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The European Union is unlikely to approve substantial sanctions against Russia because it would go against the economic interests of most of its members. There will be a period of cold relations between EU members and Russia, but eventually EU members will return to their previous strategies of seeking a pragmatic relationship with Moscow.
The crisis in Ukraine is having political repercussions for most members of the European Union. In the west, countries such as Germany, France and the United Kingdom are trying to strike a balance between criticizing Russia's actions in Crimea and ensuring that their economic links with Moscow are unaffected. The crisis is reminding countries in Central and Eastern Europe such as Poland and Lithuania that their alliances with the European Union and NATO have clear limitations, since both organizations have few options to contain Russia. Finally, countries that recently sought closer ties with Moscow, including Hungary and the Czech Republic, are struggling to define their position in the conflict.
Russian President Vladimir Putin on March 4 ordered Russian troops participating in military exercises near Ukraine's eastern border to return to their bases. During a news conference Putin said that Moscow had no plans to annex Crimea and that the people in the region needed to decide its future. However, he also said Russia reserved the right to use force as a last resort. These steps toward de-escalation came as U.S. Secretary of State John Kerry arrived in Kiev to discuss international financial assistance for Ukraine. At the behest of Poland and Lithuania, two of the most vocal critics of Russia's moves in Ukraine, NATO members held a special meeting on Ukraine on March 4 and a NATO-Russia summit will take place March 5.
Responses to the Crisis Throughout Europe
When Russian troops deployed in Crimea, the United Kingdom and France denounced what they consider a violation of Ukraine's sovereignty by Russian forces and said there would be "consequences" if Moscow did not withdraw its troops from the region. These words have so far not translated into action. French Foreign Minister Laurent Fabius said March 3 in an interview that Paris is not considering a cancellation of France's substantial military contracts with Russia. Later that day, British media leaked an internal document in which British officials said London's financial center should not be closed to Russians.
Germany's reaction to events in Ukraine is even more telling. During the early stages of the Ukrainian crisis, Berlin played an active role, supporting opposition leaders and sending delegations to Kiev. But after the fall of the government of Viktor Yanukovich and the Russian seizure of Crimea, the government of Chancellor Angela Merkel, despite criticizing Russian measures, took a considerably more moderate approach. German Foreign Minister Frank-Walter Steinmeier criticized U.S. and French plans to expel Russia from the G-8 and proposed the creation of a "fact-finding mission" led by the Organization for Security and Co-operation in Europe. Germany has strong economic ties with Russia and is worried that extreme pressure could further alienate the Russians. Berlin now believes that a settlement with Russia is necessary, and several members of Merkel's Cabinet are urging her to focus on diplomatic pressure and avoid any significant sanctions against Russia.
Poland and the Baltic nations, whose history has been marked by the permanent threat of Russian invasion, will follow these events closely. After the fall of the Soviet Union these countries viewed EU and NATO membership as a barrier against the potential resurgence of Russia. This is why Poland and Lithuania are the main political forces behind the European Union's Eastern Partnership initiative, which is designed to draw former Soviet states closer to the European Union (Yanukovich's suspension of the association and free trade agreements negotiations is what prompted the demonstrations and crisis in the first place). It also explains why Warsaw and Vilnius were the most open critics of Russia's actions in Ukraine, and why they invoked the NATO treaty and called the March 4 meeting of the organization to debate the situation. These countries are likely to feel particularly frustrated by the European Union's and NATO's lack of concrete responses to the Ukrainian crisis.
The situation is also complex south of Poland, in the group of nations that had communist governments during the Cold War but do not have the same sense of threat and urgency in their relationships with Russia. These countries have recently pursued a more pragmatic relationship with Moscow, seeking cooperation in key areas such as nuclear energy and trying to attract Russian investment.
