BELGIUM-EU-SUMMIT
We have to maintain our sanctions until the Minsk agreement is fully implemented.” E.U. Council Donald Tusk said. Photograph by John Thys — AFP/Getty Images

EU gets round its problem with extending sanctions on Russia

Mar 20, 2015

The European Union moved closer to extending its sanctions against Russia, finding a formula that looks like allowing it to bypass the obligation for unanimity among its 28 members.

The U.S. has been concerned that European unity with regard to Russia is fraying, with a number of E.U. countries openly critical of the sanctions policy for varying reasons.

At a regular meeting of the 28 member states' heads of state and government, the E.U. agreed that the sanctions adopted last year should stay in place as long as the so-called Minsk ceasefire agreement to stop the war in eastern Ukraine isn't fully implemented.

A statement issued after the meeting said that "the duration of the restrictive measures against the Russian Federation, adopted on 31 July 2014 and enhanced on 8 September 2014, should be clearly linked to the complete implementation of the Minsk agreements, bearing in mind that this is only foreseen by 31 December 2015."

Although officials didn't spell it out explicitly, the formulation aims to reverse the burden of proof for extending the sanctions, which include bans on the sales of arms or sophisticated equipment for the oil and gas industry, along with measures that effectively stop Russia and its largest banks from using western capital markets.

Under E.U. law, the measures would have had to be renewed by a unanimous vote at the end of July. But a number of countries have voiced concern, anxious at the damage to their trade with Russia, due to their separate national agendas: Cyprus is a key financial hub for the Russian economy; Hungary's conservative Premier Viktor Orban is keep to ensure continued flows of Russian gas (and to seal a deal for Russian nuclear power which the E.U. wants to ban); Italy is also concerned about its gas supplies, and about the fate of its energy companies' investments there, and its luxury companies and high-end tourism industry are suffering from the ruble's collapse.

Most of all, the Greek government has been dropping regular hints that it would veto an extension of the sanctions unless the Eurozone relaxes the terms of the country's bailout. That has not gone down well with German Chancellor Angela Merkel, who has had to face down a powerful export lobby at home to uphold measures that she sees as necessary to keeping the long-term peace in Europe.

Merkel's achievement last night (with the support of the U.K., Poland and other more hawkish E.U. members such as the three Baltic states) has been to raise the bar for lifting the sanctions to a level that, almost certainly, neither Russia nor the Ukrainian rebels will ever accept. The Minsk ceasefire agreement specifies restoring Ukrainian government control over the border with Russia, as well as holding elections under Ukrainian law in the rebel-held areas, both of which appear politically impossible in the current circumstances.

The summit is therefore bad news for Russia's Vladimir Putin, who has been trying hard to drive a wedge between the U.S. and Europe since annexing Crimea a year ago. However, there was one piece of good news for him. There is obviously no appetite for new sanctions, even though the E.U. statement said it was "ready to take further decisions if necessary."

Bloomberg reported that the measure Russia fears most--the shutting out of Russian banks from the international financial messaging service SWIFT, wasn't even up for discussion last night.

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