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The sanctions against the Russian Federation and Italy

Giancarlo Elia Valori

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For the United States and the now brainless Europe, initially the Russia-EU Summit in Sochi in March 2014 had been cancelled due to the Ukrainian crisis, but later, after the regular referendum which saw the peaceful annexation of Crimea and Sevastopol with over 4,000 votes, the relations between Russia and the West continued only at G7 level.

For the time being, however, Russia cannot join the OECD and the International Energy Agency, of which it had been a founding member as early as the USSR’s times.

Ironies of fate and memory.

146 Russian citizens and 37 federal “entities” cannot have relations with the European Union, enter the EU territory or do business within it and with anyone.

On March 10, 2016, the EU extended the measures which also regard the partial ban/restriction of oil trade but, above all, of technological materials for this purpose, until September 15, 2016.

Nevertheless the Minsk agreements reached in 2015 between President Poroshenko, France, Germany and Russia were clear: immediate and full “ceasefire” in Donetsk and Luhansk, the districts of pro-Russian “separatism”; pullout of all heavy weapons by both sides to equal distance; effective international monitoring of the forces’ separation lines; a significant constitutional reform in Ukraine, based on “decentralization” and hence on a substantial weakening of the pro-Russian insurgency.

All the Minsk II package of measures has been complied with – hence there is no lawful reason to keep on enforcing sanctions.

Therefore, precisely on the basis of the Russian signature of the “Minsk II” agreement, it was not possible and it is not possible today – without obvious Russian countermoves – to maintain or accept the sanctions against the Russian Federation, which also regard some oil and gas products – at least with reference to the EU.

Not to mention the severe banking and corporate bans, as if the issue were not the annexation of a territory which is Russian since the time of czar Peter The Great, but of a whole continent conquered by the Russian “fascism” (the usual word and concept fitting all contexts and circumstances).

Just to be brutally clear, with the Ukrainian issue – manipulated up to the almost comical EU recognition of the phantom “Tatar parliament”, composed from scratch of a largely minority population who had been deported by Stalin in 1944 – a naïve (albeit wicked, as often happens) attempt was made to turn a great power such as the Russian Federation into a ”marginal area” subjected to the geoeconomic wishes of the Western powers.

These powers, however, have neither the strength nor the ability, and not even the ecostrategic alliances to face and manage all the disputes with Russia.

Meanwhile, in April 2016, 55 French members of Parliament (as opposed to 44) voted to lift sanctions against Russia.

Moreover, it has been estimated that the cost for European farmers of the sanctions against Russia is equal to 5.5 billion euro a year in terms of lost business.

The Slovakian and Italian Ministers for Agriculture, the Austrian Vice-Chancellor, as well as Hungarian Prime Minister Orban, have all spoken against maintaining sanctions against the Russian Federation.

Moreover, Russia has been very clear: if the EU lifts all sanctions, Russia will follow suit and remove all its counter-sanctions.

If the situation goes on like that, with subsidies to farmers and new technologies again subsidized by the government, it is to be feared that, in the near future, the Russian Federation may achieve large food self-sufficiency and autonomy, thus leading to a huge crisis in the EU agrifood sector.

Just to put it in clearly brutal terms, the sanctions are tantamount to an unlawful restriction of international trade, absolutely illegal in terms of agreements already signed and implemented by Russia, Germany, France and Ukraine, leading to a pathological reduction of European trade, for no other reason and result than reducing the EU trade potential in view of the agreement and the current TTIP negotiations between the EU and the United States.

Russia is the third largest EU trading partner and Europe is the major commercial area for Russia.

As we have already seen, gas has been partially excluded from sanctions owing to many EU countries’ dependence on Russian natural gas, but not all Russian oil and gas products have been spared the sanction regime.

Banking operations are still banned, although there are some examples of “triangulation”.

Also meat exports are prohibited.

Thanks to the counter-sanctions devised and imposed by President Putin in March 2014, all EU trade with Russia fell down to 12.1% of Russia’s total trade, thus providing the opportunity – that a careful geopolitician such as the Kremlin leader has not missed – of a new economic correlation with China and the States of the Shanghai Cooperation Organization, which, inter alia, are all growing significantly, unlike the European Union.

