22.11.2019 Author: Ron Henry

Europe’s Got the Short End of the Sanction Stick


If you really think of it, there’s nothing new about trade wars, as they would be used time and again against those governments that other powers want to undermine. However, not unlike with regular wars, such strategies may result in totally unexpected results. Moreover, those counter-steps that the attacked power can take may lead to the downfall of the aggressor. For instance, The National Interest has recently pointed out that in some cases the so-called “sanctions” can backfire big time, as Washington with its aggressive actions has been facilitating the establishment of a pro-multipolar coalition of states.

In fact, there’s only two ways out of a trade war. Should the competing powers assume that they’ve inflicted enough economic damage upon each other, they may settle with a compromise deal of some sort. The other way out of a trade war is through a direct armed conflict. The latter occurred when the Celestial Empire tried to fight off British traders that were selling opium to its population. In fact, there was a number of conflicts that lasted for a total of six years and are now known as the Opium Wars.

Now, the US and its allies introduced sanctions against Russia back in 2014, when they refused to recognize Crimea’s homecoming, as this traditionally Russian region chose to return home after an overwhelming vote to do so. Those sanctions were followed by a new round of trading restrictions that were introduced after the dubious Skripal Affair, in which a former Russian spy got allegedly poisoned in the UK, with British intelligence agencies blowing this incident out of proportions without ever providing any evidence to back up their claims. Finally, there were fabricated claims of Russia’s meddling in the US election that were refuted by the Muller investigation that lasted for a total of two years.

In turn, Russia would try to prove that it did nothing wrong in all of the above mentioned cases, presenting the data showing that a total of 96% of Crimea’s population voted to leave Ukraine and rejoin Russia.

Five years down the line, and both the supporters of anti-Russian sanctions and those who opposed them from the get go agree that the sanctions failed to produce any visible results. Then, economists decided to investigate those claims and it turned out they came to a number of rather curious conclusions.

Even back in 2016, France’s Centre d`Etudes Prospectives et d’Informations Internationales calculated that in the period from the onset of sanctions and until June 2015, the states that supported anti-Russian sanctions lost some 60.2 billion dollars in lost revenue. It’s truly humorous that more than 82% of those were lost due to self-inflicted restrictions and not the ban on the import of agricultural products that Russia introduced in retaliation.

The UN Special Rapporteur on the Negative Impact of Unilateral Coercive Measures on the Rights and Freedoms, Idriss Jazairy has recently announced that Russia managed to mitigate the negative effect of the trade restrictions due to the rapid development of its own production base. In turn, the Russian Foreign Ministry indicated that Europe has already lost some 100 billion dollars from the sanctions regime, which constitutes twice the amount of economic damage inflicted upon Russia. The overall economic damage that those countries that got themselves engaged in a trade war with Moscow is estimated at 3.2 billion dollars a month.

Just recently, Germany’s Handelsblatt commented the findings of a joint study conducted by the scientists of the Lingnan University of Hong Kong and the Kiel Institute for the World Economy that came to a number of intriguing conclusions. It turned out that those states that are introducing sanctions are suffering more economic damage that the player they aim to bring down.

In particular, they found out that the total trade turnover between the states engaged in this trade war decreased by 4 billion dollars a month. However, 1.8 billion or 45% out of this sum comes at the expense of those states that introduced sanctions against Moscow. With the EU suffering the lion’s share of this damage (92%), it’s no wonder that its economy has been slowing down for years. Germany is, without a doubt, the biggest victim of the sanction wars, as it’s been losing 667 million dollars a month, with France coming second with its inability to rebound once it lost its share of the Russian market.

The same Handelsblatt cites the United Nations Conference on Trade and Development where it was announced that while Washington is keeping a keen eye on its allies that may at some point choose to defy its sanctions regime against Moscow, it believes that there’s nothing wrong with American corporations investing tons of money in Russia, as they to this date remain the largest investors on the market. The total amount invested so far exceeds 39 billion dollars with Germany lagging far behind with its investment portfolio. The above mentioned publication that highlighted this fact says this may have far-reaching ramifications for the US-Germany relations, as Berlin has been enjoying close ties with Moscow for decades. However, from the US viewpoint, there’s no foul play involved.

It’s been pointed out by the Hungarian Minister of Foreign Affairs and Trade, Peter Siyyarto in his interview to Japanese journalists that Central Europe suffered huge losses because of the economic sanctions against Russia.

In Austria, Greece and Slovakia the majority of the population is convinced that the sanctions regime is too tough, says the European Council on Foreign Relations.

Sweden’s Aftonbladet believes that sanctions allowed Russia to reinvent its agricultural business. Norway’s iFinnmark says that Russian manufactures are now occupying the niche of the market that used to belong to Norwegian companies.

Germany’s Neues Deutschland states that more that a half of all Germans are against the sanctions regime, while Frankfurter Algemeine Zeitung believes that Washington deliberately undermined the European energy market by dragging the EU into a trade war with Russia.

It seems that an ever increasing number of politicians has come to the conclusion that sanctions as a tool of applying political pressure on other states are completely useless at this point.

Ron Henry is a freelance political observer, especially for the online magazine “New Eastern Outlook.”