Viewpoint by Somar Wijayadasa*
NEW YORK (IDN) – In the aftermath of the Ukrainian crisis in March 2014, the United States and the European Union imposed sanctions on Russia that have led to unintended consequences.
Crimea re-joined Russia following a referendum in which more than 96 percent of Russian speaking residents of Crimea voted to declare independence based on “the right of nations to self-determination” that is stipulated in Article 1 of the UN Charter.
People in East Ukraine – 70% of whom are ethnic Russians – also felt violated when the Ukrainian Government banned the Russian language from its official status. They too, invoking their right to self-determination, held a referendum to establish a separate State, which is still in a limbo.
If the “right to self-determination” was acceptable to Western countries when former Yugoslavia and Czechoslovakia were dismantled, and when tiny East Timor declared independence, why a different yardstick for Crimea?
But Russia being Ronald Reagan’s “Evil Empire”, and the Russian President Vladimir Putin being “the Boogeyman” in the eyes of many Americans, Russia must be restrained – at least by means of sanctions.
In August 2014, in a radical response to US/EU sanctions, Putin retaliated by mandating an embargo on the import of beef, pork, poultry, fish, cheese, dairy products, fruits and vegetables from the European Union, United States, Australia, Canada, and Norway.
Now, the US/EU sanctions have been prolonged for the fourth time until January 31, 2017. In retribution, Putin prolonged his embargo against Western food producers.
Historically, sanctions have brought disastrous consequences – where those in power thrived and the poor suffered. Sanctions are also used as an ulterior motive for “regime change” which is a violation of the UN Charter and the basic norms of international law.
Europe’s Dilemma
Europeans soon realized that their hasty anti-Russian sanctions have failed.
Russia’s retaliatory ban on European food and other products caused food producers in Europe to loose tens of billions of dollars. Over the last two years, EU had to provide over $60 million to compensate for the agricultural sector losses.
In 2012, bilateral trade between Germany and Russia reached a record $89.8 billion, of which German exports to Russia were worth $42.8 billion. In 2015, Germany exported just $24.5 billion of goods to Russia.
In 2013, France exported agricultural products to Russia worth $825 million, which is now negligible. Farmers in Italy, France, Finland, and fishermen in Norway, etc., staged protests demanding their governments to lift sanctions against Russia.
The Austrian Institute of Economic Research claims that “continuing the sanctions on Russia could cost over $98.75 billion in export revenue and more than two million jobs over the next few years”.
Lately, many European government officials have travelled to Moscow and Crimea exploring business opportunities. During a recent business visit to Moscow, Sigmar Gabriel, the German Vice-Chancellor and Minister for Economic Affairs and Energy said that “Isolation and confrontation are not a sensible policy and don’t offer anything”.
The French Senate recently passed a non-binding resolution by a vote of 302 to 16 to lift sanctions. Some German states (Bavaria, Saxony, and North Rhine-Westphalia) and Italian regions (Veneto, Liguria, and Lombardy) have joined the chorus.
Since EU’s bilateral trade with Russia has reduced by an estimated $112 billion due to senseless tit-for-tat sanctions, Governments of Greece, Italy, France, Hungary, Bulgaria, Slovakia, and Cyprus have repeatedly called for lifting sanctions against Russia.
Paradoxically, whenever these Governments demand the removal of sanctions, the answer is: “only Brussels can decide” – which begs the question who are these people in Brussels, who elected them or gave them the authority to do so?
Hypocrisy at its best
A recent article in Sputnik quoted a World Bank consultant Olivier d’Auzon as saying that “Europe lost almost 20 percent of its trade volume due to sanctions, meanwhile the United States, which pressured the EU to join the anti-Russian economic measures, actually increased its trade with Russia by 7 percent despite sanctions”.
Similar sentiments were echoed in a Bloomberg article that read: “Since leading the push for western penalties on Russia over Ukraine two years ago, the US has leapfrogged Turkey, Japan, Poland and South Korea to become the country’s No. 5 trading partner outside the former Soviet Union.”
It further noted: “Boeing whose design bureau in Moscow is its largest outside the US just opened a training and research center at the government-backed Skolkovo technology park in Moscow. Boeing which buys a third of its titanium from Russia, struck a $7.4 billion deal to sell 20 747-8 freighters to a Russian company. And it also won Congressional approval to resume buying Russian rocket engines to launch US satellites through a venture with Lockheed Martin Corp.”
Also thriving in Russia is Cargill finishing a $200 million seed-crushing plant in southern Russia; Yum! that has opened about 200 KFC outlets in Russia since 2014; and McDonald’s that has opened its 500th restaurant in Russia to name a few.
However, sanctions caused Exxon Mobile to abandon its multi-billion dollar drilling ventures with Russia. It was acceptable, as it would hurt the Russian oil drilling industry.
But Russia, once again, outfoxed America by making Rosneft acquire 30 percent of Norwegian oil company Statoil to gain access to Arctic drilling equipment and expertise that they lost to Exxon Mobil.
Bloomberg article opined that while EU members “bear the brunt of the trade war US companies … have been investing for the long-haul and gaining market share”.
No wonder European politicians are clamouring for the lifting of anti-Russian sanctions.
Russians love sanctions!
Thanks to the oil boom, Russians blindly enjoyed life emulating those in Kingdoms across the Arab dessert – importing all foreign goods to fruits and vegetables, French brie, Norwegian salmon and even water Perrier. Easy money makes people go crazy!
Sanctions that coincided with sinking oil-prices caused a recession and inflation in Russia – perhaps, a dreadful lesson never to rely on others for Russia’s food security.
To remedy the damage, the Russian authorities quickly identified other non-Western countries to import banned food items. Russian consumers unhesitatingly switched to locally-grown food.
In 2014, Russia’s agriculture minister said, “We now have the unique chance to improve our agricultural sector and make it more competitive.” This provided impetus to Russian farmers and food producers to turn what was meant as a punishment against Russia into an agricultural boon – that have been neglected for years.
According to Government sources, Russia’s agricultural industry has recorded an annual growth of 3 percent, it’s production of meat and poultry has risen by 10 percent, cheese products by 10.6 percent and butter by 3.2 percent.
In August 2015 the government approved 464 agricultural investment projects, including 166 to modernize dairy farming and processing, and 197 for the meat or poultry industries.
While in Moscow, in June 2016, I went to many food stores, which were full of local as well as non-western produce but with slightly higher prices. When I questioned pensioners how they cope with higher prices, they said that the Government has increased their pensions, further subsidized rent and utilities while they have free public transport and free healthcare including medicine.
Invoking the Russian proverb “if it weren’t for bad luck, we’d have no luck at all”, Sergei Ivanov, Russia’s former Defence Minister, said that “Thanks to our Central Bank, the rate of inflation is coming down, while gold and foreign currency reserves are going up”.
Saying that “Russia’s economy has demonstrated stability, vitality, adaptability” Ivanov added, “I would personally prefer that anti-Russian sanctions be in place for a longer time.”
Putin has reiterated that “sanctions are a problem for those who impose them and that Russia will not ask to lift them”.
If the anti-Russian sanctions intended to destabilize the Russian economy hoping masses would revolt and cause a regime change, then it was a gross miscalculation of the will power of the Russian people.
*Somar Wijayadasa was a UNESCO delegate to the UN General Assembly for ten consecutive years from 1985-1995, and was Representative of UNAIDS at the United Nations from 1995-2000. [IDN-InDepthNews – 05 October 2016]
Photo: Construction of the Crimean bridge (March 2016). Credit: Wikimedia Commons
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