EU sanctions and Russia – New dynamics and implications on the Russian economy and EU businesses - FIIA - Finnish Institute of International Affairs

In the framework of the research project “Development of EU’s Sanctions Policy: Political and economic implications for Finland”, the Finnish Institute of International Affairs organised a working session titled “EU sanctions and Russia – New dynamics and implications on the Russian economy and EU businesses”. The working session was part of the programme of the Informal Meeting of the Foreign Relations Counsellors (RELEX) organised in Helsinki on 18–20 September 2019.

The European Union (EU) has increasingly used restrictive measures within the framework of the Common Foreign and Security Policy (CFSP) in order to respond to challenges in its neighbourhoods and beyond. Since 1990s, the EU has moved away from comprehensive trade embargos towards targeted sanctions. The restrictive measures aim to position the EU in the wider geopolitical context, affect the behaviour of targeted regimes actors, and signal disapproval as well as contain further adverse actions.

Within the last decade, the EU has increasingly set up sanction regimes based on its own initiative, making the EU prominent sender of sanctions along the United Nations and the U.S. In particular, the EU sanctions against Russia signify a noteworthy qualitative change. Since the Russian annexation of Crimea and de-stabilization of Eastern Ukraine in 2014, the EU does not shy away from imposing tougher sanctions against a neighbouring great power and close trading partner. EU sanctions against Russia have led to Russian counter actions, with notable implications for EU businesses.

Currently, the EU sanctions policy faces yet another turning point in a challenging international environment. The U.S. reinstated sanctions on Iran, while U.S. Congress prepares new restrictions on Russia. Sanctions policies on both sides of the Atlantic are increasingly out of step. After the UK’s likely withdrawal, the EU is set to lose one of the main initiators of EU sanctions as well as important resources for the design and monitoring of sanctions regimes. However, the need to fill any resulting vacuum left by Brexit also provides the opportunity to rethink EU decision-making on sanctions, its system of implementation and enforcement, and to develop the allocation of sanctions expertise and resources in the EU.

The aim of this working session is to address the new dynamics shaping the EU’s sanctions policy and discuss the implications of EU sanctions on the Russian economy and EU businesses. What are the key challenges facing the EU’s sanctions policy? Will these provide an opportunity to develop further EU decision-making and enforcement of sanctions? How have EU sanctions affected the Russian economy? Moreover, what are the key messages from the EU businesses on sanctions in general and EU restrictive measures in particular?