On September 19, 2019, „Georgia and World“ published an interview with a leader of political party “Georgian Idea“ Levan Chichua, where he states, that Europe is affected as a result of the sanctions imposed on Russia. According to Chichua, this damage was the exact reason why Europe cancelled the sanctions imposed on Russia.
Levan Chichua, Georgian Idea: „Europe has realized that neither Georgia, nor Ukraine are worth to confront with Russia, since it will damage not only Russia, but it will also receive a serious blow. This especially refers to the European counties, such as, Germany, France, Italy… That is why the sanctions, imposed over the Crimean events, were cancelled and, actually, the matter of subject was forgotten. This raises the question: If the West, in favor of its interests gave up on Crimean issue, will he confront Russia for protecting Tskhinvali and Sokhumi? “
Levan Chichua’s statement, as if European countries are damaged by the sanctions imposed on Russia and, accordingly, cancelled them, is not true. According to New Europe Center’s research of 2018, the EU export to Russia has reduced only by about 2,3% since the sanctions were imposed, while the export of agricultural products from Europe to third countries three times exceeds the indicator of reduction in exports to Russia. In addition, the sanctions imposed on Russia are still in force, and the countries in Europe mostly affected financially after the imposition of sanctions, still do not oppose them.
- In 2013-2017, the export was reduced only by 2,3%
According to the study conducted by New Europe Center in 2018, the European Union exports to Russia reduced by average 2,3% in 2013-2017, which equals EUR 10 for each citizen of the European Union. The share of products, banned from the export to Russia is small and amounts to only 0,3% of exports to third countries.
- Export to third countries amounted to EUR 18 billion
According to the same study, the European Union has successfully diversified its agricultural exports after the imposition of the sanctions on Russia. In 2014-2017, EU’s agricultural export to third countries amounted to EUR 18 billion, which is three times greater than the amount of the reduction of export to Russia (EUR 5.4 billion).
- The sanctions impose on Russia are still in force
The sanctions have not been cancelled and are being prolonged periodically. On June 20, 2019, during the meeting held in Brussels, the European Union countries extended the sanctions by 6 months and agreed to prolong the ban on Russian investments on the Crimean region for another year.
It should be noted, that the countries most affected by the reduction of the export to Russia in 2014-2017, namely, Lithuania (by 5%), Estonia (by 4.3%), Finland (by 4%), Slovakia (by 3.7 %) and Latvia (by 2,5 %), are not against the sanctions.
The aim of sanctions is to deliver a political message and to put restrictions on Russian banks’ access to the European market.
According to the information published by the Bank of Finland, the aim of the sanctions has never been to destroy Russia’s economy, but to deliver an important message to business circles having ties with Kremlin.
In addition, the research notes that negative effects of low oil prices was three times greater than the effect of sanctions in 2014-2018. Because of the sanctions, the indicator of Russia’s economic growth reduced by 0.2 % every year. For its part, low oil prices reduce GDP growth by about 0.7 % annually. Accordingly, the effect of low oil prices exceeds the effects of sanctions.
The most important part of the sanctions was prohibiting long-term financing for select large state-owned companies. The companies in banking sphere included Sberbank, VTB, Gazprombank, Rosselkhozbank and VEB (“ВЭБ”- state-owned development finance insitution). Taking into account, that Sberbank and VTB together controlled about 60% of Russia’s banking market, a part of Russia’s economy became isolated from the global financial market. The sanctions also related to the companies acting in energy sphere, such as, Rosneft, Transneft and Gazpromneft.
The ground of sanctions and their components
One should note that in 2014, the EU, United States of America and several ally countries imposed economic sanctions on Russia over seizure of Crimean Peninsula and support for separatists in Eastern Ukrainian regions of Donetsk and Lugansk.
According to Myth Detector’s material, the sanctions imposed on Russia, include: “Restrictions on export and import of guns; assets freezing and free movement restrictions – over the violation of Ukraine’s territorial integrity and sovereignty, freezing of bank accounts 152 persons and 37 organizations and prohibition of movement on the territory of European Union. Russia’s 5 state banks, 3 major energy companies and 3 major defense companies’ are prohibited to sell bonds and equity. In addition, there is a ban on providing loans to listed organizations. Sanctions also include a ban on export of particular energy technologies and equipment to Russia”.
Prepared by Lusine Pichikyan
Myth Detector Lab Regional Network