Are sanctions against Russia worth the cost?

by Chris Arsenault | @chrisarsenaul | Thomson Reuters Foundation
Tuesday, 30 September 2014 12:30 GMT

Farmers like Giorgio Corradini are worried family farms will be particularly hard hit by Russian sanctions and are calling on the European Union to distribute more aid. THOMSON REUTERS FOUNDATION/Chris Arsenault

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EU farmers find themselves stuck on a geopolitical fault line

Andrea Corradini is usually too busy tending to his cows to worry about EU foreign policy. But with dairy farms like his embroiled in a standoff between the European Union and Russia over violence in the Ukraine, his livelihood is caught in the middle of an expanding geopolitical fault line.

"We (had) just started selling our cheese in Russia,” Corradini, 30, said in an interview beside the barn in Villanova, Italy, where his 170 cattle live. “We invested a lot to get into that market. We are worried.”

Russia launched sanctions on most European farm products in August in response to similar moves by the EU targeting Russian banks, energy firms and arms companies.  

The diplomatic tussle stems from a push by NATO and the EU to expand into areas Russia considers its sphere of influence. Pro-EU protesters ousted Ukraine’s Moscow-backed government in February, prompting months of unrest.

Moscow then unleashed the bureaucratic fury of Brussels by annexing Crimea in March after residents of the region voted to become part of a Russia.

Today, Russia is accused of backing irregular armed groups opposed to the government in Kiev and fighting for independence or autonomy in eastern Ukraine.

“I am not a political affairs expert,” Corradini said. “From a political point of view, the EU is correct to support Ukraine. But from an economic view it (EU sanctions on Russian energy and weapons firms) isn’t a good policy because it causes hardship for small farmers.”

THE COSTS OF SANCTIONS

Many in northern Italy’s picturesque farm country – not to mention a host of security experts, researchers and diplomats – are weighing the effectiveness of sanctions as a foreign policy tool.

“Clearly sanctions have costs for the parties that use them; it’s hard to explain this to a farmer who now cannot export to Russia,” said Paul Ivan, an international affairs analyst with the European Policy Centre. But “sanctions are not one of the first tools used. They are one of the most serious tools in international politics before armed conflict,” he said, calling Russia’s annexation of Crimea “the most serious breach of international law in Europe since World War II”.

Sanctions won’t necessarily lead Russian President Vladimir Putin to change his strategic calculus, Ivan said, but they do send a signal that Europe doesn’t like Russia’s behaviour, reassuring local populations, particularly ex-Soviet bloc countries, that Brussels will “take measures to defend them”.

In Moscow, sanctions do not seem to have dented Putin’s popularity or changed Russia’s conduct. Polls indicate that most Russians back Putin’s stance. The economic costs of the trade dispute, for both sides, still haven’t been thoroughly calculated. 

In the EU, feelings towards the sanctions are mixed as they compound market instability exacerbated by other factors, including climate change, the Ebola crisis and worsening political unrest in the Middle East. Many farmers and consumers in Europe aren’t convinced sanctions will work, considering the effort all pain and no geopolitical gain.

“We don’t care that much about the Russians,” said pear grower Gaetano Lambertini. “The problem that we have is that the European Union is not protecting agriculture.”

If nothing else, farmers hit by sanctions want more aid from the EU to mitigate for the damages caused by lost markets and the ensuing price declines.

NOT JUST RUSSIA

Unrest in Ukraine is just one of the geopolitical troubles threatening Lambertini’s bottom line. “Libya used to be one of the biggest markets for lower quality pears, but now because of what’s going on with the war we are not exporting there. All of these political problems are stopping our exports.”

Italian growers like Lambertini are hoping to sell more within the EU, but other farmers around Europe have had the same idea, leading to a drop in prices for some fruits and vegetables.

Nationalist-tinged social media movements urging Europeans to buy local products, including the Polish plot to “Eat apples to annoy Putin”, or the “Veggieselfie” campaign, where EU officials take photos of themselves eating European farm products, don’t seem to be particularly effective.

Sanctions are set to last for one year, and few are optimistic they will be lifted earlier. Neither Russia nor the West seem ready to back down.

Direct armed conflict between the Europe and Russia still seems unlikely, so food will continue to be a primary battle ground in the fight. Some analysts aren’t convinced that is a smart way to conduct international relations.

“Trade has always been a part of political and economic conflicts,” said Ekaterina Krivonos, an economist with the UN’s Food and Agricultural Organisation. “However, trade wars create losses on both sides and rarely help achieving the political goals, which in the end require a cooperative solution.”

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