World Economy

EU Renews Russia Sanctions

EU Renews Russia SanctionsEU Renews Russia Sanctions

The European Union decision to roll over economic sanctions against Russia for an additional six months may be the last time the bloc is able to impose such penalties as the West’s united front against President Vladimir Putin wavers.

While the EU announced Monday it was prolonging the measures until July 31 as a result of continued violence in eastern Ukraine, the need for unanimity among the 28 governments makes holding the line beyond that date far from certain. Footholds made by pro-Moscow politicians throughout Europe as well as questions about the efficacy of sanctions will test that unity like never before, Bloomberg reported.

The restrictions, which were due to expire on January 31, were prolonged to July 31. Brussels imposed the measures in 2014 in response to Russia’s actions destabilizing the situation in Ukraine.

France’s Republican candidate for president, Francois Fillon, has said he wants to ease tensions and revive relations with Moscow, a shift that could end the measures that were first introduced in July 2014. Add president-elect Donald Trump’s overtures to Putin, and the common US-EU position looks precarious. President Barack Obama’s support had helped solidify the European position.

 “As time passes and the situation in eastern Ukraine doesn’t change in a significant way, it becomes more difficult to prolong the sanctions on Russia,” said Paul Ivan, senior policy analyst at the European Policy Center in Brussels. “It’s difficult to say what the situation in six months’ time will be because there are so many things we don’t know about the next US administration.”

Russian shares fell after the announcement with the nation’s Micex index dropping 0.7% on Monday. The benchmark is down 1.5% from its 2016 high reached earlier this month.

Cracks are already starting to show. The UK, Germany, the Nordic and Baltic countries are the hard liners while others in eastern Europe are more skeptical. With some convinced that a renewal of sanctions in July would be more difficult, certain leaders argued for a year-long extension, according to officials with knowledge of the talks.

The decision to renew the measures related to Ukraine came as atrocities mounted in Aleppo with Russian-backed airstrikes helping President Bashar Al-Assad’s forces retake the Syrian city in the biggest victory against rebels in almost six years of civil war.

The economic sanctions prolonged by this decision notably:

—limit access to EU primary and secondary capital markets for five major Russian majority state-owned financial institutions and their majority-owned subsidiaries established outside of the EU, as well as three major Russian energy and three defense companies

—impose an export and import ban on trade in arms

—establish an export ban for dual-use goods for military use or military end users in Russia

—curtail Russian access to certain sensitive technologies and services that can be used for oil production and exploration.


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