On November 15, the head of European diplomacy, Josep Borrell, and the EU Commission presented proposals for preparing the 12th package of EU sanctions against Russia to the EU member states. Meanwhile, the adoption of the previous restrictive measures package against Moscow in June was accompanied by fluctuations in the European political community. Their consolidated position on comprehensive support for Ukraine had weakened markedly in more than a year and a half of armed conflict. Taking into account the continuous growth of disagreements within the European establishment on the issue of tightening sanctions pressure on Russia, we should expect that the upcoming EU summit (December 14-15) will become a real “political battle” Europe hasn’t seen since the failure of the referendum on the adoption of a pan-European constitution in France in 2005. The low effectiveness of earlier sanctions imposed against Russia and connected with them massive losses for European business along with actions of Ukraine, which sometimes leads to a “double play” with European partners to fulfil its own goals, contribute to it as well.
“The sanctions bill from hell”
American “Foreign policy” journalists gave a detailed description of Russia's mechanisms and methods to circumvent the restrictions imposed on it. They concluded that the once promised by the European politicians “the sanctions bill from hell” didn’t have the intended effect. Following the results 2022, despite restrictions, Russia received more than $600 billion from hydrocarbon exports, up 28 per cent from pre-war 2021. Another American Top newspaper, “Financial Times”, admits that Russia manages to circumvent the $60 per barrel price cap on oil sales at no appreciable cost. Moreover, Iran is helping Russia to evade sanctions by providing Russia with “shadow tankers” for oil transportation.
Experts predict that following the results of 2023, the trend towards further growth of Russia’s revenues from the sale of energy resources will continue, at least by $15 billion. Hardly European and American politicians were counting on such a “collapse” of the Russian economy when they were vocal about “the sanctions bill from hell”. Moreover, if you analyse the consequences of the pressure on the Kremlin, you conclude that the states that imposed restrictions on Moscow suffer from them no less (if not more) than Russia, against which the strike was aimed.
Europe’s self-flagellation
While Moscow manages to effectively circumvent the restrictions imposed against it and thus systematically increase its military budget, European companies and corporations are increasingly affected by EU policy that weakens their economies. For example, in Great Britain, at least 127 companies voluntarily confessed to violating anti-Russian sanctions, which has become a challenge for their businesses. Especially anti-Kremlin restrictions have an impact on small and medium-sized businesses. As Europe rejected cheap Russian energy sources and started buying more expensive alternatives, American liquefied natural gas prices for electricity and other utilities have risen in most EU states. Eventually, this has a very negative impact on the pricing of the final product and makes it uncompetitive with the products of companies from those countries that have either refused to break relations with Russia or do not have strong economic dependence on cheap energy sources such as China and USA."
Most European companies feel pessimistic and angry when they see how big dividends are paid by doing business in Russia through the concrete examples of their more determined colleagues. European companies that continued their business activity in Russia recorded an increase in their 2022 year-end earnings. For instance, the “Mondelez” – “Oreo” and “Alpen Gold” manufacturers increased the volume of supplies of their products to the Russian market by 38% compared to the 2021 year.
That means that restrictions against Russia turned out to be really from “hell” but for Europe. Awareness of this fact could make serious adjustments to the final list of the anti–Russian restrictions in the framework of the 12th bill of sanctions or even derail its adoption.
One step forward and two back
Moreover, one more factor (and maybe the most important) can decide the fate of the new anti–Russian sanctions bill. This factor will assess Ukraine’s actions by the EU authorities. The fact is, Greece and Hungary were highly questionable on the approval of the previous sanctions bill right up until the very last day of discussions, so the adoption of the document could have failed at any time, as such decisions are taken by consensus in the EU and require the support of all those involved.
Listing by the Ukrainian National Agency on Corruption Prevention of five Greek shipping companies and several Hungarian companies, notably OTR Bank, as “International Sponsors of War” on suspicion of economic contracts with Russian counterparties became the main reason for the long and heated debate. Athens and Budapest were outraged by Kyiv’s recent unfriendly outburst, which looked like political pressure and manipulations. Ukraine was blackmailing Greece and Hungary with the most favourable economic treatment for their legal persons in exchange for support of the anti-Russian sanctions bill. In June, Athens finally got five Greek shipping companies off the Ukrainian “blacklist” and only after this voted for the adoption of the sanctions bill. But the situation was not as good for Hungary. Budapest believed the verbal assurances of the Ukrainian authorities, and despite support for anti-Russian restrictions, Hungarian companies remained under sanctions.
Alas, Greece’s happiness was premature. On August 7, there was an unpleasant surprise for Athens. Those five shipping companies were again included in the “International Sponsors of War” list for allegedly failing to fulfil the agreed-upon terms during the negotiations to remove them, more accurately, for “refusal from the public judgement of the Russian aggression”. Ukrainian authorities misled and deceived their Greek partners by grossly manipulating their promise to Athens. When the adoption of the 12th sanctions bill is on the agenda, this unfortunate incident has again risen to the surface of international relations. To “cut corners” in the relations between Ukraine, Greece, and Hungary and to get Athens and Budapest to approve a new package of restrictions, Kyiv threw a “trial balloon” and temporarily excluded Greek shipping companies and Hungarian OTR Bank from the “blacklist”. This decision was announced on September 29, just before the start of the EU consultations on creating and adopting the 12th anti-Russian sanctions bill.
Another trick? Another hoax? Right, these questions could have been asked by Greek and Hungarian authorities. “No, this is a high-level diplomacy” – that is how Ukrainian officials would have responded.
Such manipulations of the Ukrainian authorities could cost dearly to Kiev. It can not be ruled out that European countries won’t give in to Ukrainian blackmail this time. This means that adopting a new sanctions package may hang in the air. In this case, the failure to adopt the following bill of anti-Russian restrictions will have the effect of a nuclear explosion, which will change the political landscape of Europe beyond all recognition.
Kamran Mamedov is a Moscow-based Azerbaijani journalist born in Georgia who focuses on South Caucasus issues.
