Despite Pressure, EU’s Sanctions Against Russia Could Last

PARIS (AP) -
A board shows currency exchange rates on a street in Moscow, Tuesday.  (REUTERS/Maxim Zmeyev)
A board shows currency exchange rates on a street in Moscow, Tuesday. (REUTERS/Maxim Zmeyev)

EU sanctions against Russia over the crisis in Ukraine are cutting both ways: hurting Russia as well as pinching some big European companies. But economic relief isn’t likely any time soon, diplomats and analysts say, since EU divisions make the sanctions tough to overturn.

France, Germany, Russia and Ukraine are trying to set up talks next week in Astana, Kazakhstan, to ease the tensions behind the punitive measures that, along with slumping oil prices and U.S. sanctions, have sent the ruble sinking. The sanctions, and Russian retaliation, have in turn squeezed corporate Europe — including banks, oil companies, machinery makers and food giants that do business with Russia.

European Union rules complicate any attempt to modify the sanctions put into place last year amid the separatist violence in eastern Ukraine and after Russia’s annexation of Crimea. A unanimous decision by all 28 EU nations is needed to change the sanctions, and analysts say such unanimity doesn’t exist.

The main EU sanctions — which have hit Russian banks and oil companies and have banned arms exports and the export of dual-use goods — are in place until the end of July. A first review of some sanctions could come in March.

“We don’t turn any sanction screw just for the sake of turning,” German Chancellor Angela Merkel’s spokesman, Steffen Seibert, told reporters Monday. “The sanctions are responses to concrete situations from the Russian side and concrete situations in eastern Ukraine.”

Under the combined blow of sanctions and slumping oil prices, the ruble has lost about half its value this year and the Russian economy has drifted into recession. President Vladimir Putin has promised the economy will rebound, but he has failed to offer a specific plan for easing Russia’s heavy dependence on oil and gas revenues.

Zsolt Darvas, a senior fellow at the Bruegel think tank in Brussels, said France and Italy are among the nations more open to lifting the sanctions while Poland, Britain and the Baltic countries want to stand firm.

It’s not certain the talks scheduled for Jan. 15 in Astana will take place — diplomats say high-level preparatory talks are planned Friday. French President Francois Hollande told France-Inter radio that he would only attend the Astana talks if progress could be made in easing the tensions.

“The sanctions should be lifted if there’s progress. If there’s no progress, the sanctions will remain,” he said Monday, adding that Putin “of course is not letting on that he has the slightest difficulty.”

“The sanctions … and the decrease of the oil price … weaken him. He doesn’t say it of course, he doesn’t let people think that he has any kind of difficulty, but he has some difficulties.”