26th Oct 2016

EU sanctions add to Putin's Crimea headache

  • Almost 6 million tourist came to Crimea in 2013, compared to 2 million (80% of them Russian) this year (Photo: Michael Schwab)

The EU will, from Saturday (20 December), ban almost all forms of business co-operation with Crimea in a further blow to the Russian economy.

The new law - agreed on Thursday and seen by EUobserver - is designed to give teeth to EU non-recognition of Russia’s annexation of the Ukrainian region.

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It stops European entities from buying real estate, acquiring shares in Crimean firms, and providing loans or financial services.

It prohibits them “to sell, supply, transfer, or export goods and technology” in the transport, telecommunications, energy, and oil and gas exploration sectors.

It prevents provision of any EU services “directly relating to infrastructure … [and] tourism activities”, listing seven ports where EU cruise ships cannot call: Chernomorsk; Evpatoria; Kamysh-Burun; Kerch; Sevastopol; Theodosia; and Yalta.

It also lists 165 goods and products under embargo, hitting both industry and private consumers.

They include: salt; sulphur; iron; nickel; rock-drilling tools; steam turbines; fridges; washing machines; fork-lift trucks; machine parts; and office equipment.

They also include: radio and TV broadcasting equipment; light bulbs; trucks and vans; motorcycles; and liquid crystal devices.

The law contains exemptions to “minimise the effect … on the civilian population” and on EU businesses.

It doesn’t apply to contracts signed three months or more before 20 December or to Crimea-based firms’ operations outside the region.

Cruise ships can keep calling until 20 March.

Derogations also cover supplies to foreign consular missions, hospitals, and schools, as well as work to maintain “safety of existing infrastructure” or to protect “human health and safety … or the environment”.

The ban goes much further than previous Crimea sanctions in June and July.

Given Russia’s financial crisis and that it has to supply Crimea by sea, it's likely to make the region, which used to live on Ukrainian subsidies, into even more of an economic headache.

With Crimea’s maritime zone said to hold gas reserves, the ban on gas exploration technology will slow down efforts to cash in.

EU sources say France, which has the biggest commercial interests in Crimea, tried to water down the measures.

It said the ban should apply only to firms which are legally domiciled in the region. But the final text also embargoes “subsidiaries or affiliates under … control in Crimea”.

Against the grain

The new measures go against the grain of current EU thinking on the crisis.

EU leaders will take stock of Russia relations at a summit on Thursday.

Draft conclusions say if Russia continues to flout ceasefire accords “the EU will stay the course; the European Council is ready to take further steps”.

But German, French, Russian, and Ukrainian leaders in a phone call on Wednesday spoke of diplomatic solutions.

German chancellor Angela Merkel’s press release said she wants “good and co-operative relations” and "closer" trade ties with Moscow.

A senior EU diplomat told EUobserver “the mood has shifted” since she met Russian leader Vladimir Putin at a G20 event in Australia last month.

“I don’t have the feeling that there'll be a new wave of economic sanctions”, he said, referring to measures beyond Thursday’s Crimea decision.

Smallprint, big meaning

For her part, EU foreign affairs chief Federica Mogherini has called for a review of Russia sanctions in early 2015.

She has little power to shape policy. But the vocabulary of EU statements has changed since she arrived on 1 November.

Pre-Mogherini ones referred to Russian forces in Ukraine, but post-Mogherini ones call them “foreign forces” or “illegal forces” without naming Russia.

Ukraine’s ambassador to the EU, Kostiantyn Yelisieiev, recently urged EU states to call a spade a spade.

He wrote in a letter to EU ambassadors ahead of a Ukraine meeting on 15 December that the event “should not be an occasion for twisting language”.

He said “the word ‘aggression’ should not be avoided as it is an unfortunate reality" and that the EU should keep repeating that Crimea is “occupied” or “annexed" by Russia.

Mogherini’s 15 December statement mentioned the “illegal annexation of Crimea by the Russian Federation”.

But it didn't use the word “aggression” and spoke of “infiltration of illegal forces … from the territory of” Russia.

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