BRUSSELS (Reuters) – The European Union reached outline agreement on Friday to impose the first economic sanctions on Russia over its behavior in Ukraine but scaled back their scope to exclude technology for the crucial gas sector. The sanctions on access to capital markets, arms and hi-tech goods are also likely to apply only to future contracts, leaving France free to go ahead with the controversial delivery of Mistral helicopter carriers being built for Russia…..
…After a discussion that lasted all day Thursday and part of Friday, ambassadors asked the executive European Commission to draw up a legal text setting out economic sanctions for possible agreement as early as next week. Key measures included closing EU capital markets to state-owned Russian banks, an embargo on arms sales to Moscow and restrictions on the supply of dual-use and energy technologies. They would not affect current supplies of oil, gas and other commodities from Russia. European Council President Herman Van Rompuy wrote to EU leaders saying the discussion among ambassadors had led to “an emerging consensus on some key principles.”
One was that “the measures in the field of sensitive technologies will only affect the oil sector in view of the need to preserve EU energy security,” the letter said, according to an EU source…
…Spreading the burden evenly among EU member states is a delicate balancing act. Britain is strong in financial services, Germany in technology and machinery, France in arms sales, while Italy is heavily dependent on Russia for energy.
“To a degree everyone is reverting to trying to protect their own national interests from harm,” a senior European diplomat said. As things stood, Britain would probably face more pain than any other state from the proposed measures because of London’s key position as a financial center.
The Daily Telegraph looked at this issue this morning:
The stench of hypocrisy is almost unbearable. Germany and the rest of the eurozone trade far more with Russia than Britain does, buying billions of pounds worth of gas and propping up Vladimir Putin’s regime. Yet Europe’s proposed sanctions on Russia have been carefully designed to inflict as much pain as possible on the City of London, while shielding other economies from collateral damage.
The European establishment rightly wants to punish Mr Putin, whose behaviour has been appalling – but only if it is the Anglo-Saxons who bear the cost. German companies will still be able to sell their wares with impunity; Italy will continue to light and heat itself courtesy of Moscow; and France will deliver its warships as promised. But British workers will lose their jobs to satisfy Europe’s desire to be seen to do the right thing.
The European elites are expert at turning every crisis to their advantage, and are clearly seeking to use the need to punish Russia as an excuse to intensify their long-standing campaign against the City….
While it is of course right to squeeze Mr Putin’s regime by whatever means come to hand, given his ongoing refusal to face up to the consequences of his support for Ukraine’s separatists, there is only one way really to punish the Russian president and his cronies, and that is to wean Europe from its addiction to Russian gas. Germany gets about a third of its gas and oil from Mr Putin. Given that energy accounts for around 68 per cent of Russia’s exports, an opportunity to hit the regime hard has been missed.
We will have to see what is now finally agreed. I hope that first impressions are misleading, but if the Reuters report gives an accurate preview of what is to come, it will be the case that, as usual, David Cameron has been outplayed by the UK’s EU ‘partners’. If so, it will be yet another reminder that his proposed ‘renegotiation’ of the UK’s position within the EU is a farce intended only to deceive, rendered all the more insulting by its implausibility.