Have the European Union Sanctioned Itself or Russia?

Six rounds of sanctions against Russia, and Russia is currently just dusting off its lapel. It is no surprise that the question of the sensibility of sanctions, which primarily affect – Europe! – is becoming increasingly frequent and louder. Consequently, this also applies to Croatia, whose economic performance has indicated for 30 years that we have no, least of all a robust umbrella for any economic storm. The list of analysts of various profiles who are fully aware of this is getting longer.

Among them are those who openly claim that the sixth round of sanctions (which includes a ban on the import of Russian oil) affects those who impose them more than Russia. Russia has obviously prepared for such a situation. Analysts assure that for a longer period, the sanctions will not have any significant consequences while at the same time the EU is not at all prepared for the measures it has itself adopted. Besides the fact that more Russian oil is being imported than before the war (naturally, stocks are being built up, even more naturally, precisely Russian oil), Russia is already creating a second market for its energy resources, China and India.

Similar thoughts are beginning to be verbalized by foreign analysts, for instance, Carlo Masala, a political scientist and military expert from the Bundeswehr University in Munich, claims that Putin currently has no reason for a headache, as it is becoming clearer that by continuing the war, he gains more than he loses.

Domestic economic analysts, however, are not so united. Davor Štern is one of the few who has been advising from the beginning that Croatia should seek exemptions for everything (so far we have only requested for vacuum gas), as it is among the poorest members of the EU. He warns that we will only feel the true depth of the consequences in the autumn when the heating season and the sowing of agricultural crops begin. Agriculture without artificial fertilizers practically does not exist, and the price of artificial fertilizer has risen from 200 dollars per ton to an incredible 1200 dollars!

Sanctions are not a sprint but a middle-distance race

However, some economists view the whole story from a different perspective. Kristijan Kotarski from the Faculty of Political Science in Zagreb believes that it is necessary to separate the concept of sanctions from the way they are applied.

– The fact that the EU is currently implementing such a policy quite clumsily and unconvincingly does not diminish the importance of insisting on the application of sanctions. More than a month ago, I pointed out that the EU needs to find a middle ground between an embargo and the continuation of the status quo. The middle ground definitely does not consist of a diluted embargo with numerous exceptions (which undermine the credibility of the EU), but in forming a buyers’ cartel and imposing high tariffs on Russian oil. Additionally, an extra asset is sanctioning maritime companies, banks, and insurance companies that facilitate trade in Russian oil. High tariffs would lead to a reconfiguration of global oil trade, which would also mean the energy separation of Europe and Russia, but this is more of a political than an economic problem given the intense connections of European corporate lobbies with the protagonists of Russian energy interests – explains Kotarski.

Financial analyst Velimir Šonje also does not believe that the sanctions are misguided, or that they hit the wrong target, the European Union.

– No serious person ever imagined that sanctions could stop Russia. Their purpose in the medium and long term is to weaken the totalitarian regime that has decided to dismantle the international legal order, to reduce its potential for stronger and broader aggression. Therefore, it is premature to speak of the failure of sanctions. This is not a sprint of a hundred meters, but a middle-distance race. This autumn and next year will show how economically wounded Russia is and how quickly, and at what cost, Europe can distance itself from strategic dependence on Russian energy resources.

How sensible the sanctions are, and whether Europe can mitigate the boomerang effects of the sanctions, read in the new printed and digital edition of Lider.