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Wednesday, April 16, 2014

Divided we stand - EU struggles to find common position for sanctions on Russia

In a new flash analysis out today, we look at where each EU member state stands on expanding sanctions against Russia.

The summary notes:
There is a huge diversity of views within the EU on what to do next with regards to Ukraine and Russia. This is mostly down to divergent interests (economic, political and cultural) for different member states, as well as varying views on the effectiveness and implications of further sanctions. Countries range from Poland and the Baltics, which have very strong economic links with Russia but remain very hawkish, likely due to historical experience, to countries such as Bulgaria and some Mediterranean countries which remain quite dovish. Open Europe has attempted to quantify this on a Dove/Hawk scale from -5 to +5. The average ranking for EU members is 0.4 suggesting that the bloc as a whole remains someway off from finding the unanimity needed to push further sanctions.

In terms of trade links to Russia, Lithuania has the largest trade turnover at almost 32% of its GDP, while the Netherlands, Slovakia and Estonia also have high levels at 11%, 11% and 14% of GDP respectively. There is however, no strong link between deeper trading links and a more dovish approach to sanctions on Russia, suggesting the discussions are informed by a number of complex factors.  
The key graph is below (click to enlarge).  Clearly there is a huge level of divergence, based off a number of factors (not just total trade turnover, which is shown on the vertical axis).

Despite all this, further sanctions remain on the table. In the analysis we examine what form further sanctions could take. It would likely be sanctions on: specific firms, sectors or broader financial sanctions. The fallout of all of these has the potential to be serious, possibly explaining some of the divergence across the EU.

Attention now turns to tomorrow’s meeting between the West and Russia. The focus remains on a ‘diplomatic solution’ but with Russia warning of civil war (not least because it fits its narrative of instability), and calling for the UN to condemn Ukraine’s actions to remove pro-Russian forces in Eastern Ukraine, this remains very uncertain.


Denis Cooper said...

What's going on in eastern Ukraine now rather reminds me of the events when Slovenia was starting to break away from Yugoslavia.

Rik said...

Re Baltics this is tales wagging the dog. These countries want to create a national identity at the expense of Russia and their own Russian minorities. Which is for the rest of the EU totally unproductive if not plain madness.
One way or another they will have to find a way to peacefully coexist next to their big bad neighbour. The last thing the EU needs is permanently an enemy at its borders (with nukes and a lot of them) which is its main energy supplier for the foreseeable future on top of that.
Russians are one of the largest mistreated minorities in the EU. Well they are of course not gay and donot live in caravans, or ideally both, but this should nevertheless be a point of attention. Especially seen the fact that Lesbos and Romastan are no nuclearpowers and Russia is. As well that there is usually not much oil in the back of the average caravan or in the average souvlaki.
Same btw with the Poles (and Georgians and Moldovans and the rest of the basketcases for the further future).
Of course there are legitimate safety concerns as well, but first of all they should try to coexist peacefully with Russia.

UK Hague and Cameron doing their usual wrong call on international issues. As contra indicator they are marvelous.
I thought nobody is so stupid to let notes of a national security meeting be fotographed by journalist, I was clearly wrong it was clearly not a Baldrickian

Finns just to pick one. Would be wise to stay out of this mess. They have found a way to have a national identity, prosperous society and a lot of alcoholism on top of that, without p!$$!ng over Putin's shoes on a daily basis. Might not be a bad idea to look at Finland as a more sustainable rolemodel for the average eastern basketcase.

Just face it it is totally Putin's call. If he want to annex the whole Ukraine it can be done within a week (with some shooting afterwards of course. A bit of target practice on some Neo Nazis for instance).
The Ukraine army is even a bigger joke than say the Italians or the Dutch and with much worse equipment and likely not paid for half a year or so. Doubt sometimes if they have even enough money to put diesel in the tanks, APCs or whatever these noisy things are called. Clearly however he doesnot want the whole manure opening. And his population would probably largely approve it (until they get the bill of course) unlike the West.
The West should try to get out with as little as possible egg on its face. The price you pay for having women like Countess von Ashton, Noodleman, Merky, Obama and Hague in charge. Although Noodleman gets the award for the best quote.
Or may be the West could take Chernobyl and pump it up as a symbolic and especially moral victory. Appoint the Duchess of Ashton as governor. Wonder how orange hair will look on her. Leave the rest alone/in pace.

