The European Union has extended and enhanced economic sanctions against Russia effective until the end of January next year. Speaking at a cabinet session, Russian Prime Minister Dmitri Medvedev expressed regret that “our European partners continue this not very constructive line with regard to our state. Once again, politics takes over the economy and by and large over common sense in general.”
Konstantin Voronov, director of European Political Studies at the Russian Institute of World Economy and International Relations, has said that there are several layers to the EU’s latest sanctions. “I think this is a sort of ‘layer cake.’ Firstly, there is certainly a large ideological component in the foreign policy course of our European neighbors and partners. That is, these sanctions meet their ideological evaluation of Russia’s activities with regard to the Ukrainian crisis. Secondly, this ‘multilayeredness’ also has political component – this is the desire to change Russia’s foreign policy. The third layer is a practical component, that is, how much these sanctions are correlated with practical ties – economic, financial, and so on. Of these three aspects – the ideological, political, and practical – the most important objective is political. Above all, they would like to change Russia’s foreign policy course. That’s what they expect in the West: that the pressure of sanctions will force Russia to change its policy with regard to Crimea and Ukraine, to take a retrograde step. That is the main goal of our partners in Europe and in the West as a whole.”
The EU’s economic sanctions limit access to EU primary and secondary capital markets for several Russian banks and major energy and defense companies. They also curtail access to certain sensitive technologies and services that can be used for oil production and exploration.
The EU, US, and a number of other nations first imposed sanctions against Russian individuals and companies in March 2014, following Crimea’s decision to rejoin with Russia in the aftermath of the Euromaidan coup d’etat.
Moscow, in turn, put in place a food embargo on a wide range of products originating in the countries which had targeted Russia with sanctions. Moscow is now working on a response to the latest round of sanctions, which will adversely affect the EU markets.
“It is clear the sanctions aren’t working” says Chris Devonshire-Ellis of Dezan Shira & Associates “Russia is instead turning towards Asian suppliers for its needs. The sanctions are also negatively affecting smaller European businesses, often family traders who have sold products to the Russian market for generations. Instead, they are now closing these businesses and relocating production to Russia itself. The damage caused to EU markets by the sanctions is estimated to be US$100 billion to date. The EU appears blind to the fact that the longer this goes on, the chances of the Russian market re-engaging with European producers diminishes. Asia is taking the Russian market away from the EU, and there remain excellent opportunities for Asian businesses trading with Russia and for Russian traders to source from Asia.”
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