“Insanity,” Albert Einstein observed, “is doing the same thing over and over again and expecting different results.” If the great physicist could witness the EU’s current sanctions policy, he would likely try to put the bloc’s leaders in straitjackets himself. Earlier this week, member states approved yet another raft of restrictive measures on Russia – the EU’s 17th (yes, seventeenth) since Vladimir Putin launched his country’s full-scale invasion of Ukraine in 2022. The announcement – which Ursula von der Leyen said will “keep the pressure high on the Kremlin” – came as EU leaders threatened to impose further “massive” sanctions after Moscow ignored their call for a 30-day ceasefire. EU media breathlessly echoed politicians’ warnings of Moscow’s imminent, sanctions-induced apocalypse: Politico reported this morning that the EU, Ukraine, and the UK are preparing a “mega package” that could “deliver a knockout blow to the Russian economy”. The idea that Brussels could suddenly obliterate the Russian economy at the 18th attempt is, to put it mildly, hard to believe. Why, after more than three years of a war that von der Leyen herself has said is “existential” for Europe, are leaders only considering this option now? (Did they stumble across it while searching for one of the Commission president’s deleted texts?) The core of the “mega” plan – the essential details of which seem to have been copy-pasted from a US Senator's proposal – involves a 500% tariff on all Russian exports into the EU. This would effectively decouple the bloc from its eastern neighbour. But would this devastate the Russian economy? Probably not. According to European Commission data, the EU currently imports around €3 billion worth of Russian goods each month, mostly in the form of pipeline and liquefied natural gas (LNG), oil, and fertilisers. This is less than a tenth of Moscow’s total exports. By comparison, Russia’s total exports fell by more than 25% from 2022 to 2023 – and the Kremlin’s war economy, plainly, didn’t collapse. Furthermore, the political and economic risks from such a decoupling mean that the EU could only realistically reduce its imports by around half this amount in the near term: that is, from €3 billion to €1.5 billion per month. Such a decrease would have an effect roughly equivalent to a drop in the price of oil of a couple of dollars, according to Janis Kluge, a senior associate at the German Institute for International and Security Affairs (SWP): a “significant” problem but hardly a catastrophe for Putin. As it turns out, the EU’s next sanctions package will likely fall far short of even this proposal. In a speech delivered on Friday afternoon, von der Leyen said that the next package will include additional listings of Moscow’s “shadow fleet” of oil vessels, a lower oil price cap, sanctions on more Russian banks, and a “ban” on the Nord Stream underwater pipeline between Germany and Russia. Tariffs – including those in the three-digit range – were not mentioned at all. Read more. |