Interesting to see if people buy the call for higher budgets. Doubt it tbo, paying entitlements and keep employing nearly useless civil servants is of course a much higher priority. Played rather moronic on top of that. Arguments like 'give us more money so next time we can make an even bigger mess out of it for you', will hardly get much support. Same btw for: 'we need that to defend the territorial integrity of Moldovastan'.

Clear to see (for other purposes) what kind of leader Merky is. With the Euro thing some people seem to think it work. But it was simply becuase she is that way pure in line with her character/personality.
This crisis needs another sort of leadership and effectively she has been a total disaster (it was so awful she could really have been a POTUS for all that matters). She attacks (wrong word I admit) the issue in the same way as the Euro crisis and it is simply moving way too fast for her (and she puts herself now on the sideline).
She simply seems not able to move from one style to another when that is required, she only has one style.

Denis Cooper said...

Rik, I consider myself reasonably well-educated but I still have to check how to spell the names of some of the countries (or maybe just "territories"?) which were and still are being lined up to eventually join the EU, and I occasionally have to refer to a map to refresh my memory of their locations.

I did not vote "yes" in the 1975 referendum on whether to stay in the so-called "Common Market" with eight other western European countries, our near neighbours, so that eventually every citizen of Azerbaijan (sp?) would have the automatic right to come and live and work in my country, and I would pay more taxes to subsidise Azerbaijan (sp ?) and representatives of the Azerbaijanis (sp?) would have their say on how my country was governed.

And the idiot Cameron would go even further, across the Caspian Sea to Kazakhstan and presumably Tajikistan and Turkmenistan and Khyrgistan (sp?).

And, no, I would never be allowed to have any say on whether I wanted any of those countries to be allowed into the EU because Cameron's fiercely eurosceptic chum Hague enshrined it in his so-called "referendum lock" law that I would not; all accession treaties are covered by a blanket exemption, Section 4(4)(c) of his Act, which he has already invoked for the case of Croatia:


"All of the provisions of the Croatia Accession Treaty relate to the accession of a new member State to the European Union and thus the Croatia Accession Treaty as a whole is subject to the exemption provided for in section 4(4)(c) of the Act."

It is all a totally bloody outrageous betrayal of the trust that the British people previously, foolishly, reposed in their politicians.

jon livesey said...

If this is the degree of disagreement among EU member states, then can we really claim that the Eu is a relevant player here?

Oh, and it's amusing to compare you chart with the initial "spin" that it was the EU united against Russia except for the UK trying to protect the City.

Rik said...

I am horrible with all sorts of names. Made worse for countries by the fact that I am constantly moving from one language to the next and back or to yet another one.

From a strategic pov I think however it would have been a great idea to team up with Russia. Basically what China who think long term strategically does with Africa and Austrelia. Very likely commodities will be a main issue. With Russia you would have had them.
Well an opportunity missed. Europe as a whole has a complete conflict of interest there with the US. Europe has basically not even half what they need and will unless it really becomes poor always will have to rely on imports for alot of the stuff.
Alternative Middle East imho looks a lot worse. Politically more unstable and basically every moment ready to have some of the countries fighting with each other. Furthermore longer term they likely go more for partners that let them shoot at angry protesters when necessary (simply selfinterest of the ruling classes there).
This has all driven Russia to the East. And one can wish Europe a lot of success with their solar panels and espresso machines that not pre-warm the cups (the savages, so much for Western civilisation).

