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Sanctions on Russia will backfire on U.S. and EU

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Sanctions against Russia are undoubtedly having a negative effect on the Russian economy and on the political climate in the country. But they are also negatively affecting both the U.S. and the EU economies which — particularly the latter — are only now showing some signs of improvement.

Among those affected are those individuals and companies in the United States, which are barred from doing business in Russia, particularly with members of President Vladimir Putin’s closest circle of friends and associates.

According to Kimberly Marten, a professor at Barnard College, Columbia University in New York, by exerting pressure on Putin’s friends and associates, the West hopes that it will convince Putin to change his course of action. But that thinking ignores an important element in the relationship between Putin and his friends: the pact of KGB loyalty, writes Marten.

This is pertinent because many of the individuals targeted by sanctions have past employment or connections with the KGB or its follow-up organization, called the Federal Security Service (FSB). As a former KGB career officer and former head of the FSB, Putin knows well how to harass his opponents, such as by using sensitive materials that may lead to their prosecution.

At the same time, the West’s sanctions on Russia’s key industries have aggravated Russia’s economic downturn. This is complicated by the West banning cooperation with Russian oil firms by companies such as Exxon Mobil Corp. and British Petroleum.

In 2013, $63 billion left Russia, a figure that is expected to double this year due to the political upheaval caused by the climate of instability created by the sanctions. U.S. exports of food and agricultural products to Russia totaled $1.3 billion in 2013. Among those affected are American poultry producers, who exported 267,000 metric tons of chicken, valued at $303 million to Russia in 2013.

In addition, if Russia stops its delivery of sophisticated Russian rocket technology, NASA’s rocket programs will be seriously affected.

The European Central Bank recently stated that “heightened political risks” could hinder European countries’ efforts to overcome the devastating debt crisis. EU exports totaled €15.8 billion in 2013. Because Russia has become a key market for thousands of European companies, sanctions by the West put those companies at risk.

“Sanctions against Russia are de facto sanctions against European business,” said Philippe Pegorier, Chairman of the Association of European Business in Russia (AEB), which is the largest business association in that country. According to Pegorier, sanctions against Russia could cause 300,000 layoffs in Germany and at least 100,000 in France.

Putin imposed a one-year embargo on imports of several agricultural products from any country or region that had adopted sanctions against Russia. That ban includes the EU, Norway, the U.S., Canada and Australia. Those food exports banned by Russia were worth $6.5 billion in 2013, equivalent to 4.2 percent of the bloc’s agricultural shipments, according to estimates of the European Commission.

The resulting glut is worsening Europe’s already delicate economic situation. Speaking recently on Hungary’s Kossuth Radio, Hungary’s conservative Prime Minister Viktor Orban said that “the sanctions policy pursued by the West causes more harm to us than to Russia. In politics, this is called shooting oneself in the foot.” He also said that the entire sanctions policy should be reconsidered.

Orban was joined in that criticism by his Slovak counterpart, Robert Fico, who stated, “Why should we jeopardize the EU economy that begins to grow? If there is a crisis situation, it should be solved by other means than meaningless sanctions.”

As things stand now, Russia, the U.S. and the EU are being hurt by the West’s sanctions on Russia. It is a truly no-win situation for all those involved. At a time of enormous strains in international relations, one would assume that it is not too late to try a different, less confrontational course of action.

Dr. Cesar Chelala, winner of an Overseas Press Club of America award, frequently writes on human rights issues.

  • Grumpy Haniwa Figurine

    This commentary doesn’t seem to address the sensible reasons why the sanctions were applied in the first place.

    • Sony

      And what exactly are they?

      • Grumpy Haniwa Figurine

        How about refusing to do business with regimes that would support shadowy groups murdering and intimidating civilians such as Eastern Ukrainians and killing all passengers of MH17. It seems like things have died down a bit since Crimea and what looked like an attempt to grab more provinces in the Ukraine and possibly in the Baltics or Caucasus. Actually, many people thought the sanctions were too weak. You can’t please everybody in this imperfect world.
        Not anti-Russian by nature, Russian troops actually liberated my grandfather during WWII.

