5 March 2014, 22:55

Sanctions against Russia will backfire on the West

Sanctions against Russia will backfire on the West

The United States has threatened Russia with sanctions over Crimea. Washington’s European allies have nodded, yet do not rush to freeze economic ties with Moscow. The reasons are as clear as day. In the modern globalized world, sanctions against such a big power as Russia will inevitably backfire on those seeking to punish it that way.

Barack Obama has warned that he is not going to Sochi for a G8 annual summit unless Russia backs off on Ukraine, the White House said in a statement. Other G8 leaders, though avoiding sharp-toned rhetoric, have also suspended preparations for the summit. German Foreign Minister Frank-Walter Steinmeier was slightly offbeat when he reminded his G8 partners that the G8 was the only format through which the West could communicate with Russia directly and that cutting off ties with Moscow within the G8 would be counterproductive.

The latter approach looks more sensible than Obama’s decision not to travel to Sochi, Igor Kovalyov, a professor at the Higher School of Economics’ global politics and global economy department, told the Voice of Russia.

“Clearly, no one will win if the G8 Sochi summit fails to take place. Talk of excluding Russia from the G8 makes no sense either as in that case the entire G8 architecture will collapse,” he said.

Aside from plans to boycott the Sochi summit, the US has frozen all its military cooperation with Russia, including joint exercises, bilateral contacts, naval exchanges and conference planning, and warned of possible economic and diplomatic sanctions. Experts point out, however, that with bilateral trade standing at a mere $40 billion, Washington lacks the leverage to press Russia. What’s more, under the increasing globalization, the sanctions could backfire on US companies.

“Economically, no one will gain from sanctions. Politically, it’s hard to say who will win or lose in the end, but economically, both sides will lose. The entire world experience shows that. Here, one just needs to calculate… Unfortunately, politics often weighs hard on the economy, just because no one bothers to calculate. Had they calculated the losses both sides would have incurred, then, I am sure, different political decisions would have been made,” said Igor Nikolayev, Director of the FBK Institute of Strategic Analysis.

The European Union has a lot more to lose from sanctions than the US. The EU-Russian trade amounts to 460 billion euros. Europe needs Russian hydrocarbons and Russian consumer markets. All things considered, it’s small wonder that Latvia’s Dienas bizness newspaper carried an article under the telling headline “Sanctions against Russia – a new economic crisis for Latvia” or that the BBC published a leaked UK government document saying that Britain should not, at least for now, support trade sanctions or shut the London financial center for Russians.

“The EU and Russia are closely interdependent, particularly in trade and economy. Western Europe depends on Russian fuel supplies. Symptomatically, Russian gas exports to Europe via Ukraine proceed smoothly despite the political turmoil in that country. By severing ties with its key trade partner, Europe will punish no one but itself,” Igor Kovalyov said.

As for threats to suspend talks on visa-free travel between the EU and Russia, Europe hasn’t planned to lift visas for the Russians in any foreseeable future. The visa talks have been going on for years with little progress so far. The problem is that EU officials tend to see the cancellation of visas as a concession to Russia, rather than a mutually profitable endeavor they have been stubbornly postponing, citing security concerns, unembarrassed by the fact that biometric passport data rendered their farfetched arguments pointless.

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