On 7 September, the European Union extended its sanctions blacklisting more than 100 Russian and Crimean officials. A few months from now, in January 2017, the EU will decide on whether or not to extend its economic sanctions against Russian organisations, including several defence companies. The officials and entities targeted by previous and ongoing sanctions were involved in the Russian annexation of Crimea in March 2014. The extension of the blacklist and the possible renewal of full EU sanctions raise the question of how long Putin is willing to accept continuous economic loss, and whether this policy will lead to any Russian attempts at escalation or de-escalation in eastern Ukraine.
Despite the initial success of Russia’s hybrid warfare, there are those in Russia — especially in Crimea — who now question the wisdom of continued fighting and its impact on their livelihoods. Crimeans have dealt with increased inflation in food prices and a collapse of tourism, a vital sector of the local economy that had been reliant on visitors from the rest of Ukraine.
The Russian people are not faring that well either. Between 2014 and 2015, Russia’s GDP dropped 34.71% from $2.031 trillion to $1.326tr. Russia’s unemployment has trended only slightly upward since January 2014 and has recently come down to 5.35% as of July 2016. This surprisingly low figure has led some to question the validity of Russia’s state statistics, while others have suggested that Russia has simply shed its excess foreign workers. Regardless of which is the case, Russia’s average household income remains at a low $500 a month.
On top of existing EU sanctions, Washington recently expanded its sanctions in August to include over 80 additional companies, including subsidiaries of gas companies, shipbuilders, and computer chip manufacturers. The military-economic consulting firm Janes Ships has reported that these sanctions are likely to wreak a fair degree of damage on Russia’s defence industry, as they will have less access to American investment and clients. Finally, these costs do not include those self-imposed by Russia’s retaliatory sanctions, such as a ban on importing EU foodstuffs, dating back to August 2014.
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