FIVE SCENARIOS FOR EU RUSSIAN SANCTIONS

The following scenarios are constructed using as parameters the criteria that guided the design of the EU sanctions package, specified in a joint letter by the President of the European Council and the European Commission. These include: “effectiveness, cost/benefit, balance across sectors and Member States, international coordination, reversibility/scalability, legal defensibility/ease of enforcement”. The following scenarios are designed as possible options, and conceived in a neutral fashion. Each scenario includes an assessment of the likelihood that each will materialise.

Scenario 1: Abrupt lifting in the absence of compliance

Under this scenario, consensus collapses in the European Council. Those countries most opposed to the continuation of sanctions, harden their stance and veto the renewal of the measures.

Feasibility: Decision-making rules at the Council allow for the collapse of sanctions regimes. This is thanks to the routine insertion of sunset clauses, which foresee the expiration of the legal period of validity of twelve months normally, but only six months in the present case. In the absence of a positive decision in favour of a new legal act, the sanctions regime can end on its expiration date. As the Council agrees sanctions by unanimity, any Member State can precipitate the collapse of the regime.

Likelihood: This scenario has never happened before in the EU context. The main factor militating against this scenario is the antagonising effect that the veto would have on the Member States of the pro-sanctions camp, including Germany, Poland and Sweden. This scenario would be even more unlikely in the absence of a similar decision by the US, as transatlantic sanctions policy is routinely coordinated.

Benefits and Disadvantages: Advantages for the EU would be the resumption of normal trade and financial relations. However, it would represent a major setback for the Common Foreign and Security Policy (CFSP), including a loss of leverage against Russia and a significant loss of credibility in the EU’s future use of sanctions. It would also have an alienating effect on the EU’s partners in the post-Soviet space, particularly Ukraine and Moldova. To mitigate the loss of face for the EU, this scenario could be combined with the maintenance of diplomatic sanctions (which do not affect commercial exchanges) as a residual, minimalistic layer of condemnation of Russian behaviour.

Scenario 2: Easing in the absence of compliance, or following concessions in unrelated fields

This scenario foresees a situation that takes two possible routes.

In Option 1, the pro- and anti-sanctions camps agree on a partial lifting of the measures by way of compromise, despite no sign of compliance by Russia. Those opposed successfully call for the removal of sanctions that affect their economies negatively and lobby for the de-listing of those officials and businesspeople from whom they expect to extract benefits. By contrast, they display less opposition to the maintenance of measures that do not affect their economies.

In Option 2, alteration of the sanctions package is prompted primarily by the need to reciprocate concessions made by Russia in a different domain. It presupposes a previous process of successful negotiation with Russia , or at least some major step in progress in an unrelated and politically important and difficult domain.

Feasibility: Partial lifting can take place in several forms, even in the absence of any signs of compliance by Russia . The easing can be agreed in reward for cooperation in unrelated domains, and as a first step in a phased lifting of the package. This occurred most recently with Belarus, which was rewarded for the positive role it played by hosting the talks in Minsk, without initiating pro-democracy reforms. Those few member states opposing the lifting gave up their resistance in the interest of consensus. Alternatively, the easing can take the form of a temporary suspension in an attempt to incentivise progress, an approach the EU experimented with on Myanmar in the 1990s and with the Transnistrian statelet in Moldova.

Likelihood: The scenario of partial lifting or suspension is common in the EU context. Easing in reciprocity for progress made in unrelated fields is rare, however, in contrast to its more typical use by Washington.

Benefits and Disadvantages: Easing sanctions in the absence of compliance with the Minsk agreements presents several disadvantages. The record for such suspensions has been mixed: temporary suspensions that do not reciprocate compliance, but are intended as “carrots” to provide the target with an incentive for accommodation failed with Myanmar in 2003 and with Moldova in 2010-13, but helped to overcome the impasse with Cuba in 2008. It allows for the articulation of a minimally joint EU stance, but is still associated with credibility-loss, given the ostensible lack of compliance by Russia, particularly if no concessions have been forged. This scenario might have the undesirable effect of undercutting incentives for Russian restraint. In future, it could be interpreted by different actors as an indication that EU sanctions regimes are vulnerable to (time) pressures.

Scenario 3: Phased lifting in response to partial compliance

Under this scenario, the EU negotiates the easing of some of its bans in return for bite-sized concessions on the part of Russia in the form of de-escalation in the Donbass and progress towards compliance with Minsk agreements. It involves reciprocal concessions, whereby sanctions could be re-applied should progress be reversed by Moscow.

Feasibility: This scenario is feasible as it has been witnessed on several occasions. The most representative illustration was the phasing out of the 2006 sanctions on Uzbekistan, after the original demand of allowing an international investigation into the Andijan events got watered down to a joint “expert mission” combining Uzbek and EU officials. The lifting is typically gradual, and is preceded by one or two rounds of suspension. A more recent example is the phasing out of sanctions on Myanmar, initiated in 2010. After most sanctions had been removed, a residual regime was left in place, including an arms embargo and visa ban. The lifting of the 1993 UN sanctions on Libya started with a suspension. Similarly, a residual package of EU and US sanctions was left in place after the UN measures on Yugoslavia were lifted. Also, some US sanctions remain in place on Iran after the relief package agreed on 2015, where the easing of measures is thought to have played an important role in the talks’ success.

