By Stephanie Linares, Transatlantic Security Analyst
While Western voices have been largely united in condemning Russia for its annexation of Crimea, divisions over what penalties to impose have been equally apparent. Both the European Union and the United States have applied targeted sanctions against Russian and Crimean officials in the form of travel bans and asset freezes on a limited number of Russian and Ukrainian officials, yet many EU nations expressed noticeable hesitancy to impose harsher sanctions on Russia from the beginning, exposing divisions in the EU. While Poland and the Baltic States favored stronger response, nations such as Germany, Italy and Spain were more hesitant. Though Russia is now suspended from the G-8 and may face additional U.S. and EU sanctions, its status as a major natural gas supplier and overall trading partner for the EU may play to Russia’s eventual strategic advantage by making it a difficult target.
Germany and Italy are currently the largest importers of Russian natural gas, French defense firms are in the midst of large arms deals with Moscow, and the UK financial industry handles the assets of wealthy Russian oligarchs with close ties to the Kremlin. Smaller nations in Central and Eastern would also have much to lose from sanctions on Russian trade, especially those with recovering economies – including the Czech Republic and Hungary – that may not be able to withstand such hits. Officials in the Czech Republic, which suffered a Soviet invasion in 1968, reacted strongly to Russia’s intervention in Crimea. In early March, Czech Defense Minister Martin Stropnicky said he could “hardly imagine” that Russia would now win its bid against a U.S.-based company to carry out the planned $10 billion expansion of the Czech Republic’s sole nuclear plant; but by the end of the same day, Czech Prime Minister Bohuslav Sobotka backpedaled on the defense minister’s statement and stated that cutting all commercial ties with Russia over the crisis would be “very unwise.” Hungary, which recently awarded a contract valued at $16.7 billion to a state-owned Russian company to build two new nuclear reactors, has been even more reluctant to call out Moscow’s actions.
Poland, however, has been more vocal in urging Western nations to take a hard line against Moscow and uphold democratic principles, despite the fact that Russia supplies approximately two-thirds of its natural gas. Similar calls have come from the Baltic States – Estonia, Latvia and Lithuania – which unlike some other former Soviet republics are members of the EU as well as NATO. Even so, Lithuanian Prime Minister Algirdas Butkevieius reported that political pressure from Russia began last week when Russia suspended food imports through the Lithuanian port of Klaipeda. Baltic leaders have increasingly criticized Russian actions in Ukraine, and have voiced fears that Russia views their countries as targets and could attempt to redraw some European borders. However, the Baltic States are also very dependent on Russian energy exports and trade, increasing fears that Russia will attempt to destabilize the Baltics economically, politically and socially. Additionally, a quarter and a third of Estonia and Latvia’s populations, respectively, are ethnic Russians, and Moscow has alleged their mistreatment. Signs of Russian influence are evident: pro-Russian demonstrators clashed with opponents in the Lithuanian capital of Riga while Latvia’s new Prime Minister Laimdota Straujuma fired a cabinet minister, Einars Cilinskis, for “vowing to defy a government order not to participate in an event Sunday commemorating Latvian soldiers who fought with Germany against Russia in World War II.”
If Russia escalates, options will include an arms embargo to restrictions on Russian natural gas deliveries. It is unlikely that any single EU member nation will volunteer to shoulder the largest burden of proposed sanctions alone – a sentiment currently developing between France and the UK. Recently, British Foreign Minister William Hague called on the EU to suspend military exports to Russia, which would not harm the UK since it does not have any major arms contracts with Russia. Yet such a suspension would force France to freeze a $1.95 billion contract to deliver the first of two warships to the Russian Navy by the end of this year. Almost immediately, France demanded that UK banks seize or freeze assets of Russian oligarchs, while pushing Germany and other nations to cut back on Russian natural gas. While German Chancellor Angela Merkel condemned Crimea’s annexation and agreed that tougher sanctions are needed, her response to the demand to cut back on Russian energy – which is the source of 40 percent of German oil and natural gas – has been muted.
Russia’s status as a major energy supplier for much of Europe will complicate attempts to impose further sanctions, something the Kremlin is surely aware of. With the EU’s economic powerhouses hesitant to compromise their economies for the sake of sanctions, the risks to smaller nations with weaker economies must be taken into consideration when debating additional actions against Russia. Feasible sanctions that do not compromise the economies of nations such as Hungary and the Baltic States must be established in order for EU nations to achieve a unified stance against Russian actions in Crimea. A major step forward would be for Europe to reduce its energy dependence on Russia – something that was encouraged following the 2008 invasion of Georgia and then promptly forgotten about.