West’s sanctions on Russia or arming Ukraine

West’s sanctions on Russia or arming Ukraine

Russia annexed Crimea and is supporting the brutal separatists in the Donbass with weapons and soldiers. It is without doubt involved in Ukraine’s civil war, writes Prince Michael of Liechtenstein.

The US and the European Union have responded to this breach of the European security framework and other agreements by imposing economic sanctions on Russia. They hope this will force Russia to convince the separatists to respect the Minsk ceasefire agreement of September 2014 and also halt Russia’s arms deliveries and its direct military support to the separatists.

The sanctions are seen as punishment for Russia's infringements. But sanctions have had no impact on Russia's behaviour so far. Russian President Vladimir Putin's approval rating remains high among his population which seems prepared to suffer for what it considers Russia’s national interest.

Russia's economy and its balance of payments is suffering for three reasons and sanctions are probably the least important. Russia’s main source of income is its energy exports. The impact of the drop in oil prices is hitting hard.

The second problem is the weak rouble which is forcing Russia’s Central Bank to impose interest rates exceeding 17 per cent. GIS expert Dr Friedemann Mueller indicated at the Munich Security Conference 2015 that high interest rates and the resulting prohibitive capital costs are impeding crucial investment, especially in manufacturing facilities and infrastructure. Capital outflow from Russia increases the problem.

The third problem is the direct impact of Western sanctions which are preventing the delivery of Western expertise and technology to exploit and develop further oil and gas exploration. This is blocking some extra oil and gas production.

However Russia’s government can still use its high monetary reserves to keep the ship afloat for some years to come.

Russian separatists have launched successful attacks against Ukraine’s army thanks to their superior and more modern weapons provided by Russia and support from Russian ‘volunteers’. The Ukraine army could be forced to retreat as Debaltseve is besieged and Mariupol is endangered.

Ukraine needs weapons. Influential political circles in the US are strongly advocating supplying them. The White House appears indecisive.

Ursula von der Leyen, Germany's Minister of Defence, was firmly against arming the Ukraine army in her speech at the Munich Security Conference. She said this would encourage Russia to offer more support to the separatists and serve as an excuse and further ‘legitimise’ Russia’s support.

She considers economic sanctions are a very sharp sword. Germany’s Chancellor Angela Merkel also advocates this position, which some American circles consider a carte blanche to Russia to drive forward in Ukraine.

If the separatists advance further and the meeting of the leaders of Ukraine, Russia, France, and Germany on February 11, 2015, does not deliver a breakthrough, it is likely the West will have to support Ukraine with weapons and military equipment, irrespective of the concerns of Russia’s potential reaction. Nato, by its charter, cannot do this, but selective Western countries can act independently of Nato.

Related reports:

The peace hypocrisy

Ukraine faces a trilemma of challenges

The return of the Cold War

Review of Russian sanctions could benefit Ukraine, Russia and the West

Fault-lines exposed in Putin’s Eurasian grand plan


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