Hungary is a perfect case. Before the Ukrainian crisis, the government of Hungarian Prime Minister Viktor Orban was fostering warmer relations with Moscow. In mid-January, Moscow agreed to lend Budapest 10 billion euros (nearly $14 billion) to finance two Russian-built reactors at Hungary's Paks nuclear power plant. But the Ukrainian crisis put Budapest in a delicate situation. Orban originally based his reaction to events in Ukraine on the promise to protect the Hungarian minority in Ukraine and the offer of assistance to people crossing the Ukrainian-Hungarian border. But under political pressure from the opposition, Budapest recently strengthened its criticism of Russia and said the association agreement between the European Union and Ukraine should be signed as soon as possible.
The Czech government is under similar political pressure. Czech Defense Minister Martin Stropnicky said March 3 that Russian companies should be excluded from the tender to expand the Temelin nuclear plant. (A consortium including Russia's Atomstroyexport is bidding to expand the plant.) But the Czech Republic is heavily dependent on Russian natural gas (three-quarters of the country's consumption of natural gas is imported from Russia) and Czech exports to Russia doubled in value between 2009 and 2013, so Prague cannot afford a substantial break with Moscow.
Colder Relations Before a Return to Pragmatism
The European Union is unlikely to place significant sanctions, such as asset freezes, arms embargoes or trade restrictions, on Russia. Instead, the Europeans will likely apply superficial measures, including the suspension of current negotiations for visa liberalization (a process that was making little progress even before the current crisis) and the temporary suspension of bilateral cooperation in different areas. In the coming weeks, the European Union will push for more diplomatic dialogue between Russia and the West while offering limited financial assistance to Ukraine.
The events in Ukraine will also do little to reverse the ongoing political fragmentation in Europe. Countries in Western Europe have shown that there is little they can do to present a unified and coherent reaction to Moscow's moves. Countries in Central and Northern Europe have confirmed -- once again -- that their membership in the European Union and NATO has clear limits.
This will force them to deepen their strategy of trying to reduce their dependence on Russian energy and seek closer ties with the United States while building a pragmatic relationship with Moscow. This strategy is not without costs and risks. First, the measures designed to reduce national dependence on Russian energy are slow and expensive -- as demonstrated by Poland's efforts to transition to shale gas or the competition between Finland and Estonia to attract EU funds for a liquefied natural gas terminal. (Since no agreement was reached, they decided that each country would build one, even if the decision may not be economically viable.)
Second, history has shown Poland the dangers of depending on outside actors for its national security. Warsaw has been vocal in its demands for a greater U.S. presence in Central Europe, but Washington's interests in the region are not as strong as they were during the Cold War or even the mid-2000s. These countries will probably see more heated debate over the protection offered by Western alliances and efforts to mitigate Russian pressure.
Because of the Ukrainian crisis there will be a period of cold relations between Russia and most EU members. Since the beginning of the European crisis, Moscow made a significant effort to be perceived as a "good neighbor" by the European Union in general and the former Soviet states in particular. This strategy included discounts on energy prices and the offer of investment and loans with few conditions. Russia's military deployment in Crimea is a reminder of how far Moscow is willing to go to defend its strategic interests and will hurt Russia's strategy in the short term. The countries that recently saw warmer ties with Russia will probably take a step back to prevent domestic criticism, but only momentarily.
In the long run, most of Russia's levers are intact. Central and Eastern European nations are still dependent on Russian energy, and the lingering economic crisis in Europe still makes Russian investment attractive -- especially if it does not come with the conditionality that defines loans from the European Union and the International Monetary Fund. Moreover, the political fragmentation in Europe and the lack of cohesion in NATO predate the Ukrainian crisis and will still influence decisions by Central and Eastern European nations long after the current crisis in Ukraine is over. Even if we currently see strong rhetoric coming from Central and Eastern Europe, these countries will return to their original strategy of seeking accommodation with Moscow after the Ukrainian crisis is over.
Courtesy : Stratfor (www.stratfor.com)