According to some Swiss analysts, the macroeconomic effects of sanctions against Russia are worth at least 43 billion euro in added value, and as many as 92, if sanctions were to continue in the coming years.

This is not a matter of crippling Russia, but rather of destroying Europe economically.

As a result of sanctions, over 1.1 million jobs have already been lost across Europe, while the EU GDP growth will decrease by 1.1% only due to the collapse of trade between the EU and Russia.

A huge folly, based on Russia’s full right to own the old naval bases of Sevastopol and the Russian Crimea, which has accepted the annexation as “autonomous region” by an overwhelming majority, confirmed by 57 observers from 41 countries, later disowned – and no one knows how and why – by the UN Secretary General.

The reduced interest payments are worth at least a loss of 10 billion euro, while Italy is losing at least 42% of its exports of materials for freight.

Not to mention the tourist sector (Russia ranks fourth in terms of international tourist flows to Italy) and the agribusiness sector (which fell by 16%) and, above all, the so-called Made in Italy, the primary asset of our country which has now fallen down to become one of the marginal budget items of bilateral trade.

And all this, once again, to justify a false, and often illegal version of the facts and situations which took place in the long “Donetz war” and the clash between the Ukrainian Maidan and the pro-Russian forces in the region.

Nevertheless only 147 billion euro worth of Russian debt are held abroad, with Italy as second largest creditor, with 27 billion euro, followed by Germany and Great Britain. The bungling supporters of sanctions had to know that there was no room for maneuver.

As a result of Russian counter-sanctions, the agrifood sector was hit to the tune of 43% of its potential across the EU, with Italy which had to monitor entire economic sectors (fruit and vegetables, meat, poultry).

Hence this is the geopolitical masterpiece of the moralist supporters of sanctions: the economy of a country such as the Russian Federation has been directed eastwards; a disaster hard to solve has been created in key economic sectors of the EU and Italian production systems. And everybody agrees on the fact that all this has been done without reaching any strategic result other than the smart, effective and strong presence of the Russian Federation in Syria.

What are the solutions which can be envisaged? First and foremost, even one single country, such as Italy – possibly with Austria and Hungary – should lift bilateral sanctions in the agribusiness and, at least, in the tourist sector.

Secondly, even one single group of EU countries should denounce the substantial groundless nature of the whole architecture between the Minsk I and Minsk II agreements, as well as create a sort of European-Russian bank for funding bilateral trade.

Thirdly, the UN and the other “inner sancta” of global power (and it is worth recalling that former Italian President Cossiga dismissed the UN as “a useless organization”) should be reminded of the fact that, from now on, the sanctions, counter-sanctions, their lifting and all the other multilateral and bilateral trade issues will be the prerogative of States and not of some strange and unreliable “experts”.

Advisory Board Co-chair Honoris Causa Professor Giancarlo Elia Valori is an eminent Italian economist and businessman. He holds prestigious academic distinctions and national orders. Mr. Valori has lectured on international affairs and economics at the world’s leading universities such as Peking University, the Hebrew University of Jerusalem and the Yeshiva University in New York. He currently chairs “International World Group”, he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group. In 1992 he was appointed Officier de la Légion d’Honneur de la République Francaise, with this motivation: “A man who can see across borders to understand the world” and in 2002 he received the title “Honorable” of the Académie des Sciences de l’Institut de France. “

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The Battle for the Indian Ocean and Island States

Kester Kenn Klomegah

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Russia has taken an increasing interest in strengthening consistently its diplomacy with small island States especially Cape Verde, Mauritius, Maldives and Seychelles. Late December, the Kremlin appointed Deputy Director Artem Kozhin at the Foreign Ministry as the new ambassador to the island of Seychelles, signaling the strategic importance it attaches to this island state of Seychelles with an estimated population of 85 thousand, located in the Indian Ocean, northeast of Madagascar and east of Kenya.

