Diplomats reported little progress in talks between foreign ministers in Berlin earlier this week
The new year has brought with it much talk of new diplomatic “windows” opening for talks between Europe and the Kremlin, thanks in large part to the sudden economic chaos Russia faces due to the plummeting price of oil and value of the rouble.
Such talk has come from a number of capitals, including Riga, home to the EU’s new Latvian presidency, and Brussels, in the form of foreign policy chief Federica Mogherini. But critics point out that nothing has changed on the ground. Fighting continues, including a an attack on a Ukrainian bus this week which left 12 dead, and Moscow has made no progress in implementing the so-called Minsk agreement, the blueprint all EU leaders have cited as a pre-requisite to ratcheting down its sanctions regime against Russia.
Indeed, according to EU officials recent hopes of Russian acquiescence ahead of a proposed summit in the Kazakh capital of Astana have largely been dashed during diplomatic discussions with Germany and France because of refusals by the Kremlin to budge.
Still, the issue will gradually rise up the agenda in Brussels as the sanctions agreed last year begin to expire – the first in March, but incrementally towards the big economic measures which run out in June and July. It will take a unanimous decision of all 28 EU countries to renew the sanctions.
Despite the lack of progress with Russia, Mogherini this week circulated an “issues paper on relations with Russia” ahead of Monday’s meeting of foreign ministers that proposes a series of re-engagements with Moscow. Our friends and rivals at the Wall Street Journal were the first to report about it, but we’ve posted a copy of the paper here. Read more
Russian president Vladimir Putin visits a Rosneft oil refinery on the Black Sea last year
EU ambassadors head into yet another meeting Friday afternoon to hammer out the latest round of sanctions against Russia. Their bosses have promised to get things done by the end of the week, but there’s still a lot of work to do, so it’s not entirely clear whether a deal can be reached. Also, the on-again, off-again Ukrainian ceasefire could slow things down, though allies don’t appear to be giving much credibility to the Kremlin’s protestations that they are working towards a truce.
As we wrote in today’s dead-tree edition of the FT, we got a leaked copy of the draft legislation approved by the European Commission on Wednesday and sent to national capitals for today’s deliberations. The 18-page text is filled with a lot of jargon and technicalities, but because they could directly affect financial markets, the details matter.
For that reason, we are offering Brussels Blog readers more detail here. Remember: the EU ambassadors could still change much of the wording in their negotiations – though if the July sanctions are any indication, the changes are likely to be on the margins. Read more
Russia's Vladimir Putin, right, talks to EU foreign policy chief Catherine Ashton last month in Minsk
As we reported in today’s dead-tree edition of the FT, we got our hands on the three-page Russia sanctions options paper circulated by the European Commission and the EU’s diplomatic corps to national delegations yesterday that, for the first time, raised the spectre of boycotting the 2018 World Cup, to be hosted by Moscow.
But the meat of the document is the actual sanctions that are likely to be agreed this week; the World Cup suspension is clearly mentioned as something that only would be considered in the future. So as is our tradition here at the Brussels Blog, we thought we’d provide readers a bit more detail, including excerpts from the document itself.
First, though, here’s the language on the World Cup, which also includes a mention of UEFA, the Union of European Football Associations which organises and runs all international competitions for European soccer clubs – including Russia’s. Read more
Italy's Mogherini, the likely next EU foreign policy chief, arrives at a meeting with her counterparts
If EU leaders are going move forward with additional sanctions against Russia for its increasingly aggressive stance in Ukraine, they have a bit of work to do. The current draft of Saturday’s summit conclusions (we’ve posted a copy we got our hands on here) has very little to say on the topic.
Right now, the operative paragraph on sanctions reads like this:
The European Council remains engaged in the monitoring and assessment of the restrictive measures adopted by the European Union and stands ready to consider further steps, in light of the evolution of the situation on the ground.
Not particularly stirring stuff.
