The answer – finally – appears to be yes:
Although the European Union agreed last week to consider sanctions against Russia’s energy, defense, and financial industries, it was unclear how far they would go. It’s still uncertain how broad the sanctions will be, but the call on Monday indicated a change of tone from last week, when EU politicians were trading barbs over whether Britain or France was more reliant on Moscow’s money.
The EU will likely restrict each industry slightly, rather than imposing a full ban — such as an arms embargo. That approach would help address the fundamental problem of different EU countries relying more on Russian business in different industries.
Yglesias is excited:
After a five-way conference call between the leaders of Germany, France, the United Kingdom, and Italy the European Union seems ready to outline tough new sanctions on Russia. Not just the shooting down of MH 17, but Russia’s total lack of remorse or post-shootdown restrain appears to have been a game-changer in terms of German politics and that’s been enough to swing the situation around. The sanctions package is looking very similar to ideas outlined last week in a memo obtained by the Financial Times. The new package belies the notion of a “weak” Europe that is refusing to counter Russian aggression.
But Cassidy doesn’t expect the sanctions to amount to much:
We already know that Russia’s energy sector—which supplies power to many European countries, not just Germany—is likely to escape most of the new restrictions. The exact terms of the arms embargo have yet to be decided, but it isn’t expected to have any effect on existing contracts, such as France’s delivery, later this year, of a Mistral warship. That leaves the new financial sanctions, and I’d be willing to wager that they won’t be as draconian as they might appear, either.
Last week, Anne Applebaum analyzed Putin’s grip on Europe:
Which is worse? France sending Russia a ship that could be used against NATO allies in the Baltic or the Black Sea? Or Britain’s insistence on its right to launder Russian money through London’s financial markets? It was an amusing spat, not least because it plays into the stereotypes: Britain versus France, crooked bankers versus cynical politicians. The dispute dominated headlines as Europeans debated the right response to Russian aggression in eastern Ukraine.
But in some sense, it also disguises the real nature of Russian influence in Europe. For Russia’s strongest political influence is not in relatively large countries such as Britain or France, where at least these things are openly discussed, but rather in weaker countries that barely have a foreign policy debate at all.
Yesterday, Ioffe took a closer look at the EU industries that would be impacted by Russian sanctions
For example, German car manufacturers. Russia is their second-biggest market. If sanctions get in the way of that, German autoworkers are out of some jobs. Or if E.U. sanctions affect defense contracts, French workers building Mistral warships (for which Russia has already paid $1.1 billion) will also find themselves out of a job, and possibly striking. If Russia cuts off titanium exports—it is the world’s largest producer and the best at machining the parts—Airbus and Boeing have to stop building Dreamliners and double-deckers.
Countries like Bulgaria and Italy who are reluctant to hit Russia harder are involved in building the South Stream gas pipeline and also see a lot of revenues from Russian tourists. Bulgaria is especially vulnerable: 70 percent of its tourists are Russian. The U.K. financial industry launders a lot of Russian cash, so they are understandably reluctant to voluntarily plug up that flow. Cyprus is in a similar situation, both with Russian tourists and Russian offshores.
“A lot of jobs would be affected, but the macroeconomic effect is less than is often claimed,” says Cliff Kupchan, head of the Russia practice at the Eurasia Group.
Daniel Gross isn’t holding his breath for a bold EU response:
If the EU were suddenly to shut down all the gas pipelines and order Russian oil tankers to turn around, it would certainly inflict some short-term damage on Russia. But there are plenty of other customers out there for Russia’s oil, which is pretty fungible. As for natural gas, the huge new supply deal Putin inked with China means that a large customer will be emerging in Russia’s east. And while European countries could make a point of purchasing oil from non-Russian sources, they don’t have a ready replacement for Russia’s natural gas.
Taking serious steps to reduce purchases of Russian energy would require European leaders to show both moral courage and an overt willingness to inflict financial pain on large and well-connected companies. But both of these things are in short supply—just like natural gas and oil.
Earlier Dish on EU sanctions here.