Endgame for sanctions? Russia and the West move towards common ground

When there's a natural rapport between leaders, relationships are easy. In such an atmosphere, negotiating is a doddle. Of course, when the opposite is the case, the reverse often happens. Small disagreements can explode into furious arguments.

Indeed, personalities matter far more in politics than is generally acknowledged. Sometimes politicians just like each other. Think Margaret Thatcher and Ronald Reagan, who were once described as "ideological soul mates." Or Francois Mitterrand and Helmut Kohl when they dragged Europe into a - well intentioned, if ultimately flawed - single currency.

At the same time, it's no secret that Barack Obama and Vladimir Putin don't exactly love each other. The American President appears to resent his counterpart's lack of deference, while Putin apparently regards Obama as weak and insincere. In these circumstances, cooperation between Moscow and Washington has been practically impossible.

Twelve months ago, western commentators, almost unanimously, believed that Obama had emerged victorious from the ‘struggle." Indeed, it seems the President himself reached the same conclusion. In January 2015, he boasted, during his penultimate ‘State of the Union' address, of America's virtue and, so much as it existed in his own mind, Russia's solitude and desolation.

"Last year, as we were doing the hard work of imposing sanctions along with our allies, some suggested that Mr. Putin's aggression was a masterful display of strategy and strength. Well, today, it is America that stands strong and united with our allies, while Russia is isolated, with its economy in tatters. That's how America leads -- not with bluster, but with persistent, steady resolve," a jubilant Obama swaggered.

All that was missing was a "cock-a-doodle-doo" to bring the grandstanding to a fitting conclusion.

A lot has happened in the twelve months since. Washington's belief that the Ukrainian regime, which it helped impose, would reform the tragic state was misplaced. Instead of the expected transformation, the country's institutionalized corruption seems to have actually gotten worse. Even Kiev's biggest American supporters are openly deflated these days.

At the same time, France and Germany are running out of patience with Ukraine's inability to fulfill its obligations under the Minsk peace deal they helped broker.

Switching focus

Western coverage of Ukraine's plight quickly dwindled last summer. Due to the migrant crisis in Europe, Syria became the big story. In this arena, Putin has played a blinder. America's policy in the war-stricken country was inconsistent and indecisive. Indeed, many European thinkers wondered if Washington's actually wanted to end the conflict at all.

By contrast, Russia's strategy has been steady and constant. Putin made it clear that his mission was to contain ISIS and preserve the Syrian state, saving it from the chaos which engulfed Libya and Iraq after ‘revolutions' in those countries. As the days lengthen and the weather softens, Europe's biggest fear is an even bigger migrant influx this Spring. As a result, Brussels needs Syria resolved, to some extent, and quickly. Russia is now absolutely vital in that regard.

Right this minute, there are growing signs that reconciliation is imminent. This week, French Foreign Minister, Laurent Fabius called for the Minsk agreement to be swiftly implemented so that EU-Russia sanctions could be removed. "Sanctions are not a goal in themselves. They harm Russia, France, Europe," Fabius said. He also acknowledged that Russia was "making efforts" at enforcing the treaty.

Bloomberg reported that John Kerry was disillusioned with Kiev and veering towards Moscow's position on Minsk.

Meanwhile, Germany's Finance Minister Wolfgang Schaeuble took to the pages of Frankfurter Allgemeine Zeitung to suggest that the EU work towards closer ties with Moscow in order to disentangle hostilities in Syria.

Concurrently, Russia's representative at this month's Davos conference, Yuri Trutnev, told TASS that "a number of European politicians (at the Swiss venue) favored a speedy lifting of anti-Russia sanctions."

NATO-aligned leaders originally hoped that the penalties would force Russia to change its stance on Ukraine. That didn't happen. In some respects, the embargo may even have benefited Moscow. By making it almost impossible for companies to borrow in the west, Russia's external debt shrank markedly before the ruble crisis erupted in late 2014. Thus, Brussels and Washington, inadvertently, made Russia more resilient to extraneous traumas. And with oil prices barely over $30, there's been plenty of those.

Sanctions also served to solidify the electorate's support for the Russian government. For instance, Putin's approval rating remains at over 80 percent. This was definitely an unintended consequence.

Meanwhile, Moscow's counter sanctions have helped to stimulate, much-needed, improvements in Russian domestic agriculture.
Despite all this, most Russians would much prefer to have the option of purchasing European food again. For their part, European farmers would welcome the restoration of market access. The EU Agriculture Commissioner, Phil Hogan, admitted this month that €5.2 billion of farm produce was "locked out" of Russia. This has created an oversupply and price crisis in Europe. Milk prices are currently so low that, this week, a group of Irish farmers even visited Pope Francis in Rome, pleading with the Pontiff to intervene.

Mutual destruction

Both Europe and Russia need the sanctions to be removed. In 2014, EU exporters lost about $12 billion in sales to Russia. At the same time, Russia needs inward investment. The removal of the embargoes would be a big boost for sentiment and an influx of capital would surely follow.

On the other hand, there's no guarantee that American hawks wouldn't find an excuse for new penalties in short order. Take Iran as an example. Just as one set of sanctions were removed, Washington imposed new punishments over a ballistic missile test. France is reportedly pondering similar retribution. Could the same thing happen to Russia?

Another dark cloud arrived courtesy of a ridiculous interview from Britain's state-controlled BBC last week where Putin was accused of corruption by a US Treasury official. No actual evidence was presented and the Kremlin labelled it "pure fiction." Of course, this programme was filmed long before the recent improvement in dialogue between Russia and the West.

Despite these concerns, due to the seniority of the European officials publicly discussing a reversal in policy, feelings of hope seem well founded. Germany's vice-chancellor Sigmar Gabriel also called for detente in early January. He admitted that some "forces" in Europe and the US wanted sanctions to cripple Russia, which would "risk a conflagration."

"We want to help get the Ukraine conflict resolved, but not to push Russia onto its knees," he told Berlin's Bild am Sonntag.

Gabriel's comments served to buttress perceptions that sanctions weren't entirely about Ukraine, but were also designed to destroy the Russian economy. You might be surprised by how many Russians hold this view. Luckily, sane voices seem to be winning the argument. There's now a real possibility that Russia and the West can operate on the same wavelength in 2016.