Likelihood: Lifting the sanctions in response to only partial compliance by the target is the norm rather than the exception in EU practice, as witnessed both in its CFSP and Art. 96 records. It represents a compromise solution between opposing camps in the EU and could deliver results when more ambitious aims have reached a stalemate; again, facilitated by similar behaviour by Washington.

Benefits and Disadvantages: The present scenario maintains the credibility of the sender vis-à-vis domestic audiences and third parties, while it opens opportunities for European companies to resume business with Russia , and assuages those EU Member States most opposed to sanctions renewal. It also allows Russia to negotiate concessions without being seen to ‘lose face’ among domestic audiences. Negotiation of the sanctions’ lifting with Russia would likely include reciprocal easing of the Russian ban on perishables, despite the boosting effect that this measure has had on the Russian agricultural sector.

Scenario 4: Continuation of the current package

Under this scenario, resistance by individual EU Member States weakens as a result of successful pressure, secondary sanctions, side payments, and lobbying by the US and pro-sanctions Member States with the result that the current package is kept in place. European firms have adjusted to the post-2014 situation, securing alternative markets for their products and lobby efforts to loosen sanctions lose vigour.

Feasibility: Scenarios of very protracted EU sanctions regimes have been witnessed, but they are increasingly rare. An undeniable political will exists to limit, if not eliminate, situations of prolonged stalemate as facilitated by the introduction of sunset clauses. Sanctions regimes tend to be extended on account of unwavering pressure by Washington (China arms embargo, Sudan) or the UK (Zimbabwe), but only reluctantly and never without some degree of friction and resistance.

Likelihood: In addition to the general reluctance to keep ineffective sanctions regimes in place, unease at the negative externalities expressed by certain EU members make this scenario ostensibly unlikely. Yet, in the event of sustained pressure by Washington and further serious breaches of international norms by Russia, the prolongation of the package could become more likely.

Advantages and Disadvantages: This features the benefit of maintaining EU (and possibly transatlantic/ global) cohesion and commitment to international norms, but long-term benefits are limited as sanctions tend to have most impact in the early stages of implementation. Russia would be likely to continue to develop a diverse import substitution programme, providing targeted sectors with financial aid and developing alternative economic and trade ties. On the other hand, a longer duration needn’t be equated to the immobility that has characterised the long-term sanctions regimes imposed by the EU on targets such as Belarus, Myanmar or Zimbabwe. Instead, it could allow the EU to better monitor and tackle evasion techniques and Russian money-laundering/ corruption networks, whose operation hampers the effectiveness of sanctions. The political impetus for mounting such efforts would be easier to garner if the renewal intervals of the sanctions legislation were to be modified from the current six months to the EU’s standard of twelve months.

Scenario 5: Tightening

A scenario of tightening could entail a number of options, including broadening (to include new categories such as a ban on investments, a prohibition of joint ventures, a flight ban, or a commodity embargo); deepening (tightening of only one or a number of the existing measures); lengthening (to 12 months); an expansion to new objectives (e.g. human rights abuses), and strengthened support by existing and new sanctioning powers. Legal considerations would need to play a central role in the designation of new targets.

Feasibility: The deepening of sanctions through the inclusion of new entries to agreed blacklists is a routine technique in EU sanctions practice and sometimes does not entail more than the addition of a handful of individuals. This took place repeatedly in the course of the Iran sanctions. The lightest form would entail the blacklisting of additional members of the Russian military and political elites, whereas the most severe would involve tighter financial sanctions, further restrictions on technology exports, or the blacklisting of additional state banks and enterprises.

Likelihood: Tightening of the current package is unlikely in the absence of significant changes on the ground, such as a sudden escalation of the armed conflict, evidence of human rights abuses and/or Russian annexation of new territories. While the tightening is rendered more likely if Washington further upgrades its measures, the EU could also conceivably lead the way in deepening or broadening their own, in case of a major escalation, as it has already done on several occasion. The need to maintain energy supplies and avoid severe economic damage would dictate the intensity of the measures as would the EU’s aforementioned design criteria. Tightening of sanctions by other (non-EU/US) powers is a possibility, albeit one likely to face opposition in the absence of considered diplomatic pressure.

Benefits and Disadvantages: The tightening of EU sanctions would continue to position the EU as a supporter of the territorial integrity of Ukraine. While broadening appears to have worked in the case of Iran, when UN sanctions on Haiti were made comprehensive in 1994, the target increased its proscribed activities because it calculated that it had little to lose. This suggests that deepening of measures could be more effective than a broadening, though each sanctions regime should be judged on a case-by-case basis. Research into UN targeted sanctions suggests decreasing returns in effectiveness when a given sanctions regime exceeds a particular threshold of measures. Results suggest that the optimal combination of measures are those that target key export commodities in the targeted economy (apart from oil), or sizeable companies that affect whole sectors of that economy. Sanctions that are composed of only one measure (e.g. an arms embargo) are never effective and those at the other end of the scale (e.g. full-blown comprehensive sanctions or embargoes) show a decreasing level of effectiveness.