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EU Should Try and Use Diplomatic Way Rather Than Sanctions - Expert

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Is sanctions regime really the best way to manage Ukrainian crisis? Radio VR is discussing it with the Greek journalist Konstantin Kharalampidis, Hosuk Lee-Makiyama, Director of the European Centre for International Political Economy in Brussels, and Dr. Theofanis Exadaktylos, Lecturer in European Politics at Surrey University, UK.

Is sanctions regime really the best way to manage Ukrainian crisis? Radio VR is discussing it with the Greek journalist Konstantin Kharalampidis, Hosuk Lee-Makiyama, Director of the European Centre for International Political Economy in Brussels, and Dr. Theofanis Exadaktylos, Lecturer in European Politics at Surrey University, UK.

Two members of the European Parliament, Kostas Papadakis and Sotiris Zarianopulos have written a letter to EU leaders blaming the European Commission for initiating the sanctions regime that led to Russian counter sanctions. The regime has already incurred devastating damage to Greek economy, the MEPs said.

Last week,  in retaliation against US and European sanctions over Russia's alleged role in the violence in the eastern Ukraine, Moscow introduced a ban on importing meats, fruits and vegetables, fish, and dairy products from the EU, Norway, the United States, Canada and Australia. The ban is due to last for one year but can be abolished earlier.

The two MEPs insisted EU authorities should lift sanctions against Russia, so that Russia could make the same step.

EU Should Try and Use Diplomatic Way Rather Than Sanctions - Expert

Says Konstantin Kharalampidis, Greek journalist based in Athens:

“As you understand, the impact of such sanctions on the agricultural production of Greece is huge. Currently 47% of Greek strawberry production is being exported to Russia, around 36% of cherries, 30% of the kiwis and around 40% of peaches.

The producers, who have invested their time and efforts, and of course the valuable resources in those types of production, will be low. Those kinds of producers have no alternative now, where to send their production and collect the money.

So, this is a huge problem for the agricultural sector. And it is not only for this year, as you understand. It is for the following years, because the entire production has been adapted for the Russian market.

The Greeks, who are not the typical European citizens and may have a different look at what is happening in Russia and Ukraine, are not very fond of these sanctions not only because of the agricultural products embargo, but also because Greece is a country that is being visited by over 1 billion Russian tourists every year, which is a significant income resource for people who work in tourism.

In general, the friendly relationship and the good climate that was created over the last few years, is being endangered now by this position that the EU has adopted and the Greek Government has accepted without any negotiation.

So, what has been done by the members of the European Parliament from the Greek side? You must understand that these are the left-wing parliamentarians. They are requesting for the Greek state to adopt a different politics regarding this and to make it clear that their position differs from what the EU is currently dictating.

Another Greek parliamentarian from the Syriza party, which is a broader left coalition in Greece and it is the second party in Greece currently, has sent a personal letter to Vladimir Putin asking him not to include the Greek products into the forthcoming embargo.

So, the expected damage is really huge and the reaction not only from the politicians, but from the producers themselves cannot be understated.

Do you think that this appeal is going to be heard in the European Commission?

Konstantin Kharalampidis: Regarding the EU, I don’t think that this will be heard. First of all, these parliamentarians are not members of the Greek Government. The Greek Government is the official party which is speaking to the governments of the EU. And currently they have not taken a clear position against what is happening. They are just adopting the policy that the EU is kind of dictating.

Therefore, I believe that this motion will only create some impressions, but it will not lead to any results. I think that the only thing that could be done is the direct negotiation between Russia and Greece. But this should have the Greek Government involved, which is unlikely to happen.

Despite the negative effect on the Greek economy, right?

Konstantin Kharalampidis: Yes. Now, the Greek Government in collaboration with the EU is looking for some alternatives, in order for this production to be forwarded this year. But what they are not mentioning is that the damage that will be done is bigger.

The Greek producers have been systematically working over the last 8 or more years to enter the Russian market, which, as you understand, is not an easy thing to do, and to have a significant presence there.

The problem is that if the Greek products are not on the shelves of the Russian market in the current and in the upcoming year, they will be replaced by some other producing countries. For example, Turkey or Northern African countries. I'm talking about the agricultural products.

This will be a handicap for the Greek producers to reenter the Russian market, because the price will change, the relationships between the importers will change as well.

So, we are talking about the damage that is not ad hoc damage, but a permanent one. The loss will be a lot more than 50 million Euros that the Greek Government, in an attempt to downside the damage, is mentioning in their official meetings now”.

Now, from Greece to a more general, pan-European perspective, here is Hosuk Lee-Makiyama, the Director of the European Centre for International Political Economy (ECIPE):

The overall discourse in Europe right now, in all the major capitals, is that they have reached a point, where there is no point of return. Basically, meaning that they have to fulfill and they have to stand by the lines of these sanctions.

What is the calculated impact on Russia and what could be the impact of our counter- sanctions on Europe?