Former Russian ambassador to Seychelles, Alexander Vladimirov said the relations between the two countries have been extremely cordial since the two countries established diplomatic relations following the independence of Seychelles in 1976. Russia and Seychelles have seen remarkable developments between the two countries, including the arrival of many Russian tourists. Russian investors have been investing in the country.

On June 30, 2016, Russia and Seychelles marked their 40th anniversary of the establishment of diplomatic relations between the two countries. Over the years, both have pledged to forge mutual cooperation in many spheres, but little is tangibly visible.

Notwithstanding that little progress, an agreement between the Russian Federation and the Republic of Seychelles waiving visa requirements for short-term trips by citizens of both countries was signed in Victoria, Seychelles, on Sept 2, 2015. Under the agreement, citizens of Russia and Seychelles with a valid passport, including a diplomatic or official passport, are exempted from visa requirements and may enter, stay or transit the territory of the other state without a visa for a term of up to 30 days.

As expected, both countries have exchanged official visits and held meetings at different times. During one of such meetings, Russian Foreign Minister, Sergey Lavrov, underscored the mutual interest in and readiness for the development of a joint plan for partnership, including transport and energy between Russia and Seychelles, and that would include the Southern African Development Community.

As far back as March 2015, on the topic that appeared that Russia planned to open military bases in Seychelles, Vietnam, Nicaragua and Cuba, Lavrov vehemently responded: “It is absolutely wrong. We have no plans to create military or marine bases abroad, but to resolve specific tasks: fighting piracy, pirates have appear in many parts of the world. Our fleet makes long-distance voyages. We agreed with some countries, that our ships use the existing infrastructure for calling into ports for maintenance and small repairs, supplementing food and water reserves, and for recreation of crews.”

Seychelles has over the years, suffered from sea piracy. However, the island is a key participant in the fight against Indian Ocean piracy primarily committed by Somali pirates. Former president James Michel said: “The pirates cost a great percentage of the Seychelles GDP, including direct and indirect costs for the loss of boats, fishing, and tourism, and the indirect investment for the maritime security.” These are factors affecting local fishing – one of the country’s main national resources.

As a support base, the island is currently strategic zone for the United States¸ China and India that are already competing in the Indian Ocean. But Sanusha Naidu, a Senior Research Associate at the Institute for Global Dialogue based in Pretoria, South Africa, thinks that it is very strategic for Russia to strengthen engagements with these island States, especially Seychelles.

“Part of this will enable Moscow to have an important maritime security presence from the Indian Ocean Rim on the East Coast to the Atlantic seaboard on the West Coast. This could offer important sea-lanes for Moscow’s economic transactions. But, it also represents crucial footprint to keep up with competitors like China and the United States in terms of geo-political interests,” Naidu told Modern Diplomacy.

In July 2019, President Vladimir Putin accepted the credentials of 18 newly appointed foreign envoys, among them was Louis Sylvestre Radegonde (Republic of Seychelles). Putin pointed to the fact that Russia maintains friendly relations with the Republic of Seychelles. It counts on further joint work to expand cooperation including tourism, trade, economic and humanitarian spheres, noting strongly that the tourism sector is the primary industry of that country.

Seychelles is ranked high in terms of economic competitiveness, a friendly investment climate, good governance and a free economy. It has strong and friendly relations with various African and foreign countries. Based on this fact, Professor Dmitry Bondarenko, Deputy Director of the Institute for African Studies, explained to me that “as part of the sustainable efforts by Russia with individual African countries, Russia and Seychelles could cooperate in the priority areas such exploring the seabed for minerals, fishing and seafood processing, aquaculture and marine services (including marine finance and marine biotechnology).”

In an emailed interview for this article, Punsara Amarasinghe, who previously held a research fellowship at Faculty of Law, Higher School of Economics in Moscow and now a PhD Candidate in Law from Scuola Superiore Universitaria Sant’Anna di Pisa in Italy, discusses some aspects of Russia’s relations with Seychelles.