Imho the problem with the EU is there is basically one sort of membership.
Which is totally unacceptable for Russia.
A no go for the Ukraine as it is totally unacceptable for Russia.
Turkey is unacceptabel for half or more of the present population.
But basically the same problem with a lot of the present members (probably at least half of them):
-Eastern Europe. Basically unstable countries because of their twisted relation with mainly Russia.
Why give an economic 3rd world country full membership?
-Cyprus (because of its split);
-Greece because of the funny way it looks at mainly Turkey;
-UK where the population sees it as totally out of control;
-Rich Westeners, Norway, Switzerland who see it basically rather similar as the UK.

At the end of the day the EU has to rethink its relation with its neighbours, but also with probably half of its members. Not even to mention the Euro disaster that doubles roughly the problems.

Good news for people like yourself is probably support is eroding rapidly and if not via reform things are likely to be solved in another way.
IP might have no MPs with 20-25% of the vote. But add another 10% or so because of the UK system and the balance might move completely in the other direction. The Conservatives just having a handful MPs and IP having a majority. It is not that far from there. It is closer now to that, than it was 5 years ago from where it is now.

Well at the end of the day the EU has to create a platform and fast. You realistically cannot live without some form of national government. However a world without EU (or NATO in this case) can be immagined by an increasing number of people is even seen as progress by many.

The issue is that people like Cameron and Hague cannot properly explain why the EU (and the UK at national level) has to be more and more involved in countries like the Ukraine (except for pissing off Russia, in which case they can not explain properly why that would be benificial).
And they probably like with Syria they still not seem to get that there is no platform for all this. The electorate is in pure selfinterest mode and has no ambition at all to become the 2010s Florence Nigtingales or Nelson Mandelas.
And they simply keep messing the relation with their voterbase up while there is already a huge credibility deficit. People like Hague are a huge liability for the Tories, simply ticks all the boxes who you donot want to do your PR.
On the other hand would be great fun to see Nigel Farage as PM (much better than La Presidente de la Republic actualle LePen or PM Wilders). Thank God or who- or whatever it is not my country however.

Average Englishman said...

A few points here:-

First of all, there is no EU voice in this matter. The occasional noises from Baroness Ashton do not count for anything but giving Putin and his team a good laugh. Only responses from specific countries that could cause Russia some economic consequences will be heard. The EU is a camel. That is, a horse built by a committee. It does not and cannot speak with one voice and never will unless it becomes a single country as per its prime directive of 'ever closer union'. Well, it's not a single country yet; nor is it ever likely to be one considering its current undemocratic foundations so the EU's voice in this matter does not exist.

Secondly; the only comments that really have any weight come from the White House. The USA has the clout to cause Russia all sorts of financial trouble that would harm Putin and his pals in a big way and no amount of military posturing is going to worry them if they should decide to act. Whatever the USA says and does, the EU countries will have to live with, like it or not.

Thirdly, as for who is right and wrong, that is another matter. On one hand:
- a democratically elected government in Ukraine was overthrown by force and that caused Russian speaking minorities legitimate concern. Time will tell just how much CIA etc., involvement there was by the West to help cause this little coup. Also, the Russians in Crimea and the Eastern part of the Ukraine have the right to self determination. But on the other hand:
- the blatant and cinical use of force and subtefuge by Russia by way of a counter-offensive is not acceptable either in our modern and increasingly more civilized world. The Russians would do well to consider what happened in 1914 when a lot of sabre rattling and assassinations led to an appalling world wide conflict that didn't do anyone any good, certainly not them. The use of violence as a direct tool of foreign policy can have unexpected consequences (I cite the USA in Vietnam and Iraq and perhaps more relevant for President Putin - the USSR in Afghanistan).

Conclusion? Talk, talk, talk with a real effort from the new Ukraine Government and 'The West' to understand the very legitimate concerns of Russia and the Russian speaking people she represents and; fewer acts of violence and threats of force, with a real effort from Russia to hold back their instinctive desire to use force to protect 'their own'. Anything else will only end in tears all round and a great many of them.

