Our View: Perhaps EU should consider following US example on Ukraine

The war in Ukraine entered its 100^th day on Friday with President Zelenskiy saying that Russian troops had taken control of 20 per cent of the country. A few days earlier, EU leaders, after weeks of wrangling, agreed an embargo on of Russian crude oil imports that will take full effect by the end of the year. Three countries have secured exemptions for the pipeline imports they rely on, but this has still been described as the toughest sanction yet on Russia.

Sanctions seem to be hurting the West and the developing world more than Russia. President Anastasiades had a point when he said the EU should not impose sanctions that cause harm to the economies of its member states. The economic war on Russia is having a big economic cost on the rest of the world. Inflationary pressures that pre-existed Russia’s invasion have been fueled by the war, now in its fourth month, and economies in the West are destined for difficult times.

Western countries are faced with the prospect of slow or negative economic growth combined with rising inflation, which is at its highest in 40 years. The stagflation of the 1970s has returned, with inflation set to hit double digits as energy prices continue on the upward path, followed by food prices. Gas prices have gone up by 70 per cent while petrol prices rose again after the EU decision to ban Russian crude oil by the end of the year. Meanwhile, Russia’s blockade of Ukraine’s Black Sea ports has meant that millions of tonnes of grain remain in silos, causing global shortages, while the value of its own exports has shot up.

The rising energy prices caused by the sanctions have benefited rather than harmed Russia. Its current account trade surplus for the first four months of this year, according to figures of Russia’s central bank, is $96 billion, three times what its was in the same period in 2021. Even as the EU gradually reduces its dependency on Russian energy, Russia is finding new markets – exports of oil and gas to China in April were 50 per cent up year-on-year. Thanks to the very sound trade surplus and capital controls, the rouble remains strong and Russia has not been prevented from funding its war in Ukraine by the sanctions.

Russia’s economy will suffer, the IMF forecasting that it will shrink by 8.5 per cent as flow of imports from the west stops. Stocks of goods needed to keep the economy ticking over will eventually run out, but by then Russia could find alternative supply sources and it is unlikely the Russian people would be out on the streets protesting about economic conditions. This is more likely to happen in EU countries in which people are unlikely to accept falling living standards without protest for very long. As people protest against their governments, cracks could appear in the international coalition against Vladimir Putin.

Were the sanctions a gross miscalculation, hurting the countries that imposed them while failing to stop Putin? If the purpose of sanctions is pressuring a government to abandon a policy that is considered unacceptable, it has never been achieved in the case of Russia in the past. And the current sanctions, although much tougher, have certainly not had the desired effect. They could have a devastating effect on the developing world, however, one newspaper columnist remarking that for the world’s poorer countries “the issue is not stagflation, but starvation as a result of wheat supplies from Ukraine’s Black Sea ports being blocked.” Putin is weaponising food, and fears of a humanitarian catastrophe are being expressed at international organisations like the UN.

The realisation that sanctions are not working, and growing concerns about the economic costs of a prolonged war, could be the reason President Joe Biden announced the US would be supplying Ukraine with more advanced missile systems and munitions. The High Mobility Rocket systems have a range of 48 miles and are intended to help repel the advance of Russian tanks, the US said; they will not be used to hit targets on Russian territory it was made clear. In short, the Biden administration has decided that strengthening Ukraine’s defensive capabilities is more likely to force Russia to withdraw its troops from Ukraine than sanctions. Perhaps the EU should consider following the example of the US, offering more military assistance to Ukraine instead of persisting with economic sanctions, the devastating consequences of which are hurting people everywhere in the world.

Armed conflicts often end with compromise, but in the case of Ukraine, this would only be possible if it ceded a fifth of its territory to Russia, thus legitimising the latter’s strategy of brute force and justifying its atrocities. This is not an option for Ukraine. Former Ukrainian defence minister, Andriy Zagorodnyuk, in an article in The Guardian newspaper, quite rightly asked, “What compromise is possible when your adversary’s goal is that you should not exist?”