One other point to note in the draft: not only will the summit choose a new EU foreign policy chief (in all likelihood Italian foreign minister Federica Mogherini) and a new president of the European Council (either Polish prime minister Donald Tusk or Danish premier Helle Thorning-Schmidt), but they also must choose someone to head eurozone summits. Read more
A Vienna branch of Sberbank, Russia's largest state-owned bank, which would be covered
Although a large chunk of Brussels officialdom has already cleared out for the summer break, the 28 ambassadors to the EU will be busy this week finalising highly-anticipated sanctions against Russia.
On Monday, they will for the first time be adding “cronies” of Russian president Vladimir Putin to the EU’s sanctions blacklist, and then on Tuesday is the main event: deciding whether to move forward with “phase three” sanctions – measures against entire sectors of the Russian economy rather than just targeting individuals or “entities”.
Over the weekend, national governments reviewed legislation prepared by the European Commission that will be debated during Tuesday’s session. As we reported in today’s dead-tree edition of the FT, we’ve been able to secure a copy of the draft sent to national capitals and have posted relevant excerpts below. Read more
Russian president Vladimir Putin, left, with Van Rompuy at a January summit in Brussels
After weeks of equivocation that made it appear the EU might never move to “phase three” sanctions against Russia – which would target entire sectors of the Russian economy rather than just individuals and “entities” – on Friday things began to move very quickly.
First, EU ambassadors (known as Coreper in euro-speak) tasked the European Commission with drawing up the legislation needed to approve the new sanctions, which would go after the Russian financial, energy and defence sectors. Details of what the sanctions are expected to look like are here.
Then, late on Friday, Herman Van Rompuy, the European Council president, sent a letter to all EU prime ministers urging them to quickly endorse the sanctions package, and to give their EU ambassadors the authority to sign off on them Tuesday. Some countries have been calling for an emergency summit of leaders to approve them, but Van Rompuy clearly wants to move faster. The text of the Van Rompuy letter, obtained by the Brussels Blog, is here:
Vladimir Putin, the Russian president, chairs a security council meeting at the Kremlin this week
Although the sanctions options paper prepared by the European Commission for today’s meeting of EU ambassadors offers up five different sectors of the Russian economy for possible restrictions, a full two pages of the ten-page document obtained by Brussels Blog focuses on the financial industry.
As we reported here this morning, the main financial proposal would bar all “EU persons” from investing in debt or equity sales made by state-owned Russian banks, which constitute most of the largest financial institutions in the country.
As is our practice, we thought we’d provide a bit more detail on the proposal here on the Blog. The health warning that needs to be attached to this plan, however, is that the likelihood of it being actually adopted remains slim. Thus far, only a small hard-core group of EU countries have supported moving to “phase three” sanctions, which hit entire Russian economic sectors rather than just targeted individuals. Sanctions need unanimity from all 28 EU countries to be enacted.
The meat of the capital markets proposal is pretty straight forward: if a Russian bank that is more than 50 percent owned by the government issues stock or bonds, no European can participate. As part of its impact assessment, the document estimates that between 2004 and 2012, $16.4bn was raised by Russian state-owned financial institutions through IPOs in EU markets. And in 2013 alone, about 47 per cent of all bonds issued by those banks — €7.5bn out of €15.8bn – were issued in the EU.
Here’s an excerpt of the proposal:
Sweden's Carl Bildt, centre, and Lithuania's Linas Linkevicius, left, urged an arms embargo
Trying to keep track of what the EU has agreed – or, in some cases, has agreed to consider – on sanctions against Russia is nearly impossible for those not following the machinations up close because the terminology and targets keep changing.
Tuesday’s meeting of EU foreign ministers was just the latest case in point. Some measures were “accelerated”, others were expanded, and still others were put off until a Thursday meeting of EU ambassadors. No new sanctions were agreed, but the nuances could prove important down the road.