Oh, and how does the Average Englishman expect his or her Government to act? 1) With a real understanding of the Russian position. 2) As a mediator and not an aggressor. 3) Solely with the interests of UK citizens firmly to the fore, not on the basis of some great post Empire World leadership role fantasy (and this would include the maintenance of good relations with our friends in Europe, the USA and Russia).

I truly hope that Mr. Hague reads this and takes note. No more hypocracy. Learn the lesson of Syria. Start thinking and most of all, some energetic talking.

Rik said...

On probability.
Imho your 15% or less estimate is way too low.

Just model it.
- >60% disapproval over longer than say 5 year. You need something to calculate with. Adjust for reneg. Technically easiest when pro-reneg and require that for 2017 in are added to the disapprovals. You need change to make it work.
5 Y as it is one electioncycle.
- current position.
- trend say over 10 year (pretty EU positive as the trend looks to have been broken shortly after the financial crisis and became much more negative.
- compare trend via extrapolation (backwards) with real and calculate sigma.
- take a normal distribution.

You will see that probability is much much higher than 15%. And my assumptions seem reasonable. With real alternatives in IP and the Tories moving en masse even the minor positives are likely completely compensated by the 10Y trend iso say a 5Y.

Could start with a sort decisiontree. On top of that. Even then there are positives and negatives in there.
Positives say Cameron gets reelected and doesnot mess the reneg up.
Negative IP gets a position in which it can determine things an goes as promised for exit.
Technical problem hard to measure.

If you model other outside events say a French exit; Dutch exit; German exit; Euro collapse. You will see that these are basically all negative. At least overall strong negative. Doubtful that all the national positives could compensate for that.

It is on Cameron to deliver (to rediuce the probability of an exit). And he is doing a pretty lousy job on that. Especially on the reelection part. He seem to have a great talent for picking the unpopular choice, like now again with the Ukraine.
And declaring victory while still behind in the polls.
Alternatives Labour/Libs look crap. But Mr Ed still hasnot been found out (largely a Tory issue as well) as a hot air balloon. And competition by NF looks pretty good. Not even make half the mistakes Cameron does, much less than that.
Same (roughly on the reneg) it is if played right Cameron's to lose. But the signs are not very promising.
Communication to the stakeholders is lousy and tactics/strategy sucks (well close to that).
Good: working on allies.
Lousy on getting a proper inventory and a sort of grand strategy (Hague's report simply sucks).
But most of all communication towards the voter and working on his credibility is horrible.
Now he has become religious overnight, it simply doesnot fit at all in the overall picture he presents. Things should be much more coherent and consistent to work re credibility. having hague around who seems totally disconnected from the voterbase also hardly helps.
Economy goes better than expected but only for the top end which doesnot have anywhere near the votes to win the election.

So in a nutshell not much reason to deviate from the model.
Model gave much much better results compared to subjective (the one you are using), on lonhg term major fiancial trends. Hard to see that being different for political trends.

John McClane said...

This is a mess entirely of the EU's own creation and one for which it bears sole responsibility.

It claims to have prevented European war since its creation but visits destruction and disaster on its neighbours e.g the dismemberment of sovereign Serbia, the ban on the previously free movement of Romanian Moldovans between Romania and Moldova and now the problems in the Ukraine.

Now it has lost control of the politico-military process. EU governments are speaking for themselves and not referring or deferring to Barroso, Ashton, von Rompuy or anybody else in Brussels.

There is no greater indication of the irrelevance of the EU.

Jesper said...


"EU force takes over airport"

"Partition fears"

"The EU force is under the command of a French officer"

The debate on whether or not the EU has a military force appears to be settled. It has one, at least for deployment in Africa to protect ???? interests.

The force has been and is currently used in support of one side in a civil war.

The precedents have been set. Luckily the size of the expeditionary force is small, however, cuts to the defense force are being made so that the expeditionary force can grow.

Might it be time for a public debate about if the EU should be sending troops to support one side of a civil war?

Might it be time for a public debate about if the EU should prioritise expeditionary forces over defensive forces?