The diplomatic relation between Russia and Seychelles does not have a long history compared to the robust relations between Russia and other African states. Nevertheless, in its brief history staring from 1976, Seychelles had made a rapport with the USSR. In particular, USSR ships anchored in Seychelles and Seychelles supported Soviet invasion of Afghanistan. However, Russian influence in Indian Ocean waned in the aftermath of the collapse of the Soviet era and Russia’s interest in Seychelles consequently diminished.

Recently, Russia’s interest in Indian Ocean and African states have been escalated as a part of its global agenda to restore Russia’s role. Especially just a week before the assassination of Iranian General Solemani, Russia participated in a naval exercise along with Iran and China in Indian Ocean proving its interest in the maritime expansion in Indian Ocean.

Amarasinghe wrote in his email: “The indispensable importance of Indian Ocean appears as a key factor for any state interested in power expansion. It was not an exaggeration that Robert Kaplan vociferously exclaimed that one who controls Indian Ocean, will control the geo-political center of the world. Currently the only active military base of the US is located in Diego Garcia, 1800Km away from the Seychelles. The geographic position of Seychelles is alluring for Russia’s blooming military interests and if Seychelles allows Moscow to initiate a military base in the island, the maritime hegemony upheld by the United States will be undoubtedly challenged.”

More importantly, the crucial location of Seychelles parallel to African continent makes it a unique destination as a military base. However, realistically we cannot assume the possibility of seeing a Russian base in Seychelles in near future. Indeed, it is true that Seychelles’ main port Victoria was opened for Russian vessels for refueling and other logistical issues. Yet, the same offer was given to many other nations including China and the United States.

On the other hand, Russia’s internal economic chaos have significantly hit the military expenditures of the Russian army and it is a fact beyond dispute that the Chinese and the United States military budgets are forged ahead Russian annual military budget. The practical circumstances may not make it an easy task for Russian Federation to build a military base in the Seychelles, even though it has a significant strategic importance, according to Punsara Amarasinghe.

Nevertheless, if Chinese can pursue its fortune in Seychelles, it would be much significant for them as a military access to Indian Ocean and an apt strategic position for maritime Silk road. China has already established a military base in Djibouti and its proximity to the Seychelles will secure Chinese military presence strongly in Indian Ocean challenging the US hegemony. It seems to indicate that rather than thinking of a military base fully controlled by Russia, it is likely to see much of Chinese presence in Indian Ocean, or perhaps, in Seychelles. It will inevitably assist Russian interests too.

Maldives, independent island in the north-central Indian Ocean, while Mauritius is further south, located about 2,000 kilometres off the southeast coast of Africa. Seychelles is ranked high in terms of economic competitiveness, a friendly investment climate, good governance and a free economy. It has strong and friendly relations with various African and foreign countries.

By demographic developments down the years, Seychelles is described as a fusion of peoples and cultures. Seychellois, as the people referred to, are multiracial: blending from African, Asian and European descent creating a modern creole culture. Evidence of this strong and harmonious blend is seen, for instance, in Seychellois food that incorporates various aspects of French, Chinese, Indian and African cuisine. French and English are official languages. Seychelles is a member of the African Union, the Southern African Development Community, the Commonwealth of Nations, and the United Nations.

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Searching for a New World

Igor Ivanov

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The assassination of Iranian General Soleimani upon the order of the President of the United States on the territory of another sovereign state once again undermined the legal foundations of the entire system of international relations.

No matter how hard the U.S. Administration attempts to justify the decision of its President, it is perfectly clear that the situation in the Middle East and the Persian Gulf has become even more tense and unpredictable. Washington’s actions in recent years continue to destroy the legal foundations of international relations and demonstrate the increasingly defiant attempts of the United States to impose its terms, interests and “rules” of conduct on the rest of the world. Consequently, the assassination of the Iranian general is not so much a challenge to Iran as it is a challenge to the entire global community.

This begs the obvious question: Where might Washington’s politics lead and is there a way of opposing them without plunging the world into global disaster?

