In a DW interview, EU foreign policy chief Josep Borrell is convinced that sooner or later Russia will cave in. The effectiveness of the sanctions is disputed. Bernd Riegert from Brussels.
Josep Borrell: The EU foreign policy chief has launched six packages of sanctions against Russia
Since the renewed Russian attack on Ukraine at the end of February, the European Union has almost completely shut down economic exchanges with the former trading partner in six sanctions packages. There are exceptions: gas, oil delivered through pipelines, food, grain and certain fertilizers are not sanctioned. The Council of the European Union, which represents the 27 member countries, states that sanctions are in force against 1212 individuals and 108 companies and other entities. The people include the Russian president, his foreign minister and a number of rich oligarchs from Putin's orbit.
Half of the reserves of the Central Bank of Russia were frozen, and Russian banks were disconnected from the SWIFT international payment system. Exports of Western technology, aeronautics, electronics and luxury goods are prohibited. More than 1,000 Western companies have withdrawn from Russia. In addition to the EU, the USA, Canada, Japan, Switzerland and Great Britain have also imposed sanctions on Russia. In its “Sanctions Monitor”, the Correctiv research network counts 6825 individual measures taken by the international community since the beginning of the Russian war of aggression. Never in history have there been so many sanctions against a single country.
The West is closed to Severe sanctions: EU and G7 at the summit in Elmau (June 2022)
How and when will the sanctions take effect?
The question now is: how do these sanctions work and will they change the course of the war in the Kremlin? The EU's foreign policy chief, Josep Borrell, said in a DW interview on Friday that the sanctions are hitting the Russian economy hard. “Russia's economic output will shrink by 10 percent. They will suffer the worst recession since the end of World War II.” Josep Borrell admitted that the EU is still dependent on Russian energy supplies, but that will change in a few months. “We keep buying gas, but we've already cut imports by half. We can't work miracles.” With the proceeds from gas sales, the Russians could no longer buy anything in the West, such as technology for their tanks. “They have money but get nothing in return.”
Inflation in Europe hits record highs due to high energy – and food prices
A number of studies by renowned universities and economic research institutes on the possible effects of the sanctions and their effects in Russia and the sanctioning countries in the West are now available. Everyone assumes a drastic decline in Russia's economic output this year. The International Monetary Fund (IMF) estimated the minus at 15 percent, the EU at 10. The economic researcher Maria Shagina from Zurich is closer to six percent losses. She works at the International Institute for Strategic Studies (IISS).
Russia needs to adapt
“Russia continues to sell oil and gas at record prices, thus filling the war chest it already had before the war. That's why we have this unique situation in that it seems like Russia hasn't been particularly affected by sanctions,” analyzes Maria Shagina in an interview with DW. “But at the microeconomic level, things are very different, especially in the auto industry and aviation. There are declines of 80 to 90 percent.” Russia now has to change its economic model because it no longer has access to Western financial sources and markets, said the IISS researcher. “Russia will experience a reversal of industrialization. The big question is how quickly Russia can cope with this and join forces with China or India, for example.”
Western chains have left Russia: Empty shopping center in Moscow
Few alternatives
The sanctions against Russia are working. Julian Hinz from the Kiel Institute for the World Economy is firmly convinced of this. The view that the West suffers more from its own measures than Russia is wrong. “If you look at the trade statistics, you can see that the Russian economy is suffering massively from the sanctions. Much, much more than the European economy is doing. You can't compare that at all,” Julian Hinz told DW. The propagated conversion of production to Russian goods is very difficult, because Russian industry needs preliminary products from the West and technological knowledge.
The economist from Kiel also believes that the search for new buyers for oil and gas that is no longer supplied to Europe or the USA is difficult. “That's wishful thinking, to be honest, because there are no pipelines, for example. There are some lines to China, but that's maybe ten percent of the capacity that has been used to export to Europe. Nothing can be done at the moment than serve as a replacement for the pipelines that have so far been filled to Europe.” The sanctions would have the full effect in the long term, says Hinz.
The sea in Montenegro is still: Russian Tourists are not allowed to come. Losses for local hoteliers.
Borrell: “People don't care about Putin”
Political leaders such as Josep Borrell, the EU's foreign policy chief, like to demand patience and perseverance. The Russians were gradually being isolated from the rest of the world. “A modern economy cannot work without being connected to other economic and technological powers. This will severely damage the Russian economy. Not tomorrow. Unfortunately, the war will continue. But the economy will suffer badly,” said the EU External Representative. At some point the following point will be reached: “Putin will have to choose between guns or butter for his people. But I know that he doesn't care much about his people.”
Support for sanctions is greater in western Germany than in the east
“Sanctions rarely result in different policies”
The crucial question is whether the economic sanctions would ultimately change the political will of the authoritarian regime in Russia. The damage to the economy hardly impresses the warlord Vladimir Putin, says Alexander Lipman, head of the Eastern Europe Institute at the Free University of Berlin on Deutschlandfunk: “Within weeks or months, sanctions will definitely not change anything. You have to be honest. Sanctions is an instrument – there is quite a lot of research on this – which on average does not work. In most cases, sanctions have not influenced the behavior of the sanctioned states.”
Watch the video 01:53