COMMENT: When will the west lift sanctions on Russia: 2019 or 2029?

COMMENT: When will the west lift sanctions on Russia: 2019 or 2029?
Russian President Vladimir Putin and Ukrainian President Petro Poroshenko at the Minsk peace summit
By Gunter Deuber of Raiffeisen Research in Vienna November 19, 2018

Ever since sanctions were imposed on Russia following its annexation of the Crimea in 2014 there has been constant speculation on when the US and EU sanctions will be lifted again.

There have been numerous surveys asking if there could be an easing in the up coming 12 months. From time to time the number of analysts saying it was possible rose as high as 40% chance that the EU sanctions at least could be eased in the next year.

Lifting sanctions in the US is clearly going to be more difficult, but there too following the election of US president Donald Trump at the end of 2016 and start of 2017 the polls increased to 50-60 % of respondents saying at that time the USA could relax the sanctions imposed on Russia. But in reality the sanctions regime remains unaltered and if anything continues to get harsher.

In addition, over the last 2-3 years there have been several supposedly “windows of opportunity”, in which Russophile countries led relevant international bodies or organisations, such as the OSCE presidencies of Germany and Austria in 2016 and 2017, or the current EU Council presidency of Austria, which were opportunities to change Europe’s mind on the Russian sanctions.

Most recently the new government in Italy has actively been calling for an improvement in EU-Russia relations, but that too has turned out to be a very limited effort, despite comments to the contrary.

Ultimately, all self-interested Western politicians have recognised that no political capital can be gained from the issue at the national or international level - especially as long as there is no progress in bring peace to Eastern Ukraine.

But the noisy rhetoric continues. In the last few months the Russophile Western "bridge-building" states have been emphasized the high degree of alienation between the West and Russia. One reason for this is that even states such as Germany and Austria have been affected by Russia’s alleged wiretapping, hacking and espionage activities and as a result the talk of easing sanctions has dropped away again. Indeed, following fresh outrages such as the attempt to kill ex-spy Sergei Skripal and the controversial elections for new governments in the breakaway regions in Donbas last weekend, if anything there are calls for even more sanctions. In addition, the focus has increased on Russia's supposed interference in political agendas in the EU or in (potential) EU candidates in the Balkans.

In this respect, it is not surprising that there are currently no more "sanction-loosening surveys" among market players. Many analysts seem to have underestimated the dominance of the status quo. And the status quo dominates in sanctions and on the ground in Eastern Ukraine. It is increasingly clear that the West’s economic sanctions of on Russia are likely to remain in place for the average length sanctiosn usually remain: at least 8-10 years, perhaps even much longer.

The Donbas elections annoyed the west, but the looming key presidential and parliamentary elections in Ukraine next year are a lot more serious and Russia is already suspected of meddling. As a result it seems likely that 2019 will also pass without any progress towards lifting sanctions.

It is therefore all the more interesting that 2019 could be a very decisive year.

Everything will depend on the outcome of the elections in Ukraine. If, for example, President Poroshenko is voted out of office, there is at least an increased chance that Russia might be interested in a face-saving way out of the situation (spoiler alert: UN Mission for Eastern Ukraine). This is not at all impossible as according to a Kyiv International Institute of Sociology (KIIS) polls released on November 13 Poroshenko is in third place with a 10% approval rating versus frontrunner Yulia Tymoshenko’s 21%.

Russian president Vladimir Putin would love to make a name for himself as a "dealmaker" similar to the title Trump claims for himself. In such a scenario, it would be conceivable that the EU would once again seriously address the issue of lifting Russia's sanctions. Business lobbies across western Europe are extremely keen to see an end of sanctions as Russia remains the biggest and one of the most profitable markets in Europe for them.

If there is some sort of deal between Russia and a new leadership in Ukraine then relations will not be repaired as fast as the Kremlin made up with Ankara, following their recent diplomatic bust up in 2015 when Turkey shot down a Russian bomber over the Turkey-Syria boarder.

Relations between Russia and Turkey were perhaps even more tense than with Europe currently, but Turkish president Recep Tayyip Erdogan and Putin are not encumbered with the same adherence to Europe’s liberal values as other leaders to the west that allows for a lot more moral flexibility and opportunistic rapprochement.

The alienation between the EU states, the EU institutions and Russia is much deeper than between Turkey and Russia. Moreover, the relationship between the "big and little" brother is much clearer in the Russian-Turkish relations than in the case of the EU and Russia.

All in all, 2019 could be a "test year" for Russia's willingness to find a face-saving way out of the Ukraine conflict. And if not, then the Western sanctions, including the ones by the EU, could probably remain in place well into the 2020s, perhaps even until 2029.

 

Opinion

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