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US-EU Perspectives: Sanctions on Russia and Iran openDemocracy / flickr

US-EU Perspectives: Sanctions on Russia and Iran

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On June 21 the Center for Strategic and International Studies (CSIS) held an event titled: “Transatlantic Policy on Economic Sanctions: Promises and Pitfalls.” The discussion gave three perspectives – US, German and French – on the imposed sanctions against Russia and Iran. The panelists included Ambassador Daniel Fried, Dr. Philipp Ackermann, Simond de Galbert and Elizabeth Rosenberg. The event was moderated by Heather A. Conley, Director of the Europe Program at CSIS.

Simond de Galbert (Visiting Fellow, Europe Program, CSIS) opened with an overview of his report: A Year of Sanctions Against Russia – Now What?  He presented three takeaway points, specifically directed at a US audience. First, a unified transatlantic sanctions policy is in US national interest. Second, the EU should be given more credit and trust when it comes to sustaining sanctions. Third, the US-EU relationship needs to be balanced. Galbert discussed the limitations the EU has due to its organizational structure. Implementation and enforcement across 28 states can be challenging, like sharing intelligence across borders. However, even with its limitations, EU sanctions are a powerful tool and this should be recognized by the US.

Ambassador Daniel Fried (Coordinator for Sanctions Policy, U.S. Department of State) agreed that the EU-US working relationship has come a long way. Sanctions on Russia in response to intervention in Ukraine mark the first time cooperation between the US and EU began from “point zero”. Since the 1982 failed unilateral sanctions against natural gas pipeline equipment sales to the USSR, the US has realized that multilateral action is much more effective.

Fried also outlined the importance of “patience”, “meaning what you say” and “sticking with it” when implementing sanctions. In the case of Iran, positive results began to show only after 10 years of sanctions which always have costs and unintended consequences. Concerns from pro-Russian lobbyists and the private sector should be withstood. Though valid, Fried argues losses are often exaggerated.

Finally, Fried said that it is important to define one’s objective when implementing sanctions. Currently, the EU and US are in agreement that sanctions against Russia should be lifted only when Russia fulfills its side of the Minsk Agreement. Backpedaling is not an option and it should be recognized that without sanctions the situation in Ukraine would have been much worse.

Dr. Philipp Ackermann (Minister and Deputy Chief of Mission, Embassy of the Federal Republic of Germany) began with a reminder that Germany, as well as other EU countries, suffer more from sanctions than the US. He also expressed concern over secondary sanctions. German companies and banks seeking to invest in Iran lack certainty as to the legality of their ventures. However, overall the EU and US are in harmony.

Though a useful tool, Ackermann cautioned against sanctions being used as a first resort because they have harmful effects on innocent third parties. For example, both the Greek tourism and Finnish dairy industries took a hit, not to mention the repercussions faced by Russian society. In that vein, Ackermann stressed that no one has interest in ruining Russia’s economy, bringing the country to its knees. In fact, Ackermann argued that if Russia shifts towards fulfilling its obligations, sanctions should be eased, but at the right moment to protect credibility.

Elizabeth Rosenberg (Senior Fellow and Director of the Energy, Economics and Security Program, Center for a New American Security) addressed the private sector’s role in sanctions. According to Rosenberg, companies and banks are the true implementers of policy and thus those who sacrifice most. Responding to Galbert and Ackermann’s concerns over US overreach, Rosenberg explained that multi-national corporations are still dependent on US networks so fall under US jurisdiction. She said that part of the problem might be the limited number of OFAC officials. In addition, there is a narrow view as to whom OFAC provides guidance, limited primarily to US persons. Ultimately, Rosenberg acknowledged that there were flaws in communication, but that perhaps uncertainty is part of the sanctions’ tool kit.

To conclude, it seems that the US and EU are on the same page when it comes to rolling over sanctions. The US should remember to have more faith in the EU. Perhaps the EU faces more economic risk, but geopolitically, it is also closer to Russia and thus has more immediate need to regulate the Ukraine crisis.