Tightening its grip on Crimea, Russia faces increasingly tough EU sanctions, but the Union's business and energy entanglements with Moscow make it difficult not to receive collateral damage from punitive measures
ANKARA - The European Union are preparing to impose sanctions against Russia as the next step in their response to Russia's military activity in the Autonomous Republic of Crimea, as the strategic peninsula is set to hold a referendum on Sunday whether to secede from Ukraine and unite with the Russian Federation.
But the sanctions floated by the EU on Russia for its failure to de-escalate the crisis in Crimea seem not comprehensive enough, and the bloc’s business and energy links with Kremlin further complicates the chance of success, as the sanctions would also harm EU interests.
At an emergency summit last Thursday, as the first stage of the sanctions, the Union leaders suspended discussions on visa-free travel between the EU and Russia, shelved talks on a new bilateral economic treaty, and gave a break for G-8 summit preparations due for June in Sochi.
A second wave of sanctions would include travel bans and asset freezes in Europe.
The bloc ensures that the travel ban and the freezing of assets will be applied only to "those responsible for the breach of Ukraine's sovereignty," adding that the ban list will not include names like the Russian President Vladimir Putin or Foreign Minister Sergey Lavrov.
If Moscow refrains from cooperation with Ukraine and Western powers, the EU is expected to discuss extending the list of Russian officials to be banned and have their assets frozen. Besides, the EU seeks to ensure that third countries also act in accordance with sanctions in order to increase their effectiveness.
In the third and last step of the sanctions plan against Russia, the EU is determined to put in place a weapons embargo and economic sanctions, if Kremlin insists on maintaining its grip on the strategic Crimean peninsula.
Russian troops invaded Crimea nearly two weeks ago under the pretext of providing security for the region’s ethnic Russians. Crimea is to hold a referendum this weekend on its future with Ukraine, but the vote has come under international criticism.
Meanwhile, the Crimean parliament voted Tuesday to declare Crimea's independence from Ukraine if the peninsula votes in favor of secession in a March 16 referendum. Nearly 60 percent of Crimea's population are ethnic Russians or Russian-speakers, who are represented by an overwhelming majority in the parliament.
The West has strongly criticized what they see as Russian aggression in Crimea, which took place after the ousting of the pro-Russian former president Viktor Yanukovych.
- Sanctions problematic for EU -
Nonetheless, EU's sanction decision is not without problems. First of all, the formal decision to impose the sanctions is only expected to be taken when EU foreign ministers meet next week on March 17. By then, the referendum planned for March 16 in Crimea on joining Russia would already be complete, bringing about a new conjuncture.
Another problem is EU dependency on Russian trade. The EU economy, still recovering from a prolonged recession, is reliant to some extent on Russia as it is the EU’s third-largest trading partner and EU Energy Commissioner Gunther Oettinger has said that imposing sanctions on Russia will negatively affect Europe’s delicate economy and alternatives to Russian gas needing to be found, particularly for Germany which imports more than a third of its natural gas and oil from Russia.
Eurostat 2012 data suggests that Russia's exports to the EU amounted 123 billion euros, while it imported 213 billion euros from the EU. Thus considering the fragility of EU economies, absence of its third largest trade partner after the US and China would have serious negative repercussions for EU economy.
Arms embargo also seems unlikely to succeed because the EU is not a major customer of Russia's lucrative arms sector, which earned it $15.7 billion last year.
- Gazprom card still powerful -
Facing the threat of EU embargoes, Russia’s energy giant Gazprom seems to be the biggest bargaining card in Moscow’s hand. Europe meets its 34 per cent of its gas needs from Russia.
The EU has sought to reduce immediate dependence on Russian gas through measures such as storing 3 months worth of gas. In addition, it considers purchasing cargoes of liquefied natural gas (LNG) from the Gulf countries. But both seem to be short-run solutions that would harm the EU's energy security.
According to European Commission's 2013 Gas Market Report, LNG imports began falling in the second quarter of 2011 with volumes going down by 31% in 2012 relative to 2011. This trend continued in the first two months of 2013 with LNG import volumes falling by similar rates as in 2012 for the three largest exporters of LNG to the EU (-34%, -24% and -16% for Qatar, Nigeria and Algeria, compared to the first two months of the previous year.
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