In the United States itself, many people are starting to realise that the course currently being steered by the U.S. Administration may do irreparable damage to the country’s own long-term interests. The American public was mostly restrained in its reaction to President Trump’s decision to eliminate the Iranian general. The provocative actions of the United States are increasingly isolating the country. Even its traditional allies are beginning to distance themselves, as they feel the consequences of Washington’s imperious unilateralism. The implications of the internal struggle currently unfolding over U.S. foreign policy will become apparent after the November presidential elections. However, whatever the outcome, we must concede that it will take a long time to redress the damage that the U.S. Administration has caused to the entire system of international relations.

As for the Middle East and the Persian Gulf, we can expect stronger anti-American sentiment and a general weakening of Washington’s influence on regional developments. The general lack of enthusiasm in the Middle East about the regional settlement plan touted by the U.S. Administration as “the deal of the century” suggests that the settlement is likely doomed to failure. In reality, the idea was just a way for the United States to retain its presence in the region.

Most of the United States’ allies are taking a “wait-and-see” approach following the dramatic events in the Middle East. Their stance is in some way understandable: they cannot come forward as one and directly criticise the United States, yet individual voices will go unheard. Consequently, most European capitals confined themselves to vague formal statements and general pronouncements. Nevertheless, the United States’ allies are becoming increasingly vexed by the unilateral actions of the country’s Administration, for which the “America above all” principle has become a way of life. However, for various reasons, the countries of Europe, as well as other allies of the United States, are not ready to oppose Washington’s politics on their own. That said, the process has begun, although it promises to be a long and arduous road.

In this context, particular responsibility lies with those few international actors that are capable and, just as importantly, ready to oppose Washington’s unrelenting pressure in the interests of global security. The only fully sovereign and independent actors that come to mind here are, of course, Russia and China, permanent members of the UN Security Council that enjoy significant weight in many global and regional issues and have massive combined military containment potential. Russia and China command respect in the global community and therefore bear special responsibility for the future world order.

The international community today—both at the level of public opinion and heads of state and international organisations—is listening with particular attention to the signals coming from Moscow and Beijing, recognising them as essential landmarks for adjusting their own stances and strategies on the key issues of international politics. Given the increased instability and unpredictability of the global environment, the importance of such landmarks increases significantly.

The model of Russia–China bilateral relations is seen as such a landmark in itself, as a demonstration of the feasibility of building ties based on carefully balanced interests without sacrificing national sovereignty and without opposing these relations to other foreign policy priorities. Equally relevant is the practical experience of new multilateral unions, including BRICS and the SCO, which allow states with highly divergent interests (for example, India and Pakistan) to interact successfully and constructively.

The special responsibility that rests on the shoulders of Russia and China entails additional, loftier requirements for the global political cooperation between the two states. Today, the question is how to coordinate the two countries’ long-term foreign political strategies more closely and promote joint initiatives that concern the fundamental issues of the future world order.

Naturally, Russia and China cannot claim a monopoly for developing new rules of the game for the future global political system. These rules should emerge from negotiations, consultations and discussions within a wide variety of multilateral formats, from global platforms such as the United Nations to the narrow-format meetings of public organisations and expert communities. Yet, the deeper and more strategic Russia–China coordination is, the more productive multilateral formats can become.

From our partner RIAC

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Putin’s “January Sermon”: Is it a path to democratization of Russia or a hoax?

Punsara Amarasinghe

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The volatile political trajectory and its subtle actions in Russia have always created awe among the political pundits in the West who are immensely obsessed with the geopolitical space in Ruski Mir. However, history has always aggrandized Russia as a state that cannot be easily fathomed. Just like how a dull and calm plot reaches its most unexpected culmination in a Dostoyevsky’s novel, the political trajectory in Russia has always been thrilling. The most recent political events followed by president Vladimir Putin’s annual speech in the state Duma on 15th of January is an epitome for the uncanny political nature of the world largest state.

