Will the economic sanctions of US and the EU against Russia fail?

Further escalation of an armed conflict in Eastern Ukraine and killing of 298 passengers of Malaysian Boeing, finally, induced both the United States and the European Union, as well as a number of other countries - such as Japan and Australia - to abandon unproductive anti-Kremlin rhetoric and punish those responsible by harsher economic sanctions.

On the eve the EU leaders agreed to impose a new package of sanctions against the Russian sector in response to the aggressive policy of the Kremlin against Ukraine. New restrictive measures against Moscow for the first time will be applied to the entire Russian oil industry, financial, defense and technology sectors. Sectoral sanctions include restrictions on access to European financial markets for Russian state-owned banks, the arms embargo, a ban on the export of dual-use items and limit of Russia's access to the latest Western technology in the field of oil production. The new package of sanctions also supplements the list of individuals and entities that undermine the territorial integrity of Ukraine, stops funding from the European Bank for Reconstruction and Development and the European Investment Bank, prohibits investment and trade with illegally annexed Crimea and Sevastopol, as well as reviewing the bilateral cooperation between Russia and EU towards the reduction of co-operation.

By creating a "black list" of such major Russian banks and companies as Gazprombank, Vnesheconombank, Rosneft and Novatek last week the United States started a new round of sanctions against Russia. President Barack Obama stated that US impose sanctions against key sectors of the Russian economy in connection with the violation of the sovereignty of Ukraine and Russia refuse to take steps to resolve the crisis.

Thus, the harsh economic sanctions against Russia demonstrated the unity of the European Union and the United States on the issue of stopping the bloody war, unleashed and supported by Russia, as well as their full support for Ukraine.

Despite the fact that the economic effect of sectoral sanctions against Russia shall occur over time, politicians and experts have actively started to discuss its impact on Russian politics and economics. Herewith, we can see two diametrically opposed positions. According to European experts, the third level of economic sanctions directed against Russia's financial markets will have extensive and immediate consequences. If Moscow does not correct its foreign policy towards Ukraine, the consequences will be very noticeable by the ambiance of President Putinand ordinary Russian citizens. Russia will lose 23 billion euro (about 1 trillion rubles, or 1.5% of Russia's GDP) in the current year and another 75 billion euro (about 3.5 trillion rubles, or 4.4% of GDP) in the 2015 due to current sanctions.

In their turn, the high-ranking Russian officials states that Russian economy shall not be affected by sectoral sanctions. Moreover, they say, quite seriously, that the economic sanctions shall conversely help Russia "to gather" and make Russian economy more "efficient."

Why Russians are so optimistic about this? Maybe the fact that the new sanctions are still not sufficient (for example, the United States does not deny all Russian companies access to American financial system,). Or perhaps Moscow thinks that the EU ban on the supply of defense products and dual-purpose equipment refers only to new contracts and is not retroactive. Thus, a contract for the supply of two French helicopter carriers "Mistral" does not fall under EU sanctions. It is also possible that the truth lies somewhere closer. The point is that while in government circle strong statements are made, representatives of the Western business elites continue to discuss promising lucrative projects and contracts with Russian partners, as if they do not relate to the imposition of economic sanctions and restrictions. For example, the currently ongoing consultations between Russian company TVEL and Hungarian partners for the delivery of a large batch of nuclear fuel for nuclear power plant Paksh. Moreover, the transportation of dangerous goods is planned to be performed by air through the airspace of the European Union, which, in the circumstances of the destruction of Malaysian Boeing, as well as recent media reports about the possible preparation by the Russian special services of the next similar terrorist attack, should cause anxiety of governments and citizens ofunited Europe.

The recent negotiations between representatives of the other energy corporation Rosatom and German partners about nuclear fuel supplies for research reactor Munich-2 have been finished successfully.

Unfortunately, there are a lot of facts of "collaboration" bypassing officially imposed economic sanctions and they are carefully hidden from the wider European and international public. Danger of the situation lies in the fact that any violation of the sanctions and restrictions undermine the confidence in their performance and at the same time encourage Putin to further escalation of the armed conflict in eastern Ukraine.

The fact that the United States and the European Union foresaw such a scenario is really encouraging. On the eve of "Big Seven" country’s made an official appeal, which said that if Russia chooses way of de-escalation of conflict in Ukraine, economic sanctions against Russia shall be lifted. If Russia doesn’t change its aggressive policy toward Ukraine, new and harsher economic sanctions shall be imposed against Moscow.