrence. Also, in this
case the scientific community remains divided. The most skeptical stress that the
policies of the member states and their geographical position affect EU
policies. For central and eastern Europeans, the memory of the Soviet Union as
a power able to impose external and internal policy decisions is not so far,
but Western Europe has another vision. As seen above, analyzing the bilateral
agreements, in the eyes of Russia, the EU is divided between national
mercantile interests and historical politics. Countries such as Poland and the
Baltic States, are opposed to those with stronger interests and historical
affinities that link them to Russia, such as Italy or Greece. The countries
between these two extremes, including France and Germany, have difficulty in
developing policies at European level that can all agree[27]. However, some experts stress
European efforts in developing a coherent approach. Thanks to Germany and
Donald Tusk’s commitment, all member states have maintained sanctions following
the annexation of Crimea[28]. Although with different
commitment from member states sanctions are supported[29]. Furthermore, the coordinated
removal of Russian diplomatic staff from many EU countries in response to the
Skripal poisonings shows that Europe can pursue a punitive policy against
Moscow in response to hostile actions by the Kremlin[30]. Actually, Moscow does not consider
the EU either as a serious and reliable partner or a unified actor. Russia
tends to look at Germany, France, United Kingdom and Italy when it comes to
discussing international issues, because the EU is perceived as an instrument
of American interests[31].

Dmitry
Danilov, Head of the Department for European Security Studies at the Institute
of Europe, in his essay “EU-Russia:
making up for security cooperation shortfall
[32] stresses that the EU considers
Russia as a strategic challenge and threatens to its security order. For the
author, the restoration of a systemic dialogue between Russia and the EU should
become a high priority issue[33]. Nowadays, there is not a common
political approach regarding future relations with Russia. The European Council
blocked the structured political dialogue with Moscow. However, the EU member states
are supporting an approach based both on deterrence and on dialogue with Russia
within NATO. Furthermore, each member state carries forward its own foreign
policy more or less favorable to cooperation with Russia. It must be recognized
that a good part of EU states considers Russia to be an inevitable partner and
this obviously has an impact on EU policy that fails to find a coherent,
strategic and incisive approach[34].

 

4.Conclusion

Manufacturing
products represent the most important group of products that EU exports in
Russia with a share of 54.3%, followed by mineral and chemical products
(18.8%). EU exports of agri-food products to Russia amount to 9.7% of total
trade flows and this percentage has decreased by 2.2 % in the period 2013-2016.
Similarly, even the importance of manufactured goods, although only partially
covered by sanctions, decreased significantly by 3.8 %, while the share of
exports of mining and chemical products grew significantly by more than 5 % in
the same period. The negative consequences of the ban on imports into the
Russian domestic market (which led to shortages and increases in food prices,
etc.) forced the Russian authorities to explore opportunities for new business
partners. In order to mitigate the decline in supply following the trade
embargo, the prohibited agri-food products had to come from non-sanctioning
countries, for example from Eurasian Economic Union countries. Following
intense trade relations with South America in previous years, meat imports
would probably have been replaced by deliveries from these countries and
several companies in Brazil approved to export to Russia. According to World
Food Moscow, imports from Pakistan, Serbia, Egypt and South America,
particularly from Chile, Argentina and Brazil, increased significantly since
the implementation of the embargo[35].

