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Ukraine

FAQ: Sanctions and the Ukraine crisis

The EU and US are talking further sanctions - the Kremlin, retaliation. Does that mean an uncontrollable sanctions spiral? Or could the measures actually cause the Ukraine crisis to de-escalate?

Which sanctions have been imposed so far?

In early March, the EU's heads of state and government agreed to a three-stage plan for sanctions against Russia.

Level one included the stopping of EU negotiations with Moscow on a relaxation of visa rules as well as a new accord.

The second level involved banning travel to the EU and freezing assets held in the EU. In March, 33 people from Russia and Ukraine were placed on that list, each seen as responsible for escalating the situation in Crimea, the peninsula Russia annexed from Ukraine in March.

On Monday (28.04.2014), EU ambassadors imposed sanctions on 15 more people, which included Russian Deputy Prime Minister Dmitry Kozak, who coordinated Russia's Crimea policy. Several leaders of pro-Russian separatist groups in eastern Ukraine are also on that list. In total, sanctions have been imposed on 48 people.

The third and final level of sanctions has yet to be declared. It is to be imposed if the EU feels Russia is further destabilizing the situation in Ukraine. The EU would then implement economic sanctions. The exact nature of such sanctions is not yet clear. The EU Commission is currently working on a joint position for the 28 member states.

Obama

On 30 April, a group of Republican senators introduced a bill for further sanctions and aid for Ukraine's military

The US has imposed visa bans and asset freezes on a number of Russians with links to the government. On Monday (28.04.2014), it added seven more people to that list, including Igor Sechin, CEO of Russia's state-held oil giant, Rosneft. Also on the list are politicians and members of the military taken to be responsible for the Crimea crisis and destabilization in eastern Ukraine.

The US also decided on measures against the St. Petersburg-based Rossiya bank and 17 companies believed to have ties to Russian President Vladimir Putin.

Additionally, there are restrictions on high-tech US exports to Russia that could be used by the Russian military. Should Russia intervene militarily in Ukraine, additional sanctions would hit key sectors of the Russian economy.

How has Russia reacted?

It has ranged from mockery to anger. First, some of the sanctioned individuals called it an honor to be on the list. Moscow, meanwhile, threatened counter-measures. Russia's deputy prime minister, Dmitry Rogozin, said Tuesday, "Honestly, they're beginning to get on our nerves with sanctions. And they don't understand at all that the sanctions will backfire."

Putin also warned of consequences for Western energy firms in Russia. "If this continues, we'll of course have to think about how [foreign companies] operate in the Russian Federation, particularly in key industries such as the energy sector."

Russian oil concern Rosneft cooperates with several Western energy companies, such as US-based ExxonMobil, Statoil of Norway and Eni of Italy. The German E.ON group has also expanded its business in Russia in recent years. Overall, Germany's largest energy provider has invested roughly six billion euros in Russia since 2007, much of it in new power plants.

But do the sanctions have teeth?

The effects of sanctions, themselves, are limited. Suspending talks on lighter visa restrictions and a new EU-Russia accord were largely symbolic; account freezes and travel bans affect a small circle of individuals. The latter group surely had enough time to withdraw funds held abroad beforehand.

Dr. Susan Stewart

Susan Stewart: Sanctions will have an impact

Indirectly, says Susan Stewart, an Eastern Europe expert at the German Institute for International and Security Affairs (SWP), sanctions will take their toll. "The flight of capital [from Russia] has increased," she told DW. "Many investors doubt whether they should still look toward Russia. The ruble has fallen."

These consequences are the result of uncertainty created by the crisis as well as the sanctions. Russia's economy is feeling it. The International Monetary Fund (IMF) has significantly lowered its growth forecast for Russia in 2014, from 1.3 percent to .2 percent.

How high is the threat of a sanctions spiral?

Relatively high. The German government's Russian affairs commissioner, Gernot Erler, counts on counter-sanctions should the West take further punitive action. That raises the question, he says, of "whether the spiral of reciprocal measures is controllable at all," adding, "That would then really be a return to Cold War."

Stewart at SWP considers Russian counter-sanctions "very likely." Still, she advocates a strong signal to the Kremlin. Tough sanctions, Stewart says, can force Moscow to relent.

"If, instead, you stick with relatively weak sanctions, even though Russia annexed Crimea and destabilized eastern Ukraine, then Russia will go further."

In the medium term, even countries like Moldova or Georgia could face threats, the expert says.

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