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January 27, 2015

«Kommersant»: Ban Seekers. The US and the EU consider introducing new round of sanctions against Russia

Relations between Russia and the West are under test once again, the biggest one since last summer, when after escalation of the Ukraine conflict the US and the EU imposed sectoral sanctions on Russia. Present-day aggravation was caused by the tragedy in Mariupol, shelling of which resulted in deaths of 30 people, Ukraine and the West blamed it on rebels and their supporter — Moscow. The US promises to increase pressure on Russia, Ministers of Foreign Affairs of EU are to meet on the special meeting this week. After the incident in Mariupol mitigation of the sanctions is out of the question. On the contrary — there are claims demanding new sanctions against Russia. Our sources close to the US State Department don’t rule out banning Russia from SWIFT.

On Thursday Ministers of Foreign Affairs of 28 EU Member States are going to gather at the emergency meeting dedicated to the Ukraine. The ruling presidential country of the EU, Latvia, concerned with the sudden escalation in Donbass, called for gathering that meeting. Our sources in the EU structures differed in whether during that meeting it will be resolved to introduce new sanctions against Russia. ‘More likely than not, the Ministers will simply harshly criticize the situation in the Western Ukraine, but they won’t make any decisions regarding sanctions, because current escalation in Donbass became big news for the majority in Brussels and they don’t have a definite plan of action,’ says one of the sources. ‘The thing is, not so long ago the EU didn’t rule out lifting some Russia sanctions in March. However, now this is out of the question.’

Our second source agreed that most likely the Ministers will not adopt new resolutions on sanctions, but also didn’t rule out that they will call on heads of the countries and the EU governments to negotiate such measures during the summit that is set to take place on February 12 or sooner. ‘There is room for new sanctions,’ he assured, refusing to disclose the details. Our sources in the EU structures firmly believe that Russia backs rebels and is therefore responsible for escalation of violence in Donbass.

After recent explosions in Volnovakh and Donetsk dozens of innocent citizens including children were killed and OSCE observers didn’t jump to conclusions as to whom to blame, but this time around with events in Mariupol they gave a definite estimation: in their opinion residential areas of the city were shelled from west and north-west direction, i.e. from areas occupied by rebels. That is the reason behind the harsh reaction of Federika Mogherini, the High Representative of the EU for Foreign Affairs, who not so long ago called for her colleagues to consider renewal of practical cooperation with Russia. ‘I openly call on Russia to use its influence on separatist leaders, and cease any types of military, political or financial support,’ she said on Saturday evening. ‘Further escalation of the open military conflict will inevitably result in a serious deterioration of relations between the EU and Russia.’

While Ms. Mogherini calls on Russia to distance itself from the rebels, Donald Tusk, President of the European Council, has in effect blamed Moscow for breaching the truce. ‘Once again, appeasement encourages the aggressor to greater acts of violence. Time to step up our policy based on cold facts, not illusions,’ he said on Twitter.

Our source in the EU structures rationalized the harsh response of the Brussels by saying that after the progress made at the recent meeting on Wednesday, where Ministers of Foreign Affairs, the so called ‘Normand Four’, expected stabilization of the situation in Donbass. ‘However, now the EU suspects Moscow of the double game: on one hand, it takes steps towards diplomatic settlement of the crisis, but at the same time it keeps supporting separatists thus undermining efforts of the negotiators,’ clarified our source. ‘Hopefully, it’s not too late to mend the situation.’ Yesterday Frank Walter Steinmeier, the German Minister of Foreign Affairs, has also called on ‘continuing making diplomatic efforts.’ According to the German Minister, those admitting end of dialogue should be ready for the situation in Ukraine to ‘go down the drain’.

Meanwhile, yesterday the US President Barack Obama has also threatened Russia by way of toughening the sanctions. He accused ‘separatists with Russian equipment, funding, military training and Russian army,’ of exacerbating the situation, and also added that the US ‘will continue to make economic pressure on Russia.’ Our source close to the US State Department didn’t rule out blocking Russia from the SWIFT system. ‘That would be very painful (for Russia — Kommersant),’ he said, reminding that similar measures had already been taken against Iran. Our source had doubts that ‘Europeans will resorts to such measures,’ and added that the US may well act alone.

However, according to our source in the payment market the only thing the US could resort to is ban direct interaction between the US and Russian banks via SWIFT, by way of an instruction or by pressing the US-located SWIFT operating center, which controls interaction between the US and foreign banks. However, the US can’t influence European banks; neither can it influence other banks outside the US, since such interaction flows through the SWIFT operating centers, over which the US has no control.

