U.S., EU impose third round of sanctions against Russia

The U.S. and EU governments announced a coordinated third round of sanctions against the Russian government on July 29 in order to pressure it to withdraw its support for pro-Russian separatists fighting in the easternmost Donbas region of Ukraine. The U.S. Treasury imposed sanctions on more Russian banks, targeting VTB, the Bank of Moscow, and the Russian Agriculture Bank, as well as the United Shipbuilding Corp, reported the Reuters news agency. “If Russia continues on this current path, the costs on Russia will continue to grow,” U.S. PresidentBarack Obamasaid in Washington.“Russia’s actions in Ukraine and the sanctions that we’ve already imposed have made a weak Russian economyeven weaker,” he said.

In Brussels, diplomats told reporters that the ambassadors from the 28-member European bloc agreed to restrictions on trade of equipment for the oil and gas sectors, particularly in deep sea drilling, and “dual use” technology with both defense and civilian purposes, Reuters reported. Russia’s state-run banks, corporations and agencies would be barred from raising funds in European capital markets, including the issue of Eurobonds and stocks for European buyers. The measures will be reviewed in three months. Previously Europe had imposed sanctions only on individuals and organizations accused of direct involvement in threatening Ukraine, and had shied away from wider “sectoral sanctions” designed to damage its biggest energy supplier. The sanctions don’t apply to defense contracts completed before the armed conflict, which allows the scandalous sale of the French Mistral warships to Russia.

“The powerful propaganda machine sponsored by the Russian state continues to support the illegal actions of armed separatists,” said a joint statement issued by European Commission President Jose Manuel Barroso and EU Council President Herman van Rompuy. “When the spiral of violence gets beyond control and leads to the murder of almost 300 peaceful people, the situation demands urgent and decisive measures in reaction. The EU will fulfill its obligations to defend and ensuring the safety of its citizens, and also will support its neighbors and partners. These sanctions send the leaders of the Russian Federation a strong signal: destabilizing Ukraine, or any other European country, will come at quite a cost to your economy. Russia’s actions are further isolating it.”

The sanctions will take effect immediately, said Finnish Prime Minister Alexander Stubb. They are geared for year could be reviewed within six months, he said. “Russia should confirm its desire to settle the crisis in Ukraine with concrete actions,” he said. “In practice, that means the necessity of fulfilling those conditions that were discussed earlier, as well as pressuring the separatists.”

Zenon Zawada: We expect these sanctions will serve as adequate pressure for the Russian government to limit its supplies of arms and fighters to the pro-Russian separatists. Yet the problem we see is that Russian President Putin is so deeply invested in this conflict (image-wise) that he would lose standing among the Russian public if he were to abandon support for the separatists altogether. So we expect he will continue to support the warring, if merely for the purpose of maintaining his image.

The next step the West needs to take is to provide a scenario of ending the conflict in which Putin saves face. Unfortunately, we can’t conjure such a scenario ourselves because the conflict has taken the form of a zero-sum game. Putin wants nothing less than to to create federalized enclaves in southeastern Ukraine, while the Ukrainian government, with Western backing, refuses any federalization.

Meanwhile, EU diplomats don’t seem to have agreed upon when the first review of the sanctions will occur. So the hawks on Russia (Great Britain, Sweden) will likely support a longer sanctions period while the doves (France, Germany) will advocate an earlier review.