According to EU diplomats, some of this lack of clarity is intentional obfuscation. The initial outline of how the EU would gradually ratchet up sanctions has proven politically unworkable, so those negotiating have consciously attempted to blur lines and shift focus to make it easier to get unanimous agreement on the next steps. Read more
A pro-Russian militant stands guard at a checkpoint outside Donetsk earlier this week.
UPDATE: We’ve now posted the draft communiqué on Ukraine. You can read it here.
Today’s special EU summit was originally called to hash out nominees for the remaining jobs atop the big Brussels institutions – the European Council president, the EU foreign policy chief and the chair of the eurogroup of eurozone finance ministers. But recent events in Ukraine have pushed Russia policy back onto the agenda.
According to a draft of the summit communiqué obtained by Brussels Blog – which was pulled together at a marathon session of EU ambassadors on Tuesday – EU leaders could go beyond so-called “phase two” sanctions, which involve targeting individuals for travel bans and asset freezes. But it won’t be all the way to “phase three”, which constitutes sanctions on entire sectors of the Russian economy.
The new intermediate phase, which diplomats say is an intentional blurring of phase two and three, would focus on four elements. First, the EU would cut all new project funding for Russia from the European Investment Bank and caucus together to prevent similar investments from other international organisations where EU countries are members – particularly the European Bank of Reconstruction and Development. Other international financial institutions are not mentioned by name, but diplomats said the World Bank was raised during deliberations. The draft language now looks like this:
Russia's Vladimir Putin at the launch of South Stream's Black Sea pipeline in 2012
Is it possible that, once again, one of Europe’s biggest strategic concerns ends up hinging on a Balkan intrigue?
This time, it is the Ukraine crisis, Europe’s fears about its energy security – and the influence of the king-making junior coalition party in the Bulgarian government, the Movement for Rights and Freedoms.
The concerns of Bulgaria’s small ethnic Turkish party may seem worlds away from the geopolitical confrontation between the Kremlin and the west. But on the group’s narrow shoulders could lie the fate of the landmark South Stream pipeline, a project that many believe will further cement Russia’s hold on Europe’s gas supplies. Read more
Ukraine's prime minister Yatseniuk returns to Brussels Friday to sign the EU integration treaty
Just how sensitive is tonight’s summit dinner debate over the next steps for EU sanctions against Russia? According to EU diplomats, the meal will be for leaders only – no aides, no experts – and they won’t be allowed to bring in mobile phones or other electronic devices.
That’s because the next most likely step is what one senior EU diplomat termed “phase two-plus”: new names, potentially those closest to Russian President Vladimir Putin, are expected to be added to the list of 21 Russian and Crimean officials subject to EU visa bans and asset freezes.
As a result, the draft conclusions that were produced from last night’s meeting of EU ambassadors – which apparently includes those names – is not being given the normal circulation to national capitals and will only be given to leaders once they get into the room tonight. The draft produced before last night’s meeting, a leaked copy of which we’ve posted here, is the last one to get distributed more widely. Read more
Campaign posers for Sunday's independance referendum in Simferopol's Lenin square
Monday’s meeting of EU foreign ministers is shaping up as one for the history books. Just as Crimean officials are scheduled to be finishing their count of the region’s independence referendum, ministers will gather in Brussels to finalise a list of Crimean and Russian officials to be targeted with travel bans and asset freezes, the most significant step yet taken by any of the western allies against the Russian incursion.
But first, diplomats must decide who exactly is on that list.
The process started in EU embassies in Moscow, who pulled together a master list that was forwarded to diplomats in Brussels. According to one diplomat involved in the discussions, the list is to be narrowed to a “small but politically significant” group of people who are “infringing Ukraine’s territorial integrity”. The diplomat put the final number “in the tens or scores”. So perhaps 20 to 40 names. Read more
Sweden's Carl Bildt, Poland's Radoslaw Sikorski and EU's Catherine Ashton consult on Ukraine
As is frequently the case with high-level EU documents, the draft communiqué distributed to national capitals ahead of today’s emergency meeting of foreign ministers is more interesting for what has not been agreed going into the session than what is already set in stone.