Hosuk Lee-Makiyama: This is a rather unique experience for both the EU and Russia, since, usually, the sanctions are applied towards smaller countries. Whereas, if you look at the size of Russia and the EU, they are considerable in terms of their economic size and they are trillion dollar economies. And also, it is one of the strongest economic dependencies we see between Russia and the EU. It is a very strong interdependence link between those two economies.
So, in that sense, this is rather unprecedented, which means that any sanctions from one side to another will have a considerable economic impact and economic cost on the both sides.

You said that capitals believe that the point of no return has been already passed. So, in that case, what could be the signal, that would actually result in lifting the sanctions regime?

Hosuk Lee-Makiyama: Given that Russia has presented a very strong determination to step up its own sanctions, I think we have now reached a point where we can talk about the mutually assured destruction. Both sides are waving with the double-edged swords and it is basically a question about who has the endurance to outstand this situation, who has the stamina to endure the damage that is being inflicted on the both sides.

So, I would say that the desirable outcome, probably for both parties, is to resolve the situation through some form of negotiated truce, of an acceptable political situation of the current conditions in Ukraine. And we know that both sides are now bleeding and we can hasten this process by increasing the momentum of how we will reach the end point. But I think the end point in any scenario is probably the same, which is some kind of an acceptable coexistence and the realization of the realities.

Europe was quite reluctant to impose sanctions on Russia and it was pressed by the Americans to do so. Now, when we are talking about trying to negotiate the way out from the crisis, would Europe be able to do it on its own, or would it still be reliant on the US in that respect? The US is not really suffering from those sanctions, it is Russia and Europe who are suffering.

It is true. The State Department obviously could take a much clearer position, given that its economic dependency on Russia is relatively limited. Now, I would still argue that the US has a certain political, and I would even say a deep political interest in seeing a stable and reliable partner in Russia. And it is also willing to take a very strong political action to make sure that this happens.

The role of the US vis-à-vis Europe - it is true that the strategy, with regards to the US’ sanctions and the Europe’s sanctions, has been rather different. And also, the target has been significantly different from the beginning. As this will progress towards the end game of the current situation, I would assume that the position of Washington DC and Brussels will increasingly converge.

Now, that the sanctions have been stepped up from both sides and both sides realize that they are waving with the double-edged sword, and these sanctions are costly for both, those who imposed them and those who are targeted by them, we are now looking at a period of not more than 6-9 months before the situation become untenable for both sides”.

According to the Danske Bank research on Ukrainian crisis, published August, 12, “an escalating trade war would be unbearable for both Russia and the EU, and the EU will revoke the sanctions within one to three months, with Russia abolishing its own sanctions”. How realistic is the forecast?

Says Dr. Theofanis Exadaktylos, Lecturer in European Politics at Surrey University, UK:

“Obviously, this kind of trade war has been detrimental for both sides. It would be ideal if diplomacy worked and things could get sorted out a lot faster, than they usually are. However, these measures are always reciprocal. So, once one country imposes sanctions, the other side also has to impose sanctions. The more persistent the two sides are, it is the less likely that these sanctions will be lifted early enough.

Europe seems to be more vulnerable than the US…

Dr. Theofanis Exadaktylos: It is more vulnerable. Remember, the US is a single country. The EU is a union of 28 member states. And we need to also keep in mind that the EU does not have a single common policy towards Russia. A lot of the relations with Russia are based on bilateral relations that each member state has. So, it is harder for the EU to agree on a common strategy against Russia, because it affects the different member states economically in different ways.

We do understand that, for example, a country like Greece has been largely affected because of the sanctions on the agricultural products. Other countries that produce certain chemicals or other manufacturing items will be affected in a different way than Greece, for example. So, it is true, Europe is not coping in the same way as the US would, because the US has the capacity to act as a single actor and absorb certain shocks that come from these sanctions, that the EU doesn’t have.

And besides, the scale of trade between the US and Russia is so much smaller.

Dr. Theofanis Exadaktylos: Precisely! And at different level. I mean, we shouldn’t forget that Europe depends on the Russian energy resources. That is also a good leverage – if you like – for the EU and for Russia to use. And obviously, the bilateral trade in some countries, especially the eastern side of the EU has had extensive trade relations with Russia for many-many years. And therefore, using these sanctions is actually quite detrimental to these countries.

All the more so that the sanctions are not facilitating the dialog. Do you think that those concerns could be heard by the US?

Dr. Theofanis Exadaktylos: I think that the EU should try and use the diplomatic way rather than the sanctions way, because effectively the EU is better at doing that rather than imposing sanctions, if you see what I mean. When it comes to external action, issues or external affairs, EU has always used the more dialectic method, the more diplomatic way rather than using hard tools of foreign policy, like the sanctions.

There is the pressure from the US, but also, the US understands the fact that the EU cannot really sustain the sanctions for too long, simply because there is a lot of bilateral trade going on with Russia.

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