Our other source close to the US State Department specified the Washington’s approach: ‘The US will fight, as it always did, and force diplomatic solution, although that hasn’t brought the desirable result yet. But concerning the other way (sanctions — Kommersant) we’re far from being exhausted. Those who think otherwise couldn’t be more wrong!’

The Ukraine situation is also going to be discussed today at the emergency meeting of OSCE. Moreover, at Kiev’s request, there will be special consultations of the NATO—Ukraine Commission. Our source from the NATO HQ assured, that ‘they are dead serious about the matter, there is a pile of questions to Russia.’ ‘We feel like Moscow is taking us for fools,’ he said with exasperation. ‘But Russians should realize that full loss of trust from the West will bring about a lot of negative consequences for Russia.’

The fact that Russia and the West have a contrary opinion on the escalation of the Ukraine crisis was made clear at the debates of UN Security Council. Its members weren’t even able to agree on the text of the claim after the Mariupol tragedy: Russia was strongly against condemnation of the ‘militant appeals’ of the Donetsk People’s Republic, suggested by the UK and supported by Western delegations. As a result there was no claim from the Security Council, but there was one from the Secretary-General of the UN, in which he shares the opinion of London.

Poroshenko’s claim was probably the only positive signal. According to Poroshenko, it was resolved to hold negotiations in Geneva style — where Russia, Ukraine, the EU and the US would participate. Our source from the Ukraine President Administration explained why it was the Geneva format that was chosen: ‘It is fundamentally crucial for us to have the US as a participant in these negotiations. Unlike Paris or Berlin the US is independent from Moscow in terms of energy supply or otherwise.’

Moscow is also considering expansion of the negotiation format and suggests inclusion of the DPR and LPR. Yesterday Sergey Lavrov, Russian Minister of the Foreign Affairs, discussed this matter with John Kerry, the US Secretary of the State. According to the official statement of the Russian Ministry of Foreign Affairs, Moscow insists on the ‘direct dialogue’ of Kiev with Donetsk and Lugansk.

Ukraine announced January 25 as a mourning day. The Ukraine leaders accuse Russia of ‘direct aggression’, while Rada’s deputies demand to impose martial law, cease economic ties with Russia, close the borders and break free from the diplomatic relations. However, President Petro Poroshenko is still reserved in his actions. Yesterday at the emergency session of the OSCE he said: ‘We will not let Minsk agreement be undermined. We must ensure its undeviating fulfillment, not least with help of the Trilateral Contact Group mechanism.’

Aleksandr Zakharchenko, DPR leader, made an array of harsh statements that put in question peaceful prospects of the Minsk process. On Friday he announced the counter-attack and threatened the Ukraine army with ‘another hell’ around Debaltsevo. Zakharchenko made it clear that Minsk agreement no longer exists for DPR, which renders useless the negotiations. ‘We’re going into attack, what negotiations are you talking about?’ said DPR leader and added that his self-proclaimed republic refuses to have further hostage exchange, which was by far the only tangible achievement in the Minsk process.

‘Escalation of the Donbass situation has to do with exhaustion of the Minsk agreement format. Its underlying attempt to stabilize the situation bypassing the relevant matters (status of the sides, prospects of their relations, etc.) with a hope that truce will cease battles and will allow to indefinitely put the subject aside. The obligatory requirement for such a format was fixation of the demarcation line, which was provided for by the initial agreement. However, for some reasons that didn’t happen, which gave a blow to an already volatile construction,’ said Fyodor Lukyanov, Chief Editor of a Russian political magazine. In his opinion, this new escalation looks more like ‘rebels want to shift the demarcation line and force the Ukraine side to be more flexible at negotiations in some modified format.’

‘Sooner or later the conflict will end up with another negotiation, but before that both sides want to have more stable positions and a wider toolbox for achieving their goals. In the near future it’s quite possible that the escalation will continue, during which both Kiev and rebels will try to procure additional leverage over each other,’ assumed Sergey Oznobishchev, Head of the Strategic Estimates Institution. In his opinion it will be Russia who will lose in the end, and that no matter how things will work out the West will always blame Moscow for that escalation.

Solution to the current situation at experts’ estimate can lie in the Minsk agreement. ‘This agreement is not perfect and is subject to multiple readings. But so far it’s the only format we have,’ reminded Andrey Kortunov, Director General of the Russian International Affairs Council. In his opinion it’s too early to bury the Minsk process, although the DPR has already dismissed the previous negotiations. ‘We have witnessed for mote than one occasion how fast leaders of DPR and LPR changed their minds,’ says the expert, ‘so one can’t rule out the return of self-proclaimed republics to the Minsk process.’

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