Brussels, London It is a breach of international law, an act of aggression – but it is not yet a large-scale war of aggression: With his decision to recognize the Ukrainian provinces of Donetsk and Luhansk, which are held by pro-Russian militias, as sovereign states and to move Russian troops there, Russian President Vladimir Putin is representing the West with a dilemma.
Several Western countries have now reacted to the Kremlin’s decision: Chancellor Olaf Scholz (SPD) stopped the approval process for the Nord Stream 2 natural gas pipeline, British Prime Minister Boris Johnson announced sanctions against Russia after a meeting with his crisis council.
The USA also wants to decide on further measures on Tuesday. The EU is also considering sanctions, and a corresponding package is ready.
But does the Kremlin’s move justify the sweeping sanctions being prepared in Brussels, Washington and London? Or is a step-by-step approach advisable? The Handelsblatt compiles the most important questions and answers about the West’s reaction.
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What measures will the EU decide?
The EU ambassadors met for an emergency meeting on Tuesday morning to discuss precisely these issues. In the past few weeks, the EU Commission had agreed on a package of sanctions together with the member states and in close coordination with the Americans.
The most important elements are: capital freezes for Russian banks, a tech embargo on Russian industry and targeted measures against Putin’s environment. What was intended as a deterrent will now be implemented at least gradually.
However, there is disagreement among member states as to how harsh the Europeans’ initial reaction should be. Austria and Italy are in favor of a more cautious approach. Lithuania, on the other hand, is calling for the entire sanctions package to be tightened now.
What next for the Nord Stream 2 Baltic Sea pipeline?
Nord Stream 2 will not go into operation for the time being. Chancellor Scholz stopped certification by the Federal Network Agency. The project is unlikely to continue.
Opposition to the pipeline is enormous, both in Europe and in the US. The then Chancellor Angela Merkel (CDU) agreed last summer with US President Joe Biden on a joint statement that provides for sanctions against Nord Stream 2 “should Russia attempt to use energy as a weapon or further aggressive actions against Ukraine commit”.
The statement said, “This pledge is aimed at ensuring that Russia does not use any pipeline, including Nord Stream 2, to achieve aggressive political objectives.” Biden is under domestic pressure to stop Nord Stream 2.
The pipeline has been built but is not yet operational. The operating license from the Federal Network Agency is still missing. The EU Commission still has to evaluate Nord Stream 2 – and the Brussels authorities make no secret of the fact that they reject the project.
The traffic light coalition, on the other hand, recently had no clear position on Nord Stream 2. The pipeline has prominent supporters in the SPD, such as Manuela Schwesig, Prime Minister of Mecklenburg-Western Pomerania. The Greens and large parts of the FDP, on the other hand, consider the German-Russian project to be a serious mistake.
What are the UK and US planning?
Prime Minister Boris Johnson announced in the House of Commons in London on Tuesday that the UK would target five Russian banks and three wealthy Russian citizens with targeted sanctions. Their assets in the UK will be frozen and travel to the UK will be banned. This is just the first tranche of sanctions, Johnson said.
The sanctioned persons are Gennady Timchenko and the brothers Boris and Igor Rotenberg. All three are considered close allies of Putin.
By recognizing the two breakaway Ukrainian regions, Russia’s president “shamelessly broke the Minsk peace process,” Johnson said. Sending troops is tantamount to a renewed invasion of the neighboring country.
As the British Foreign Office announced, Russia’s ambassador in London was summoned for talks on Tuesday. However, according to media reports, the expulsion of Russian diplomats has not yet been discussed.
US President Biden issued a decree on Monday evening that provides for far-reaching sanctions against regions of Ukraine recognized by Russia. New investments, trade, financing and financial transactions by US citizens and organizations in the affected areas will be prohibited in the future.
The same applies to exports to the USA. Russia’s actions “pose an unusual and extraordinary threat to US national security and foreign policy,” Biden said. Further measures could follow on Tuesday, the White House said.
The US does not rule out further punitive measures against Russia.
(Photo: via REUTERS)
What sanctions are already in place?
When Russia occupied the Ukrainian peninsula of Crimea in 2014, the West reacted with sanctions. When separatists later shot down the MH17 passenger plane from eastern Ukraine, the measures were tightened. They are still in force.
At its core, it is about the energy sector and the financial industry. For example, companies from the EU and the USA are not allowed to deliver goods to Russia that are necessary for the exploration of oil deposits. Europeans are also not allowed to offer services in this area in Russia.
Some banks, oil and defense companies have been cut off from doing business with EU banks. Europeans are only allowed to grant loans if the term is less than 30 days or if they are used to finance commercial transactions.
Trade with Crimea was cut off almost entirely. The Russian government confiscated many of the companies located there. These are now explicitly on the EU and US sanctions lists, as are almost 200 people who were involved in the annexation of the peninsula.
At the time, Russia responded with counter-sanctions and banned the import of certain foods from those countries that had imposed sanctions on Russia. Meat, vegetables, milk and dairy products are particularly affected.
What are the consequences of the crisis for the European economy?
EU Monetary Affairs Commissioner Paolo Gentiloni warned on Tuesday that the European economy was “surrounded by uncertainty”, adding: “Russia’s violation of international law by recognizing two separatist areas in Ukraine will greatly increase this uncertainty.”
How exactly the economic shock will turn out cannot yet be reliably quantified. The impact depends on the exact sanctions imposed by the West and possible counter-sanctions by Russia.
>> Read here: Which sanctions would be particularly effective
However, raw materials have already become significantly more expensive. Russia is not only Europe’s most important supplier of natural gas, but is also one of the largest oil producers in the world. The price of oil rose to its highest level since 2014.
The price for a barrel of the American WTI variety is now 95 dollars. The EU Commission warns: Europe must be prepared for persistently high energy prices.
In order to reduce dependence on Russian energy supplies, the Brussels authorities propose accelerating the expansion of renewable energies and building a strategic gas reserve for next winter. Should Russia stop gas deliveries to Europe, the EU would at least be prepared for this heating season despite low storage levels – thanks to large quantities of liquid gas imports and unusually mild temperatures.
Will there be compensation for the countries particularly affected by the measures?
Parallel to the discussion about sanctions, the question is smoldering as to whether there should be compensation within the EU for those states that suffer particularly from the sanctions or the expected counter-sanctions. Italy, which is particularly dependent on Russian gas, made the suggestion.
It can be assumed that the EU states will agree on such support, even if it is not clear how much money is involved. In any case, the Baltic and perhaps also other Eastern European states, which do a lot of trade with Russia, would probably benefit.
More on this: The developments around Ukraine in the live blog