And according to a draft obtained by the Brussels Blog, quite a bit is left to be decided, including just how aggressive the ministers will be in threatening sanctions – or “targeted measures” in Eurospeak – against Russia. Our main story on the leaked communiqué gives the outline of the dispute, but as is our practice at the Blog, we decided to post a bit more information here. Read more
As European leaders gather in Brussels for a summit meeting nominally dedicated – for the first time – to energy policy, one uninvited guest is looking on with some dismay: Russia.
High on the agenda is energy security. Which is a polite way of saying that European leaders are discussing how the bloc can break its dependency on Russian gas. In some parts of the EU – notably among the new member states of central and eastern Europe – that policy goal has become an obsession.
“We are totally dependent,” said one Lithuanian diplomat. “Whatever Gazprom says, we pay.” Read more
It was buried amid the excitement of the European Union’s summit in Brussels, but I’d like to draw your attention to a revealing report published on Thursday on the subject of European access to strategic raw materials. Prepared under the supervision of the European Commission, the report names 14 critical materials that Europe risks not having enough of in the future – with potentially far-reaching implications for Europe’s economic development, not to mention its defence and security. Read more
If the Greek debt crisis is teaching the European Union some harsh lessons about the design of its monetary union, no less serious is the message coming from Ukraine about the effectiveness of EU foreign policy. Viktor Yanukovich, Ukraine’s newly elected president, agreed a deal with President Dmitry Medvedev of Russia last week that gave Moscow a 25-year extension of the right to station its Black Sea fleet in Ukraine’s Crimean peninsula. In return, Ukraine secured a 30 per cent cut in the price of Russian gas deliveries. Read more
You know that the European Union is in trouble when Russia offers more intelligent advice on the eurozone’s debt crisis than Spain, the country that holds the EU’s rotating presidency. Dmitry Medvedev, Russia’s president, disclosed the other day that he had recommended to George Papandreou, Greece’s prime minister, that the Greek government should request assistance from the International Monetary Fund to sort out its problems.
This is exactly the course of action advocated by several non-eurozone EU countries as well as a host of distinguished economists and, dare I say it, the editorial writers of the Financial Times. As it happens, I don’t agree – if by IMF assistance we mean financial help. The IMF will be involved, along with the European Central Bank, the European Commission and eurozone finance ministers, in monitoring Greece’s public finances and providing technical aid as required. Read more
Yulia Tymoshenko’s refusal to acknowledge Viktor Yanukovich as the legitimate winner of Ukraine’s presidential election is starting to embarrass her friends in the European Union. The White House, Nato and the EU have all congratulated Yanukovich on his victory. The longer Tymoshenko maintains her defiant stance, the more it will cost her in terms of prestige and contacts in Europe.
Only last December I saw the red carpet rolled out for Tymoshenko at a congress in Bonn of the centre-right European People’s Party, the biggest party in the European Parliament. Everyone was there – German chancellor Angela Merkel, EU president Herman Van Rompuy, French premier François Fillon, Italian premier Silvio Berlusconi, etc. Tymoshenko was one of the star attractions from the “new” eastern Europe. Read more
The European Union should be pleased with the outcome of the first round of Ukraine’s presidential election. Not because the politician who received the most votes was former premier Viktor Yanukovich, the most pro-Russian of the main candidates. Rather, because the election for the most part met the very high standards of democracy, legality and fairness that the EU had demanded of Ukraine to sustain the process of bringing the country closer to the 27-nation bloc.
It was a genuine contest among a variety of distinctive candidates, and the second, knock-out round on February 7 between Yanukovich and Yulia Tymoshenko, the incumbent prime minister, will be a genuine contest, too. Compare this with the tainted presidential election of November 2004, which precipitated the Orange Revolution that propelled Viktor Yushchenko to power. In terms of democracy and the political maturity of society, Ukraine has progressed a long way over the past five years. Read more