The speech delivered by president Putin on 15th of January in the Duma was entirely an unexpected political explosion. In his speech, he proposed a serious of constitutional changes that would escalate the powers of the parliament eventually leading to an increase of prime minister’s power. Article 83 and 84 of the Current constitution in Russian federation have vested considerable power in the hands of the president over the state duma and the proposed changes would inevitably revoke them. A legitimate question appears before any inquisitive person on Russian politics is “Why Putin would allow Duma to curtail his power “. Political history of president Putin has aptly proven his sharp political acumen as a politician who properly kept his grip.  However, this time he opted for rather a completely a different strategy by empowering the state Duma, which is the lower house of Russian parliament to appoint the prime minister who is currently being appointed by the president with Duma’s consent.

The increasing the power of a national council happens to be the most notable proposition of these recommendations and Putin indicated the need to strengthen the constitutional role as a crucial factor. The state council was a creation of Putin during his first term in Kremlin. Thus far it has served as an advisory body and it is consisted of regional governors, speakers of the both houses in the parliament and the party leaders. The proposed constitutional recommendations will boost its power and it is still unclear the way it would safeguard Putin from a political ebb. It not clear what role president Putin fancies in empowering the national council from nonentity to a powerful tool in Russian state apparatus. The evasive step taken by the former president of Kazakhstan Nursultan Nazarbayev in 2019 seems like a potential strategy Putin determines to implement. The last holdover from the Soviet era Kazakhstan resigned from the presidency and retained the influential job of leading country’s security council as the leader of the nation. Perhaps, Putin will embrace the same strategy of symbolizing an honorable step down while keeping his grip in a different way such a making himself as the head of the national council. Yet, making such an arm chair prediction about his possible strategy to remain in power beyond 2024 may be rather futile as Vladimir Putin has always shown a political unpredictability in his actions.

The appointment of Mikhail Mishustin to the prime minister post after Dmitry Medvedev stepped down along with his cabinet is the next notable incident emerged after 15th of January. Unlike Putin’s protégée Medvedev the newly appointed president holds no significant political activism as an ally or at least as a panegyric. He is being described as a technocrat and apolitical figure who was responsible for transforming the aged old Russian tax service into an era of digitalization.  From a vantage point, the choice of Putin appears to be a wise move with the meritocratic capability of Mishustin regardless of his lack of affinity with the politics. Since the Ukrainian crisis in 2014, the economy of Russia has been in the doldrums and some economists have described the last decade as a stagnant decade for Russia’s economy. Given his solid background in economics and practical experience with taxation may prove his competence to become the premier in midst of an economic stagnation. Mishustin’s appointment reminds of the count Sergei Witte’s appointment by Tsar Nicolas II in 1905 whose capacity as an econometrician boosted Russia’s industrial growth for a shorter period. 

The democratic reforms have always been sort of tough moves throughout Russian history. Especially the centralization of political power has always impeded Russia from reaching democratization. The confrontation between president Yeltsin and the parliament in the fall of 1993 eventually ended up in Yeltsin’s outrageous move of sending armed tanks to the parliament building. The current Russian constitution which has placed enormous power under in the hands of the president is an offshoot of the constitution adopted in Yeltsin era. Putin’s abrupt decision to reduce that will at least theoretically undo the damage wrought by 1993 constitution. In principle, the transition of power from the president to the parliament will pave the way to increase the high chances of check and balance in power crating a greater change in Russian political culture.

All in all, the ostensible motive of the constitutional reforms will assist Russia to get into better strides as a normal democracy without enabling the centralization of power around one man. But can we believe that country that has never undergone a proper western democracy will be adamant for such a mammoth change? The real politic in Russian history has always shown the rise of lesser known political characters to the zenith of power by taking the advantage of chaos. When Russian state was in a verge of extension Mikhail Romanova came out of nowhere and created the house of Romanovs that lasted for three hundred years. When Lenin died creating chaotic power vacuum in 1924, lesser known Stalin exterminated all his foes and tightened the power of newly born USSR and finally made it a super power. The sudden power shift Putin proposed on 15th of January is simply a tranquil sign before a great political storm in Russia and ironically Russians are no strangers for such political storms.

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