EU extends sanctions against Crimea for another year

By bne IntelliNews June 20, 2016

The EU extended its restrictive measures against Crimea and Sevastopol for 12 months until June 23, 2017, to protest what it calls "the illegal annexation of Crimea and deliberate destabilization of Ukraine", the EU Council stated on June 17.

The move precedes the decision later this month on extending the broader package of EU sanctions against Russia for its actions in Ukraine, although this is regarded as a certainty. The G7 members already agreed in May on the "vital importance" of a six-month sanctions rollover in June.

The sub-category of sanctions include a ban on imports into the EU of any of Crimean goods, as well as any European investment in the companies based in Crimea, including the acquisition of real estate and the provision of services. European ships are also banned from entering Crimean ports except in case of emergency.

The EU also banned the supply of some types of goods and technology to Crimea, including products in the field of transport, telecommunications, energy, oil production and refining, and extraction of natural resources.

Sevastopol Governor Sergei Menyailo said that the extension of sanctions is no disaster as the region is adaping to the sanctions regime. He added that sanctions primarily harm the economies of those countries that imposed them. 

"For us there is nothing catastrophic. It is the third year we are living under sanctions,  it pushed us to develop our economy without dependence on the West," RIA Novosti quoted Menyailo as saying.

The decision came several days before the meeting of the EU foreign ministers in Luxembourg followed by an EU summit in Brussel where national leaders will decide on extending the sanctions. While there is no doubt that they will be prolonged, the question remains on what level the decision will be made and wherever it will be done automatically or after the debate. 

"I think it is right to let the [foreign] ministers discuss this issue and then pass it to the heads of states," Kommersant cited the Slovenia's foreign minister Karl Erjavec as saying on June 16. "But we can not exclude that, given the lack of progress in the implementation of the Minsk agreements [on bringing peace to East Ukraine], the decision to extend the sanctions will be made at the council of foreign ministers without debate".

"There is only one way to lift economic sanctions - the full implementation of the Minsk agreements," EU Commission President Jean-Claude Juncker told the St. Petersburg International Economic Forum on June 16.
Russian officials stated again that Kremlin will not initiate the discussion on the lifting of sanctions. Russia would be prepared to lift its counter-sanctions from the West if it could be sure it "would not be cheated once again", President Vladimir Putin told the forum in the northern city.

"We wish to be certain that Russia's unilateral moves will entail reciprocal moves that won't eventually prove to be what a Russian classic once described as 'one step forward, two steps backwards'," Putin said after talks with Italian Prime Minister Matteo Renzi.

"It was our partners’ initiative to enter [this situation], they should initiate the exit from it," added Russian Minister of Ecnomic Development Alexei Ulyukaev.

Putin and Juncker did not discuss sanctions during their meeting on June 16, TASS quoted Kremlin press secretary Dmitry Peskov as saying. "In the situation when we can say with confidence that the Russian economy started to adopt to functioning under sanctions, the issue is certainly not on our agenda any more," the spokesman said.

The forum results partly confirmed Peskov's statement as the event proved to be a reasonable success in terms of deals signed, despite the continuing sanctions regime. The official deal count than tripled that of last year's forum, which saw 205 agreements worth $4.52bn, marking a shift in Russia's international business relations amid remaining political tensions.

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