Matches, Mistrals, and Moscow: The Politics of Sanctions

July 27 Main Image

British Prime Minister David Cameron’s Conservative Party was criticized this weekend for accepting a 160,000GBP donation from a Russia Oligarch with close ties to Russian President Vladimir Putin.  This adds to a week where European governments have had to weigh foreign policy decisions against domestic considerations.

Following the tragic downing of MH17, Europe has resorted to a blame-game over who is really to blame for the lackluster European sanctions.  On one side, the French are hesitant to scrap the sale of two Mistral-class warships.  This deal, valued at around 1.2 billion euros, has directly supported hundreds of jobs in France.  Given the precarious economic situation in France, President François Hollande is faced with a choice between foreign policy imperatives and domestic considerations.  Despite immense pressure from Washington, France will likely opt for its internal considerations.  Frankly, it’s hard to blame them.

The argument against withholding the sale rests in both punishing Russia and ensuring that these weapons aren’t one day used against NATO troops.  Surely Russia has acted in an intolerable way, particularly considering the MH17 disaster, but the likelihood of war is still miniscule.  If France goes through with this deal, it will provoke the ire of its allies, particularly within NATO, but it will soon be forgotten.  Should the French government cancel the orders, it will directly seal the fate of hundreds of workers: a political reality that won’t soon be forgotten by the French public, and certainly won’t be forgotten by opposition parties.  With approval ratings at record lows, this is a move François Hollande and the French government can hardly afford.

Looking on from across the Channel, British Prime Minister David Cameron was highly critical of the French this week, emphatically stating: “Frankly in [the UK] it would be unthinkable to fulfil an order like the one outstanding that the French have.”   For all the Prime Minister’s bravado, his hands are far from clean.  Indeed, at a recent Conservative fundraiser meant to fill party coffers in anticipation of next year’s general election, the wife of a Russian oligarch donated 160,000GBP in exchange for a tennis match against Cameron and London Mayor Boris Johnson.  In all likelihood, Cameron will return the donation and disavow this individual, however this event is indicative of a greater trend.  In recent years, Russian money has flooded into London — so much so that The Economist attributed the soaring property prices in the British Capital in part to Russian Oligarchs.

Cameron is faced with much the same choice as Hollande: attacking Russian interests will undoubtedly harm his domestic economy.  With a general election looming, this is hardly a judicious choice for the ambitious Prime Minister.

The current problem, therefore, does not necessarily lie in a lack of political will.  In a vacuum, the British and French would surely favor tougher sanctions on Russia.  In reality however, the cost of inaction is far lower than imposing strict penalties on Russia.

Instead of framing the debate against Russia as one purely dominated by economics, perhaps Western powers should reorient their focus on tangible political gains.  For instance, it’s curious that Vladimir Putin was so eager to push for a referendum in Crimea.  Why doesn’t Europe and the United States capitalize on Putin’s democratic gusto by calling for referenda in the Russian separatist provinces in the North Caucasus?  Similarly, pressure could be placed on Russia in international institutions to deplore its massive human rights abuses.  In addition, Moscow’s proxy assets, be they the illegal financial assets in western economies or puppet states like Syria, should be scrutinized and potentially acted on by the United States and Europe.

Lastly, to truly dent Russia’s economic machine, there is one undeniable weapon: energy.  If European powers (I’m looking at you, France!) are willing to move forward with the exploration and production of carbon energies in the Greater European region, Gazprom’s hegemony (and by association, Moscow’s bottom line) would be severely undercut. This strategy would prove to be far more effective than the sanctions equivalent of a mosquito bite that the United States and Europe have currently agreed to put in place.

In an ideal world, economic sanctions are the easiest way to make Russia fold and understand the consequences of its belligerence.  In practice, however, this decision is simply too costly for certain leaders to make.  If the United States and Europe go all-in on sanctions, the collateral damage would surely cripple Europe’s weak recovery.  The political reality is such that these will likely never come to fruition.  Sanctions can be effective, but not when each country carves out the specific sanction that will hurt them in return.  Thus, instead of forcing western powers to make impossible economic decisions with deep political ramifications internally, perhaps they should exert the kind of political pressures on Russia that will force Moscow to reconsider its current path.

For more on this statistic:

http://www.ft.com/intl/cms/s/0/ac270dfa-1574-11e4-ae2e-00144feabdc0.html?siteedition=intl#axzz38fqHEhkt

Other relevant links:

http://www.ft.com/intl/cms/s/0/f5156478-125c-11e4-93a5-00144feabdc0.html

http://www.reuters.com/article/2014/07/26/us-ukraine-crisis-russia-sanctions-idUSKBN0FV0CC20140726

http://www.bbc.com/news/uk-politics-28443588