The European Union on Tuesday announced its strongest round of sanctions against Russia since the beginning of the Ukraine crisis. The sanctions are meant to show Moscow that the Europeans are willing to punish Russia for supporting the rebellion in eastern Ukraine. But they are also meant to contain political fragmentation within the European Union at a time when countries in Central and Eastern Europe are becoming increasingly uncomfortable with what they perceive as a lack of action from the bloc's largest economies. A few hours after the announcement, the United States also adopted additional sanctions against Russia.
Europe's sanctions prohibit state-owned Russian banks from buying or selling bonds and equity in the European Union, place an embargo on new arms sales, prohibit exports of dual use goods (software and technology that can be used for both civilian and military purposes) to Russia and restrict the export of certain energy-related equipment and technology to Russia. The sanctions will be revised every three months, depending on how the crisis in Ukraine unfolds. This is meant to give Europe enough time and flexibility to plan its next move.
Since the beginning of the Ukraine crisis, EU members have sought to protect their national interests and avoid a substantial escalation of sanctions against Russia. Europe's largest economies — Germany, France, the United Kingdom and Italy — have strong trade and energy links with Russia. Those links have until now kept them from supporting tougher actions against Moscow. However, the downing of Malaysia Airlines Flight MH17 has shifted the position of these countries — as well as public opinion within them — against Russia.
But this is also a tactical move because the sanctions have been tailored to hurt Russia more than Europe. The sanctions will not affect France's military sales with Russia or natural gas exports — a decision meant to please Germany and Italy, Russia's largest natural gas customers in the European Union.
These sanctions should be seen within the context of Western Europe's permanent desire to balance between its economic and political interests. The situation in Ukraine has put Germany, the largest economy in the European Union, in an awkward position. On one hand, Berlin needs to preserve its strong economic ties with Russia. On the other hand, it has to appease the eastern members of the European Union that have repeatedly complained about Germany's timid response to the crisis in Ukraine.
When countries in the former Communist bloc joined the European Union and NATO, they were expecting both institutions to provide them with economic prosperity and military protection. The economic crisis in Europe has created doubts about the first promise, while Germany's reluctance to take a tougher stance against Russia has opened questions about the second. Moreover, as Europe drags its feet on the application of additional sanctions, countries from Poland to Romania are looking at Washington instead of Brussels for protection and investment.
The downing of the Malaysian airliner July 17 made things even more difficult for Western Europe, especially because so many Dutch citizens — and some British and German citizens — were killed. In the past 10 days, the media in Western Europe have adopted a tone that is more critical of Russia. German newspapers accused Russia of creating a "monster" (the separatists) in Ukraine and demanded tougher sanctions against Moscow. The plane crash also led to an ugly blame game within the European Union. Countries in Eastern Europe criticized France's military deals with Russia and denounced Italy's close ties with Russian President Vladimir Putin's government (in mid-July, Poland and the Baltic countries blocked Rome's proposal to have the Italian foreign minister appointed as head of EU diplomacy). The economic crisis had already generated severe divisions within Europe, and the Ukraine crisis is threatening to make these divisions even deeper.
As a result, Germany, France, the United Kingdom and Italy felt that they had to do something. Tuesday's sanctions are meant to put Putin on notice without cornering him. Their goal is to show Russia, but more importantly, countries in Central and Eastern Europe, that the European Union is willing to punish Moscow for supporting Ukrainian separatists.
Just as the Europeans felt they had to do something, Putin will be pressed to respond as well. In recent days, Russia has announced plans to ban the import of agricultural products from several EU members, and similar actions could follow. Russian lawmakers have also threatened to seize the assets of European companies operating in Russia, but this possibility still seems distant.
Europe's plan is clear: Gradually increase sanctions that are designed to give Russia the time and space it needs to change its direction while making sure European businesses do not feel excessive pain. However, Putin is under more pressure than his European peers. For Moscow, having a pro-Russian government in Ukraine — or at least a neutral government outside of the Western alliance structure — is an existential question. Putin has simply invested too much political capital in the Ukraine crisis, and his own position as Russia's leader could be at stake.
At this point, the Europeans do not need to do much else. Tuesday's measures will probably appease countries in Central and Eastern Europe for some time, while the economic impact on local companies will remain tolerable. The key actor to watch now is Russia, and the coming days will probably be crucial for Russia's position in Ukraine and, potentially, for the future of Putin's government.