Contribution by Lucas Maynard,
3rd-year student in ESSCA’s Bachelor in International Business Development.
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Crimea, 5 years later: what exactly are the EU sanctions on Russia and what are their effects?
Since March 2014, the EU has gradually imposed restrictive measures against Russia. These measures were adopted in response to the illegal annexation of Crimea and the deliberate destabilisation of Ukraine.
The EU uses three different types of restrictive measures:
- Diplomatic measures
- Restrictions on economic relations with Crimea and Sevastopol
- Economic sanctions
1- Diplomatic measures
In 2014, the summit between the European Union and Russia was cancelled and EU Member States decided not to hold periodic bilateral summits. Bilateral talks with Russia on visa issues as well as on the new EU-Russia agreement have been suspended. In addition, the G8 summit in Sochi became a G7 summit in Brussels on 4 and 5 June 2014. Since then, these meetings have continued in the G7 format. EU countries also supported the suspension of negotiations on Russia’s accession to the Organisation for Economic Co-operation and Development (OECD) and the International Energy Agency (IEA).
2- Restrictions on economic relations with Crimea and Sevastopol
The Council of the European Union (the institutional executive but also legislative body of the EU that co-decides on legislative and budgetary acts) took decisions on restrictive measures. These measures apply to EU nationals and companies established in the EU. They are only valid in the territory of Crimea and Sevastopol.
These measures include:
- The ban on imports of derivatives products from Crimea and Sevastopol
- Trade and investment restrictions related to certain economic sectors and infrastructure projects
- The prohibition of the provision of tourist services in the Crimea or Sevastopol
An export ban on certain goods and technologies - On 20 June 2019, the Council of the European Union extended these measures until 23 June 2020.
3- Economic sanctions targeting trade with Russia in specific economic sectors
Between July and September 2014, the European Union introduced economic sanctions aimed at trade with Russia in specific economic sectors. The economic sanctions have been successively extended for six months since 1 July 2016, each of them having been decided following an assessment of the implementation of the Minsk Agreements (Protocol signed on 5 September 2014 by the representatives of Ukraine, Russia and the People’s Republic of Donetsk to end the war in the Crimea. It was signed after long negotiations in Minsk, the capital of Belarus.).
For the time being, the economic sanctions have been extended until 31 January 2020.
These restrictive measures have the effect of:
- Limiting access to the primary and secondary EU capital markets for certain Russian banks and companies
- Imposing an embargo on arms exports and imports
- Banning the export of dual-use goods intended for military use or military end-users to Russia
- Restricting Russia’s access to certain sensitive services and technologies that can be used for oil production and exploration.
About five years after the introduction of these sanctions and measures, what are their effects on Russia?
The factor most affected by these measures decided by the European Union is Russia’s economy. It is widely acknowledged that the sanctions have contributed to increase the macroeconomic challenges Russia was already facing, including the sharp fall in oil prices that began in the last months of 2017. The combined effect of these sanctions and the fall in oil prices has exerted a strong pressure on the value of the rouble and accelerated capital flight. Russia’s ban on importing Western food products has only aggravated an already delicate situation as it has led to higher food prices and thus to further inflation.
In Russia, Vladimir Putin is less popular, not least for his actions in Crimea. For a long time, the untouchable president. An emblematic phrase of the Russian people “There is Putin – there is Russia; no Putin – no Russia”. Over the last two 2-3 years, the president has been less seen as a model in his country.
But the impact of the sanctions remains very limited. Of course, when the European Union decided on a series of economic sanctions against Russia, it knew full well that they would not bring Crimea back to Ukraine. The aim was first to punish those responsible for this annexation, which was not recognised by the international community, and then, by strengthening them in July and September of the same year, to discourage Vladimir Putin from continuing the destabilisation of Eastern Ukraine. At this point in time, it cannot be said that they have really achieved their goal, as the Minsk Accords of 2015 have still not been respected. Most of the sanctions are purely symbolic and often unnecessary, Vladimir Putin does not seem to take them into account. If the European Union wants Russia to respect the agreements, it will have to tighten the sanctions, which is not easy.
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This student blogpost was produced within the framework of the 3rd-year module “International Issues and Challenges” of ESSCA’s Bachelor in International Management, following a course design developed by the EU-Asia Institute. The opinions expressed are of course those of the author and do not necessarily represent the views of the institute.
