Ukraine and EU Sanctions against Russia
The European consensus for maintaining Ukraine-related sanctions against Russia is beginning to unravel. In addition to the economic costs of sanctions to European industry and agriculture, two major factors are contributing to the decline in support for the sanctions policy:
- Although the sanctions have damaged the Russian economy, the economic pain has not produced the hoped for political change in Russia’s approach to Ukraine or any significant reduction in Russian popular support for Russian president Vladimir Putin and his policies. It appears increasingly doubtful whether enough governments have the strategic patience to stick with this policy for the long term.
- Ukraine’s pro-European government is losing sympathy in the West because of its unwillingness to implement its side of the Minsk II agreement, tackle endemic corruption, and implement other needed reforms.
- “If Ukraine doesn’t come through with the reforms linked to the Minsk peace process, it will be very difficult for Europe to continue united in support for sanctions against Russia,” Danish foreign minister Kristian Jensen warned on the sidelines of a 5-6 February meeting of EU foreign ministers in Amsterdam.
- Ukraine’s highly respected economics minister, Lithuanian Aivaras Abromavičius, resigned his position in early February, stating “Neither I nor my team have any desire to serve as a cover-up for the covert corruption, or become puppets for those who, very much like the ‘old’ government, are trying to exercise control over the flow of public funds.” Ten Western ambassadors, including those of France, Germany, the UK, and the U.S., subsequently issued a statement in support of Abromavičius.
In Germany, Bavarian minister president and Christian Social Union (CSU) leader Horst Seehofer and his predecessor Edmund Stoiber met with Putin in Moscow in early February to discuss future economic relations and global issues. Seehofer said he hoped for a loosening of Western sanctions against Russia “in the foreseeable future” but said it still had to be determined how this realistically could be accomplished; whether in stages or in a single step. His comments were reminiscent of economics minister Sigmar Gabriel’s October 2015 visit with Putin, in which Gabriel expressed his personal opinion that the sanctions could be lifted incrementally even without the full implementation of the Minsk II agreement.
- Seehofer’s visit drew criticism from some government officials and media sources, which accused him of challenging Chancellor Angela Merkel’s support for continued sanctions and undermining a common European position toward Moscow. Seehofer rejected the criticism as unjustified and said that all aspects of his trip had been coordinated in advance with the Chancellor and the Foreign Office.
Seehofer’s visit to Moscow came close on the heels of a visit by Austrian vice chancellor and economics minister Reinhold MItterlehner, who also heads the Austrian People’s Party. Mitterlehner headed a delegation of Austrian business leaders for two days of talks on economic cooperation, including Austria’s participation in and strong support for the Nord Stream 2 gas pipeline linking Russia with Germany across the Baltic Sea. In talks with Russian prime minister Dmitry Medvedev, Mitterlehner stated that Austria didn’t want to be dependent on the Ukrainian government or Ukraine’s gas transit network for its gas supplies. Mitterlehner also criticized the EU’s Ukraine-related sanctions against Russia and promised that Vienna would work within the EU to end them.
If the consensus for sanctions cannot be maintained, Western supporters of Ukraine are likely to demand other measures to help Ukraine in its struggle against Moscow, including the provision of increased military assistance and more advanced weapons for Ukrainian forces that could escalate the level of conflict in eastern Ukraine. Past discussions have demonstrated that there is no consensus in the West for such a military response.
Dutch Referendum on Ukraine’s Association Agreement with the EU
EU skeptics in the Netherlands have forced a referendum on 6 April challenging the Netherlands’ approval of the EU’s association agreement with Ukraine. Dutch foreign minister Bert Koenders told reporters 6 February that the government would be obliged to reconsider its position in support of the agreement if it loses the referendum. Although the referendum is non-binding, most Dutch political parties have said they would respect the decision of the voters. EU Commission president Jean-Claude Juncker has warned that a victory for opponents of the association agreement in the referendum could lead to “a great continental crisis.”
Opinion polls in December showed 62 percent opposed to the association agreement and only 38 percent in favor of it. A campaign to increase public support has since narrowed the margin, but as of late January, opponents of the agreement still led supporters 55.5 to 44.5 percent. Two polls of about 3,000 Dutch voters conducted by I&O Research and the University of Twente found that the main factor driving the no vote is opposition to further eastward enlargement of the European Union, which for most voters outweighed their concerns about Russia.
Normalization of Relations with Iran
Germany and its European partners are intent on boosting trade and investment with Iran following the lifting of sanctions in the wake of Iran’s implementation of the core nuclear-related commitments agreed to under the Joint Comprehensive Plan of Action (JCPOA). Rapid normalization of relations between Europe and Iran could bring European states into conflict with the U.S. Congress, which has been pushing for new sanctions against Iran on the basis of human rights, support for terrorist organizations, and recent ballistic missile tests.
While the imposition of unilateral U.S. sanctions alone probably would be manageable as long as they were confined to U.S. entities, efforts to impose extraterritorial restrictions on European businesses or financial institutions doing business with Iran could produce tensions in transatlantic relations. Europe’s banking and financial sectors are particularly concerned, given past aggressive enforcement of U.S. sanctions by the Treasury’s Office of Foreign Assets Control.
