In addition to the EU package, Germany announced that the commissioning of the controversial Nord Stream 2 gas pipeline will be suspended indefinitely. By recognizing the separatist regions of Donetsk and Luhansk, Russia has violated international law, Chancellor Scholz said. It was therefore necessary to send Moscow “a clear signal that such acts are not without consequences.” The pipeline is ready, but will not be commissioned for the time being.
Scholz’s turnaround is of great symbolic significance. Despite fierce international criticism, the previous chancellor, Angela Merkel, has always stuck to Nord Stream 2, which should transport gas directly from Russia to Germany, without transit via Ukraine. Critics accused Germany of putting Ukraine in a vulnerable position. Russia could easily cut off the country from gas without losing its German and Western European customers.
“Russia caused this crisis and will now bear the consequences,” European Commission President von der Leyen said after EU foreign ministers gave the green light to the sanctions at an emergency meeting in Paris. These include the 351 Russian parliamentarians who approved the recognition of Donetsk and Luhansk as well as 27 individuals, organizations and companies that were militarily or financially involved in the decision. They no longer enter the EU and their financial assets in Europe are frozen.
European capital markets
In addition, the EU is hitting a number of Russian banks with sanctions, trading with the two rebellious regions has been halted and the EU is restricting Russia’s access to European capital markets. That makes it difficult for Moscow to raise money and finance debt. The EU sanctions package is closely coordinated with the United States, Canada and the United Kingdom.
Severe sanctions, such as a Russian exclusion from the international payment system SWIFT or a trade embargo on high technology, are being held back. “We’ll come up with new ammunition if necessary,” said Borrell. “We have a wide arsenal at our disposal, but we will not put it on the table in one go,” said French Foreign Minister Le Drian.
Borrell stressed that the EU leaves the door open to diplomatic talks with Moscow. However, a meeting with Russian Foreign Minister Lavrov scheduled for Friday has been canceled, Le Drian said. Lavrov reacted laconic to the EU’s sanctions on Tuesday: ‘We are used to it. We know that sanctions are imposed no matter what, with or without reason.’
Test unit
Russia’s action in Ukraine is a test of the unity of the EU. Hungary appeared to distance itself from the proposed sanctions during a meeting of EU ambassadors on Tuesday morning. The Hungarian ambassador first wanted to consult with his Prime Minister Orbán, who recently visited Putin. But in the end Budapest also agreed to the sanction package. Importantly, Germany, often seen as a weak link due to its reliance on Russian gas, favors western unity over its trade interests.
The United States and the United Kingdom also do not immediately use up all their gunpowder. British Prime Minister Johnson imposed punitive measures against three individuals and five banks in Russia. According to Johnson, it was a ‘first barrage’ and much stricter measures will follow if Russia attacks Ukraine further. For example, the capital market in London can be closed to the Russian state and Russian companies.
US President Biden initially reacted cautiously with a ban on economic activities by Americans in Donetsk and Luhansk. After it became known that Russia is allocating the two regions entirely to the separatists, Biden launched a tougher package of financial sanctions against two Russian banks and several members of Russia’s elite. Heavier sanctions will follow if Russian aggression increases, but Biden emphasized that he still hopes for a diplomatic solution.
Although the West constantly emphasizes that it forms a ‘front of unity’, there are major differences between the US, the UK, the EU, and the EU Member States. If Russia annexes all of Ukraine, the toughest measures will undoubtedly be taken. But what happens if only the Donbass is occupied is less clear.
Different interests
The countries of the West have different interests. America is protected by two oceans and hardly trades with Russia, while Europe risks being hit by gas shortages and high energy prices in the event of a conflict with Russia. Within the EU, member states also have different interests and a different history with Russia. Poland and the Baltic States have been occupied by the Soviet Union and want to crush any Russian expansionism as quickly as possible with heavy and swift sanctions. Member States such as Austria, Hungary and Italy are more cautious.
Italy is safely behind the Alps and desperately needs cheap Russian gas. Italian Prime Minister Draghi said last week that sanctions should not endanger energy imports. “Welcome to a wonderful new world in which Europeans will soon pay 2,000 euros for 100 cubic meters of gas,” sneered former Russian president Medvedev.