U.S. sanctions against Russia: Who will cover losses of EAEU countries?

Although experts, politicians and even high-ranking European officials speak of the need to improve ties with Russia, no positive shifts have been observed in Russia-EU relations. The West’s sanctions and Russia’s counter-sanctions are still in force. The current paradigm of the Russia-West relations broadly determines the nuances of their policy towards post-Soviet counties, specifically EU Eastern Partnership Project countries: Ukraine, Moldova, Belarus, Georgia, Armenia and Azerbaijan. All these countries are within the zone of West’s interests and Russia’s privileged interests. The fight for these countries is intensifying amid growing tensions between the key players. Is Europe’s attitude towards Russia changing? Is EU ready to lift anti-Russian sanctions? How these sanctions affect Eurasian integration? Read answers to these and other questions in EADaily’s interview with Dr. Alexander Libman, Associate at the Research Division of Eastern Europe and Eurasia, German Institute for International and Security Affairs SWP.

The geopolitical fight over Ukraine has continued for a long time already. The West imposed large-scale sanctions on Russia, the latter responded with counter-sanctions. Are the West’s measures to deter Russia efficient or they just causing harm to the sides?

The initial goal of the sanctions was not to “deter” Russia. The sanctions were nothing but a response to the Ukrainian crisis. At least in Europe (the situation in U.S. is slightly different), using sanctions to “respond” to Russia’s actions in other conflicts is not practiced. As to the effect of sanctions on Russia’s policy, I’d like to avoid too tough statements, since we do not know either the true reasons behind Russia’s policy or the true mechanisms of its decision making. What happens in the Kremlin is secretive, and we cannot speculate how these or other sanctions (or threat of sanctions) have influenced Russia’s stance on any issue. Normally, sanctions are not considered to be a very effective instrument in foreign policy. We do not know how efficient they were particularly in the case of Russia.

Another matter is that the sanctions have affected Russia’s economy and the public. We can say for sure that Russia’s economy suffered a tangible damage, though not critical. Moreover, we can hardly hope for long-term development of Russia amid sanctions. The sanctions have become a heavy burden for the relations of Russia and EU countries at the public level.

In Europe, leaders of states started speaking about the need to establish a dialogue with Russia. Is Europe’s attitude towards Russia changing and is there a hope that the sanctions against Russia will be lifted any time soon?

Lifting of EU sanctions against Russia is hardly probable. First of all, even those advocating for a dialogue with Russia are often unready to “turn the page” of the conflict in Donbass and situation in Crimea that prompted the sanctions. EU’s Economic damage from Moscow’s countermeasures is not big. EU leaders do not feel any serious pressure over sanctions. And finally, nothing suggests that Russia is ready even to partial concessions. Consequently, there is no impetus to lift the sanctions.

As Trump came to power in the United States, there was hope that Moscow and Washington will find areas of common interest. However, they are more and more distancing themselves from each other. U.S. is preparing a new package of sanctions against Russia. Why doesn’t Trump manage to “get on with Putin” despite his previous promises?

Three factors affect the U.S.-Russia relations. The first one is uncertainty about Donald Trump’s goals and about what is behind his rhetoric. The second factor is that accusations against Trump’s Administration hold him from making any conciliatory gesture to Russia – it will just increase domestic policy pressure on the president. The third and the most important factor is that any dialogue is possible only on the basis of mutual concessions, while the sides are not ready for it. What could Russia offer in exchange for lifting of the sanctions? Considering the low level of trust, dialogue seems quite problematic.

How do you assess integration processes in the post-Soviet territory? Is the Eurasian Economic Union sustainable?

For the time being, the EAEU has achieved the level of a limited customs union (limited because after Kazakhstan’s joining the WTO, a big number of exceptions from the single customs tariff have been made). In fact, it is rather a high level of integration (there are few examples of effective customs unions in the world). I think there is little probability that the EAEU may “backtrack” or much less collapse. However, further integration progress, first of all, in the field of non-tariff barriers as well as upgrade of the Eurasian Commission autonomy, is little probable too. In fact, this is very important, as the EAEU’s ability to boost economic growth depends on whether its member-countries will reduce non-tariff barriers.

All EAEU countries have quite close contacts with the West. How do sanctions against the EAEU’s driving force, Russia, affect the integration processes?

Sanctions, indeed, negatively affect integration into EAEU. First, they are turning Russia into a source of “shocks” for other countries – there is always a risk that the sanction war will intensify and negatively affect Russia’s economy and, consequently, the EAEU countries. This reduces their readiness for further integration. Second, Russia’s reaction to sanctions – an increased protection and countersanctions – is a threat to integration as such and increase disagreements between the member-countries. At the same time, at the current level, sanctions apparently do not threaten the EAEU stability and existence, but they are restraining integration progress.

Brussels will host the Eastern Partnership summit in November. The EU has approved visa-free travel for Georgia and Ukraine. Earlier, Moldova was granted a similar regime, but the new president in that country is due to quit European integration. Armenia is going to sign a new agreement with EU in November. What is your assessment of integration of EU’s “Eastern partners”?

There are few “success stories” so far. Visa-free travel is attractive for Eastern Partnership countries, of course, but EU’s ability to boost reforms and development of these countries is much more important. Meantime, there are two reasons limiting that process. First, the EU does not offer enough stimuli for the region’s countries to be able to overcome “reform blockades.” It is an old problem – can “foreign player” overcome internal problems for economic and political development, especially such rooted problems as the ones in Eastern Partnership countries. The second reason (it is a very dangerous new trend), crisis in the relations with Russia makes EU “close eyes” on insufficient progress of the Eastern Partnership countries in reforms – search for “potential allies” is turning more important that contribution to reforms. As a result, Eastern European elites get new opportunities to balance between Russia and EU without necessary reforms – as far as I can gather, Belarus is now actively using these opportunities.

Interviewed by Arshaluys Mghdesyan