One of the greatest examples of transatlantic cooperation that I witnessed during my tenure as US ambassador to the European Union in 2014-2017 was the imposition and periodic renewal of sanctions against Russia following its invasion of Crimea in 2014. Although there are useful lessons that can be applied from that experience, the sanctions that the United States, the EU and their allies are applying now go far beyond what they did eight years ago in breadth, speed and effectiveness.
Helping in this crisis is the fact that many top officials in the Biden Administration played a prominent role in the previous crisis. I remember then-Vice President Biden’s frustration at the slow pace and painful gradualness of the sanctions that were applied. It took six months for the United States and the EU to move beyond one-off sanctions, largely travel bans and asset freezes on a few officials and members of Vladimir Putin’s inner circle. Only after the shooting down of the Malaysian Airlines plane in July 2014, with the loss of many European lives, did we finally apply sectoral economic sanctions, including to some sectors of energy and financial services.
Although the collapse of oil and gas prices on world markets hurt Putin more than our sanctions, I have no doubt that the sanctions came at a high cost. The problem is that the cost was not high enough. Russia continued to have access to Western technology; foreign energy companies continued to invest in Russian energy projects; Russian companies continued to have access to Western capital markets. Moreover, President Obama repeatedly insisted that sanctions be gradual and low-based, giving Putin plenty of opportunity to find a face-saving way out, despite repeated evidence that Putin would ignore it. And Obama repeatedly blocked any proposal to provide lethal weapons to the Ukrainians. That is one of the reasons Putin is now dramatically wrong in thinking that a full-scale invasion of Ukraine would not cripple Russia.
However, it was the United States that set the pace of the sanctions and their severity, often against European misgivings. On several occasions, Washington had to toughen the EU’s decision by threatening to act unilaterally. Some member states were more concerned about losing relatively small export markets than taking on Moscow. The European Commission was unable to act more quickly due to acrimonious disputes between EU member states over “burden sharing”, ie the need to distribute more equitably the pain of Russian counter-sanctions.
A key success of the 2014 crisis, and an important lesson for the current crisis, is that transatlantic unity must be maintained. We had active discussions about the scope and speed of the moves. At times we disagreed on which sectors to target because the relative exposure of the US and European economies to Russia is naturally different. German and Italian companies were especially keen to continue doing business as usual. Many in Europe suspected that Washington was more willing to strike hard and fast because the US economy and businesses have limited exposure to Russia. This conclusion was only partially correct: some US companies, especially in the energy sector, suffered a significant impact from our sanctions.
Despite these disagreements, the US and Europe have always remembered the Zulu adage: “if you want to go fast, go alone, but if you want to go far, go together”. For sanctions to be successful, they must be broad, including not only the US and the EU, but also large economies such as Japan, South Korea, Canada, and financial centers such as Switzerland. Had we not maintained transatlantic unity while moving independently on sanctions, we would have scored an own goal and handed Putin an important victory.
This crisis is of a totally different magnitude and has therefore justified a considerable increase in sanctions. It is natural that the US and the EU have taken many steps that they did not dare to take in 2014. The speed and unity of transatlantic sanctions have been exemplary, far exceeding anything expected.
Some of the measures taken in Europe are truly historic. I have followed European affairs for three decades, but I never imagined that the EU would provide 500 million euros in arms and other aid to the Ukrainian army. I never imagined that Germany would give up decades of foreign policy to provide significant lethal military aid to Ukraine and quickly fulfill its obligations as a NATO member to spend 2% of its GDP on defense. Europe has risen to the occasion.
But much more could be done. Perhaps the United States and the EU are studying the possibility of cutting off Russia’s access to cryptocurrency exchanges; end the status of most favoured nation of Russia in the WTO; ban the import of oil from Russia; crack down on facilitators of the oligarchs on the sanctions list, including bankers, lawyers, and consultants; forcing greater transparency in corporate registries so that oligarchs cannot hide their assets in a complex network of holdings through tax havens; and, perhaps most importantly, taking more aggressive action against Russian banks and energy giants.
Just a few days ago, the International Energy Agency published a must-read 10-point plan to reduce the EU’s dependence on Russian natural gas. The plan would allow Russian gas imports by the EU to be reduced by 50 billion cubic meters in a year and reach zero by 2030. This will require a major effort, not only to speed up the deployment of wind and solar energy, but also to introduce minimum gas storage obligations and replace Russian gas with alternative sources. One of the main lessons of the 2014 crisis is that the EU did not do enough to diversify Russian gas imports.
One last lesson is important to note. This crisis will not be gratuitous neither for the EU nor for the United States. Consumers will be affected by the increase in the prices of energy and some raw materials. Some export markets will be lost. The leaders of our countries will have to be very honest with their constituents about what is at stake here, not only for Ukraine but for our own security. There is little doubt that Putin not only wants to wipe an independent Ukraine off the map, he wants to rewrite the entire postwar order. That could include new threats to the Baltic and Central Europe. Transatlantic unity on this long and difficult road remains paramount.
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