This
shows that even if the EU wanted to react against the annexation of Crimea by
imposing sanctions, observing the results and percentages these did not have a
significant economic impact. In addition, both the EU and Russia found
loopholes to circumvent them. On the one hand, as highlighted above, the three
strongest economic powers of the EU continued bilateral political, economic and
financial relations by investing in new projects and increasing their turnover
especially since 2017. On the other hand, Russia found new markets
strengthening new alliances, especially with the great Chinese power. Moreover,
after five years, the Kremlin continues to consider Crimea as Russian
territory. The EU has been able to maintain sanctions over time, but at the
same time its member states, each in proportion to their economies and their
historical relations with Russia, continued bilateral relations that made
sanctions as a purely symbolic tool. The EU has also been split following the
“Skripal case”. On 4th March 2018, Sergei Skripal (former Russian
military intelligence officer and British spy) and his daughter Yulia Skripal
were poisoned in Salisbury, England, with a Novitchok nerve agent. In 1990,
Sergei Skripal was an officer of the General Intelligence Directorate of the
Russian General Staff and worked as an agent for the British Secret
Intelligence Service. He was arrested in Moscow in December 2004. In 2006 he
was convicted of high treason and sentenced to 13 years. In 2010, after the Illegal Affair case, which led to an
exchange of prisoners between the United States and Russia, he moved to the
United Kingdom and obtained British nationality. After the poisoning, the
British government accused Russia of attempted murder and announced diplomatic
sanctions, such as the expulsion of many diplomats. The United States, NATO,
Canada and Australia expelled Russian diplomats[36]. Even though the EU condemned
the attack on British soil, not all states wanted to launch a political and
solidarity message in London. Indeed, Austria, Slovakia, Slovenia, Greece,
Bulgaria and Portugal did not expel any Russian diplomat[37].

The
message seems clear: both at political and economic level, the EU and its
member states are sometimes on two parallel lines. Relations with Russia were
yet another proof of the lack of harmonization between European objectives and national
interests. When the member states act in the Council of the EU they continue to
follow a “coherent” line because, although with different interests, all states
agree to renew sanctions on Russia. At the same time, a each state, especially
those analyzed, developed bilateral cooperation policies based on their
historical relation with Russia.

Maria Elena Argano

For further information:


[1] European Parliament, Russia: http://www.europarl.europa.eu/ftu/pdf/it/FTU_5.6.3.pdf

[2] EU-Lex Website,
Accords de partenariat et de coopération (APC): Russie, Europe orientale,
Caucase méridional et Asie centrale https://eur-lex.europa.eu/legal-content/FR/TXT/HTML/?uri=LEGISSUM:r17002&from=EN

[3] https://ec.europa.eu/energy/sites/ener/files/documents/2011_eu-russia_energy_relations.pdf

[4] EEAS Website, The European Union and the
Russian Federation: https://eeas.europa.eu/headquarters/headquarters-homepage/35939/european-union-and-russian-federation_en

[5] European Council Website, EU
restrictive measures in response to the crisis in Ukraine: https://www.consilium.europa.eu/en/policies/sanctions/ukraine-crisis/#

[6] European Council Website, European Leaders
choose Juncker to lead the future of the Union: https://www.consilium.europa.eu/en/meetings/european-council/2014/06/26-27/

[7] European Council Website, Mesures resctives de l’UE: https://www.consilium.europa.eu/media/22022/144163.pdf

[8] European Council Website, EU extends validity
of sanctions over actions against Ukraine’s territorial integrity: https://www.consilium.europa.eu/en/press/press-releases/2015/03/13/eu-extends-validity-sanctions-ukraine/

[9] European Council Website, Russia: EU prolongs
economic sanctions by six months: https://www.consilium.europa.eu/en/press/press-releases/2016/07/01/russia-sanctions/

[10] European Council Website, Ukraine: l’UE ajoute à sa liste des sanctions six
entités ayant participé à la construction du pont du détroit de Kertch reliant
la Russie à la Crimée annexée illégalement:https://www.consilium.europa.eu/fr/press/press-releases/2018/07/31/ukraine-eu-adds-six-entities-involved-in-the-construction-of-the-kerch-bridge-connecting-the-illegally-annexed-crimea-to-russia-to-sanctions-list/ 

[11] European Parliament Website,
Russia’s and EU’s sanctions: economic and trade effects, compliance and the way
forward: http://www.europarl.europa.eu/RegData/etudes/STUD/2017/603847/EXPO_STU(2017)603847_EN.pdf p. 6