European suppliers are scrambling for a share of the pent up demand in the Iranian market, with Germany alone expecting a four-fold increase in exports to €10 billion over the next five years, according to reports by the German wire service Deutsche Welle.
- Germany’s Siemens, which recently signed its first contracts with Iran in years, hopes to make billions of euros providing trains and equipment to modernize Iran’s railway network.
- Herrenknecht, a Swabian producer of supersized tunnel drills, reportedly wants to provide Iran with equipment to expand its subway systems—equipment that also could be used to build protected bunkers for Iran’s command and control centers and other leadership assets.
German foreign minister Frank-Walter Steinmeier visited Tehran in early February—his second visit to Iran in the last three months—for talks with Iranian president Hassan Rouhani, parliamentary president Ali Larijani, and foreign minister Mohammad Javad Zarif on bilateral relations, the Syrian civil war, and other pressing conflicts in the region. Steinmeier said there is “enormous mutual interest and curiosity” regarding the development of economic relations, as well as cooperation in the areas of science and culture. He emphasized that “strong nations” need to look beyond national interests and accept responsibility for their neighborhood and the entire region. Before leaving Iran for talks in Saudi Arabia, he warned that every new escalation in tensions between Tehran and Riyadh makes the search for solutions to regional problems that much more difficult.
- Deutsche Welle noted that Steinmeier encouraged Rouhani to visit Germany during his next visit to Europe. However, Germany’s Der Spiegel reports that Germany’s Christian Democrats are divided over the issue. Chancellor Merkel apparently has no interest in meeting with Rouhani and Bundestag Foreign Affairs Committee Chairman Norbert Röttgen reportedly is concerned about the symbolism of an official visit. Franz Josef Jung, the CDU/CSU’s Deputy Parliamentary Group leader in charge of foreign policy, is said to favor the idea, and the German business community reportedly is pressing Merkel to do more to promote trade ties with Iran.
Germany’s 2016 State Elections Could Have National Consequences
Public dissatisfaction with the government’s handling of the migration crisis challenging Germany and other European nations has driven down support for Chancellor Merkel and boosted the standing of the right-wing populist Alternative für Deutschland (AfD) ahead of Germany’s state elections, three of which will be held on 13 March. A recent opinion poll for ARD-Deutschlandtrends found that the percentage of respondents dissatisfied with the governing coalition had increased from 48 to 61 percent over the last month, while support for Chancellor Merkel had dropped 12 points to only 48 percent. The poll found that 81 percent of respondents believed the government had lost control over the influx of refugees.
- The AfD was the main beneficiary of public dissatisfaction, increasing its support three percentage points to 12 percent in the last month.
In each of the state races to be held in 2016, the performance of the AfD is likely to limit the coalition possibilities of the mainstream parties, even though the AfD itself has no chance of participating in any of them. Predicted strong showings for the AfD in the three state contests scheduled for 13 March are likely to strengthen opponents of Chancellor Merkel’s open-door asylum policy within her Christian Democratic Union (CDU).
13 March: Baden-Württemberg, Rheinland-Pfalz and Sachsen-Anhalt
In Baden-Württemburg, the ruling coalition of Greens and Social Democrats under Winfried Kretschmann had good chances of returning to power before the migration crisis boosted support for the AfD. Now, according to the latest polls, support for the AfD is at about 10 percent and neither the ruling coalition nor the center-right opposition of Christian Democrats and Free Democrats is predicted to have a majority.
In Rheinland-Pfalz, Christian Democratic challenger Julia Klöckner appeared to have good chances of replacing Social Democrat Malu Dreyer as Minister President and heading a coalition of either Christian Democrats and Social Democrats or Christian Democrats and Greens. However, recent gains for the AfD, which is polling at about 8 percent, have given Dreyer’s SPD-Green coalition new hope of returning to power, if necessary in a “traffic-light coalition” with the Free Democrats. Klöckner’s Christian Democrats have lost ground to the AfD despite Klöckner’s efforts to distance herself from Chancellor Merkel’s asylum policies.
In Sachsen-Anhalt, the Social Democrats under Katrin Budde had hoped to escape their role as junior partner to Minister President Reiner Haseloff’s Christian Democrats and head a new coalition with the Left Party or the Left Party and the Greens. However, recent opinion polls predict the AfD will take about 15 percent of the vote, driving down the vote for the leftist parties. The SPD could finish in fourth place—behind the CDU, Left Party, and Greens.
4 September: Mecklenburg-Vorpommern
Social Democratic Minister President Erwin Sellering appears likely to continue his grand coalition with the Christian Democrats, assuming his party outpolls the CDU, which is likely if the AfD makes gains at the expense of the Christian Democrats. A strong showing for the AfD also would likely drive the extreme-right National Democratic Party (NPD) below the minimum required to remain in the state parliament.
18 September: Berlin
The most recent polls point to either a renewal of the grand coalition of Social Democrats and Christian Democrats under Michael Müller or a possible center-left coalition of Social Democrats and Greens.
Stephan Wallace is a defense and security policy analyst following political, military, and economic developments in Europe. He has worked more than 33 years on this area for the U.S. government, most recently for the U.S. Department of Defense. He can be contacted by email at email@example.com. The views expressed are those of the author alone. They do not necessarily reflect the views of the American Institute for Contemporary German Studies (AICGS).
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