      • Maxim Nawangwe

        You’re a victim of pure Western propaganda, try to widen your source-base and figure it out for yourself.

      • Sony

        I agree that this was a very ugly affair. Shadowy groups that have been murdering civilians should not have been employed by the Ukraine army. They are out of control and have irreversibly destroyed the reputation of the incumbent government and all those that supported them.

        More importantly they cast a dark shadow across all of Ukraine even though most people do not agree or support these thugs. They have only galvanized further support for the separatists.

        The problem appears to be that the Ukraine military in a rush to control the pro-Russian parts of the country accepted mercenaries as well as recruited from the ultra-nationalists / Right Sector groups. The problem now is the politicians cant seem to disarm them now or remove them from governorships.

        Fortunately things have become peaceful in Crimea at least – its like a sanctuary island away from all the conflict. People are very lucky there and many families have been accepted as refugees and have also been allowed to cross over the Ukraine border and offered housing. Whilst they feel for the people suffering in the Ukraine, none would be willing to trade places.

        It is sad to see families separated by conflict particularly ones caused by external forces. I am Korean and live in the South. I am of a generation that has my immediate family with me but we all have relative members separated by barbed wire…

      • Grumpy Haniwa Figurine

        It is sad. And I don’t think anyone believes that one side is entirely in the right and the other entirely in the wrong. Still others have made the point that Russia has been treated arrogantly since the end of the Cold War, fair enough. But that does not mean that the sanctions suddenly fell out of the sky for no reason. And those in favour of the sanctions, whether sensible or misguided (I still lean towards the former, but appreciate the two above perspectives clearly believing the latter) – those in favour of applying the sanctions always knew they would be damaging to their own economies, to say nothing of cost-effective gas supplies in Europe.
        Whether they saved lives or not, I guess good people can disagree. Interesting and poignantly sad comparison to Korea by the way.

      • Sony

        Thank you. I appreciate your understanding. On a positive note most South Koreans believe that we will be reunited someday – sooner rather than later.

        It is a strange time in the world. We are all quite concerned about recent tension being created in our region and do not want to get mixed up in all the politics being foisted on the South China sea and ASEAN region… again. Life is much better when we all live simply. I know many Chinese and Japanese civilians feel the same – but unfortunately there is always some puppeteer at work and they want us all to buy expensive military equipment.

      • Reyter

        Simple! By refusing to accept the fascist-led coup in Ukraine only possible due to massive Western backing and by accepting the right of the people of Crimea to self determination. And then refusing to let the fascist regime in Kiev murder en-mass all the people of Eastern Ukraine who also wouldn’t accept the coup. Surely everyone understand that if the US and EU want those people dead, Russia should go in and do it themselves and thereby prove it really is a democratic country.

        And of course Russia should also have taken the blame for the fascist regime in Kiev shooting down MH17.

    • TommyTCG

      Surely not applied for MH17, were they? Although thaf waffle was repeated every time a US puppet opened his big gob blabbering about Russian militray annexation,etc..

      The close-up photos of the side panel of the cockpit, taken immediately after the crash by Canadian/Ukrainian Michael Bociurkiw are in the public domain… also at Global Research.

      Michael was part of a special OSCE team sent there to negotiate access to the crash site. He was interviewed by CBC Canada, and this was published in The New Straits Times, in Malaysia and Singapore.

      Michael’s photo shows the cockpit side panel had holes in it made by what appeared to have been one air to air missile that clearly ‘aimed’ exactly where the Captain sat. No missile from 30,000 feet below could aim that accurately! The side cocpit had also had been raked with heavy (30mm)? machine guns. The bullet-holes-metal was bent both in and out indicating 2 fighters had fired, one from each side of MH. Ther was also a bullet graze on the top of left wing, towards the Captain.

      Retired anti-aircraft missile specialist Colonel Bernd Biedermann in an article for the New Germany newspaper says that had splinters from a surface to air missile hit the plane, it would have immediately caught fire.