[12] Ibidem p. 7

[13] European Parliament Website: Russia’s and the
EU’s sanctions: economic and trade effects, compliance and the way forward: http://www.europarl.europa.eu/RegData/etudes/STUD/2017/603847/EXPO_STU(2017)603847_EN.pdf pag.4

[14] Istituto Affari Internazionali Website, Le Relazioni tra Italia e Russia: https://www.iai.it/sites/default/files/pi_a_0144.pdf p.9

[15] Ibidem, pag. 15

[16] Ibidem p. 16

[17] Carnegie Europe Website, Russia and Germany:
From Estranged Partners to Good Neighbors: https://carnegie.ru/2018/06/06/russia-and-germany-from-estranged-partners-to-good-neighbors-pub-76540

[18] Il Post Website, Il nuovo gasdotto che collega la Russia all’Europa,
spiegato: https://www.ilpost.it/2018/11/11/gasdotto-nord-stream-2-russia-europa/ 

[19] Financial Time Website: https://www.ft.com/content/d6785134-3f2a-11e8-b7e0-52972418fec4

[20] France Diplomatie, Présentation: https://www.diplomatie.gouv.fr/fr/dossiers-pays/russie/relations-bilaterales/presentation/

[21] Russia Beyond Website, Que la Russie importe-t-elle de France ?: https://fr.rbth.com/economie/80831-russie-importations-france

[22] RT France Website, Macrom se veut confiant quant à k0avenir des
relations économiques franco-russes : https://francais.rt.com/economie/51032-macron-poutine-evoquent-relations-economiques-saint-petersbourg

[23] Ministère de l’économie et des finances Website, 24ème édition du
Conseil économique, financier, industriel et commercial franco-russe (CEFIC) :
https://www.tresor.economie.gouv.fr/Articles/2018/12/27/24eme-edition-du-conseil-economique-financier-industriel-et-commercial-franco-russe-cefic-17-decembre-2018

[24] Carnegie Europe Website, Judy Asks: Is Russia
Europe’s Biggest Threat?: https://carnegieeurope.eu/strategiceurope/75608?fbclid=IwAR0CJJh6CKaiQyFG6-AvrJZ_bP_u-1-o20uaEh0QbNdTWOWxXzBvmMxkATM

[25] Ibidem

[26] Ibidem

[27] Ibidem, Dmitri Trenin

[28] Ibidem, Fraser Cameron

[29] Ibidem, Matthew Kaminski

[30] Ibidem, Angela Stent

[31] Ibidem, Pierre Vimont

[32] Egmont Institute Website, The EU-Russia: the
way out or the way down?: http://www.egmontinstitute.be/content/uploads/2018/10/IERAS-Egmont_EU_Russia_2018.pdf?type=pdf

[33] Ibidem, pag. 23

[34] Ibidem, pag. 25

[35] European Parliament Website, Russia’s and EU’s
sanctions: economic and trade effects, compliance and the way forward: http://www.europarl.europa.eu/RegData/etudes/STUD/2017/603847/EXPO_STU(2017)603847_EN.pdf, p. 26

[36] The Indipendent Website, Russia claims it could
have been in interests of Britain to poison Sergei Skripal: https://www.independent.co.uk/news/world/europe/sergei-skripal-latest-salisbury-poisoning-attack-russia-nerve-agent-sergei-lavrov-a8284766.html

[37] Sputnik Website, Quali paesi hanno espulso diplomatici russi: https://it.sputniknews.com/infografica/201803285827558-paesi-espulso-diplomatici-russi/


[1] European Council Website, Basic Principles
on the Use of Restrictive Measures (Sanctions) : http://register.consilium.europa.eu/doc/srv?l=EN&f=ST%2010198%202004%20REV%201

[2] European Council, Adoption and review procedure for EU sanctions: https://www.consilium.europa.eu/en/policies/sanctions/adoption-review-procedure/

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