EU Extends Sanctions Against Russia - for the Last Time?

13 June 2016

On 31 July 2016, the European Union (“EU”) will extend its economic sanctions against Russia for another six months. The EU has renewed these sanctions every six months since they were introduced for one year in July 2014 in response to Russia’s alleged annexation of Crimea. In 2015, EU leaders publicly linked repeal of these sanctions to Russia’s implementation of the Minsk II ceasefire agreement. Despite the fact that Russia has not fully complied with that agreement, recent events across Europe suggest that this might be the last rollover of the full sanctions program. Rolling over the sanctions requires consent of all EU member states. Support for the sanctions is waning, however, in those member states most affected by Russia’s counter-sanctions on EU food exports.

The EU’s economic and financial sanctions against Russia cover some of its largest institutions, including five of Russia’s state-owned banks, three of its energy companies, and three of its defence companies. Separate Crimea-linked sanctions include asset freezes and visa bans on individuals (these are set to expire in September 2016), and sanctions against conducting business in the Crimea region itself.

In June 2015, EU leaders formally decided to “clearly link the duration of the restrictive measures to the complete implementation…of the Minsk agreement.” The presidents of Russia, France, Germany and Ukraine negotiated this agreement alongside the Organization for Security and Co-operation in Europe (“OSCE”). Russia’s obligations include:

• Removing its troops and heavy weapons from Crimea
• Giving OSCE inspectors access to Crimea
• Ending all military support for Ukrainian separatists
• Giving back control of the Russia-Ukraine boarder

Russian leaders continue to publicly support the agreement. In April 2016, the Russian President, Vladamir Putin, backed the introduction of armed OSCE inspectors and urged ‘the West’ to pressure Ukraine to uphold its side of the deal. However, Russia has not fulfilled its obligations and few commentators expect to see full implementation within the next six months.

Despite this failure to fully implement the ceasefire, support to extend the sanctions past December 2015 is waning in some EU countries. In early June 2016, the French Senate adopted a non-binding resolution to ‘gradually’ lift the restrictions. This followed a similar vote in France’s lower house in April. In December 2015, Italy delayed the renewal of sanctions before eventually backing down, though in May its Veneto region voted to end the program altogether. The Hungarian Prime Minister, Viktor Orban, and the Greek President, Alex Tsipras, have voiced opposition to the sanctions during joint press conferences with Putin. By many measures, France, Italy, Hungary and Greece have suffered the most from Russia’s counter-sanctions, which banned the import of agricultural food products and have remained in place since August 2014. Domestic Russian producers are filling the gap left by its ban on EU food imports. If sanctions last for too long, some EU producers might be permanently excluded.

Agriculture is not the only concern. On 13 June 2016, twelve MEPs published an open letter calling for sanctions to be re-evaluated because they prevent cooperation with Russian intelligence forces, exposing European citizens to a greater risk of terrorism.

In contrast, other EU states strongly favour the extension. In the United Kingdom, the House of Commons European Security Committee has already approved the EU’s decision to extend. The German chancellor, Angela Merkel, has repeatedly stated that the sanctions must stay until Russia complies with the Minsk agreement, most recently on 16 June.

Despite these clear differences, those who oppose the extension are unlikely to force a discussion at the next EU summit on 28 and 29 June for several reasons including the lack of progress on Minsk, the G7’s existing agreement to extend the sanctions reached in April, and an already full agenda.

Analysts predict that by the December 2016 summit of EU leaders, however, the political mood in Europe is likely to have changed to the point that a thorough re-evaluation of the sanctions program will be necessary.