Borrell says EU sanctions on Russia 'working', but at what cost?

By Al Mayadeen English
Source: Agencies
27 Aug 2023 13:04
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Hungary's Foreign Minister says the US pushed the EU into a "military aid competition" of who will help Ukraine while European officials played along even though they are "literally destroying Europe."

The High Representative of the European Union for Foreign Affairs and Security Policy, Josep Borrell, in Brussels, Belgium, on September 5, 2022 (AFP)

While Europe is in the middle of figuring out whether it has won or lost its sanction war on Russia, as decision-makers aggressively defend their hawkish anti-Moscow policies, claiming that they are working perfectly and actually doing "wonders", most of the bloc's economies beg to differ.

"Within a year, they [sanctions] have already limited Moscow’s options considerably causing financial strain, cutting the country from key markets and significantly degrading Russia’s industrial and technological capacity," EU's chief diplomat Josep Borrell wrote in his blog on Saturday.

While it goes without saying that Russia's economy did receive a number of painful hits - most of which Moscow arguably recovered from to an extent since - EU's top diplomat resorted to citing numbers from the Russian economy without benchmarking them to those of its industrial neighbors in Europe, which are doing significantly worse as per public records, international financial think tanks and organizations, and even their own central banks.

But Borrell's assessment did not match that of Hungarian Foreign Minister Peter Szijjarto, who concluded that the continent's anti-Russia sanctions policy was directly orchestrated by the United States and has led the bloc to become a laughing stock for the world as the sanctions continue to backfire on European economies.

Talking at the Tranzit political festival, one of the most significant annual events that celebrate Hungarian youths integrating into the political scene, Szijjarto said the EU is self-destructing in the name of supporting Kiev.

"The USA has pushed Europe into the competition of who will help Ukraine and how much: a military aid competition," he said, pointing out that European officials "accepted this provocation" even though "we are literally destroying Europe."

It would be a "baroque and poetic exaggeration" to say that Western sanctions on Moscow have succeeded in crippling the country's economy, he said, adding that "everywhere in the world, the European sanctions policy is being laughed at."

The hysterical sanctions on Russia were imposed by the bloc because European leaders "are in a war psychosis," Szijjarto added, warning that military assistance to Ukraine is posing a direct threat to Europe's collective security.

"Looking at Russia’s long-term growth prospects, the technological degradation and the exit of foreign companies will hamper investment and productivity growth for years," Borrell claimed.

"To stop the war, we need to stay the course," he stressed, referring to the need for a 12th package of sanctions, and called on other non-EU countries to further abide by the bloc's sanctions.

Knowingly or not, Borrell failed to mention the disastrous financial numbers the bloc's top members are witnessing, on top of which is Germany -- Europe's powerhouse.

Moreover, while claiming that the sanctions are "producing hard, tangible effects across Russia's economy," an earlier IMF report forecasted that the Russian economy is not at a stalemate, rather it will continue to grow by 0.7 percent in 2023, and 1.3 percent in 2024.

In June, the Eurozone officially announced it had entered a recession. Among the main factors for this financial crisis was the downturn of Europe's biggest economies, Germany being on top of that list.

Battered by questionable political and economic decisions, both on the local and EU level, the German economy is suffering from consecutive blows unseen since the end of WWII.

Just this month, the World Bank declared that Russia overtook Germany's $5 trillion market to become the fifth-largest economy in the world and the largest in Europe at $5.3 trillion. Meanwhile, preliminary data revealed last Wednesday that Germany's business activities experienced their sharpest decline in over three years during August.

"Any hope that the service sector might rescue the German economy has evaporated," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank following the data report, confirming that the country's sector service is officially heading into a recession.

On the other hand, ongoing unrestricted European cash flow into Ukraine is driving public outrage in the 27-member group, as living conditions continue to deteriorate and inflation is nowhere near the ECB's 2 percent target.

Another inter-bloc dispute, which is anticipated to implode in the near future and have its repercussion spill over to the global economy, is the issue of tax-exempted Ukrainian grain making its way into the continent through land routes -- which, according to Kiev's neighbors, would systemically destroy their domestic agricultural markets and put their farmers out of business.

This heated debate was re-fueled recently after the suspension of the Grain Deal and as the ban on Ukrainian agri-imports nears its deadline on September 15.

In June 2022, the EU suspended the collection of tariffs on goods imported from Ukraine for one year in an effort to assist Ukraine in maintaining a steady outflux of exports despite the plight of the raging war. The EU initiative allowed the export of millions of tonnes of Ukrainian grain without tariffs.

However, this move was not without consequences: given the aberrations, it shook the subtle balance of the European market.

Poland, Hungary, Bulgaria, Slovakia, and Romania called on the union to extend the ban on the free products or face defiance.

"Russia’s decision to attack Ukraine has obviously pushed the Russian economy towards isolation," Borrell insisted.

"The only morally tenable position is [that] the war must end this minute," Szijjarto concluded bitterly.