The EU has adopted a new package of sanctions against Russia targeting key sectors of economy and expanded the list of entities it considers responsible for Ukrainian crisis. The move was followed by a similar step taken by the US Department of Treasury. Experts warn that aimed at punishing Russia sanctions can badly hit Western businesses.
Dmitry Kurochkin, Vice-President of the Chamber of Commerce and Industry of the Russian Federation, Ilya Levin, independent expert joining us from Berlin, and Jon Hellevig, a Finnish political analyst and businessman, based in Moscow shared their opinions with Radio VR.
Dmitry Kurochkin: To begin with, I wouldn’t use the term ‘sanctions’ in this particular case, I would rather call it unilateral restrictive measures. And, frankly speaking, those who impose them are going beyond their national jurisdiction. Moreover, it contradicts the WTO regulations and the very philosophy of this organization, because the WTO was designed to liberalize trade, while the direct purpose of these measures is just to restrict trade for noneconomic and, essentially, political reasons.
So, what is this strong psychological pressure aimed at? If you ask – do these measures have an impact on the Russian economy? – I think yes, because the EU is our main trading partner and we regret about it. But if they are effective in changing Russia’s strategic behavior – my answer would be ‘no’ and even stronger measures won’t change anything.
What really matters for me is the atmosphere of cooperation and mutual trust between Russia and Europe, between the Russian and the European businessmen. And that is the question, because no trust – no business. But, fortunately, I think things are not as bad as that.
We have frequently discussed these questions with our colleagues from the chambers of commerce both in Europe and the US, and I can assure that most of them are strongly against these measures. Moreover, they are determined to even intensify our cooperation in some fields and we do appreciate it. As they say – a friend in need, is a friend indeed.
What can be the role of the business communities all over the world, especially in Europe, probably, in sending their message to the policy makers that – please, stop, please, understand that in the 21st century what you are doing contradicts not only the WTO norms but the very essence of capitalism, which envisages the free flow of capital and the exchange of goods?
Dmitry Kurochkin: Yes, I agree. And it is a very strong pressure imposed not only on Russia, but on the European business community as well. And everyone is aware of the fact that these EU measures against Russia will backfire, and that the European business community and the EU economy at large will suffer as a result of these measures, and, certainly, both sides will have losses.
The question – whose losses will be more sensitive – it depends. But I think we are more – if you like – stress resistant, just because we are. It is in the Russian history and psychology. But what I would like to emphasize is that we are not planning any direct retaliation measures, but, on the other hand, we certainly make conclusions of these events and we will have to look for new sources of investment and new markets in other parts of the world. And it is only natural.
I would like to say that we completely understand our business partners and we are united in this understanding of these measures as of very harmful, very detrimental for both sides. And that is a bad side, I would say. But there is a very good and positive side, on the other hand, another side of the coin, because these measures may be good news for our industrial policy. I mean, our chamber has always been proposing decisive measure to pursue a very strong industrial policy in Russia and in a way we are very grateful to these events, which will eventually make us stronger industrially.
Ilya Levin: It is quite a big punishment. The German economy is very concerned about these sanctions coming. On the one hand, they see the necessity to work together with the US and the whole international community on the sanctions. On the other side, they have a bit of concern because of the influence of the sanctions on the German economy. That’s why they are trying to do it halfway – publically talking about the sanctions, on the one hand, and, on the other hand, not implementing them.
How concerned the German business and politicians are about these latest sanctions?
Ilya Levin: I would the German business is very concerned. The German politicians are not basically concerned, because they are acting only on the political agenda. It is pretty early to speak about the impact of the sanctions on the German economy, we are basically talking about the expectations of the impact on the German economy and we are going to see. The German Trade Organization gave an estimation of a value loss of about $30 billion, but we can’t really talk about it seriously right now.
How is Russia and Vladimir Putin being portrayed in the media at the moment?
Ilya Levin: Right now, it is a kind of neutral position on that. Earlier in the press we could read about the warning of the Special Ambassador of the German Government on the Russian issues about Putin being a really rational player in the field, on the one hand, but, on the other hand, warning about the danger of sending troops to Ukraine.
Basically, the mainstream position is that nobody knows what to expect from Russia. They are thinking he is the rational player, but, on the other hand, they are pretty concerned, because all the developments over the last couple of months are very unexpected for the German side. And that’s why they don’t know what to talk.
It is not like the standard West European propaganda about Putin being the bad guy and the Ukrainians being the good guys. Everybody is like a bit of a bad guy and a bit of a good guy.
How likely is the German Government to impose even tougher sanctions on Russia?
Ilya Levin: I wouldn’t say the German Government is really ready to implement tougher sanctions. If we are talking about the sanctions of the EU, we should consider one thing – the EU decides on the sanctions, but the concrete implementation of the sanctions is the sovereignty of the national states. That’s why the Germans have a kind of space for decision on that. Germans can decide what sectors they are targeting. They are obliged to implement that, but how they do that and when they are going to do that, that is the decision of the German Government.
And that’s why, if we are talking about the tougher sanctions, we should see the other side. The German Government could say – look, the small sanctions are not so tough sanctions, we are working and we are waiting on the tougher sanctions. I wouldn’t really think it is expectable – the tougher sanctions. It is more like the American talking, the talking of the Baltic states, but it is not the talking in Germany.
Jon Hellevig: I'm very concerned. I think that, first of all, there will be worse sanctions. And, secondly, already these sanctions very much affect the business climate. Business that is not directly covered by the sanctions already suffers from these sanctions. Companies don’t want to make investments they were planning to do. So far, there has been no reason to make these sanctions. If the sanctions are not a response to any specific event or any specific action of the Russian Government, they are just a way of warfare against Russia.
To what extent do you think the voice of the Western business community can be heard by the policy makers?
Jon Hellevig: I think very little, because the problem is in the politics of democracy of the Western states. We have the EU, which is totally an undemocratic institution. And they are covered by propaganda press in the West that lies to the public about everything that is going on. Therefore, the voices of business or of people that are concerned – they don’t have any connection with the decision making.
