Don’t let high energy prices sway you, says Ukraine to the West. The sanctions war must go on.

Higher gas prices are part of the cost of supporting Ukraine, argues Oleksii Makeiev, Ukraine’s Special Envoy on Sanctions, because without sanctions, Ukraine will not be able to defend itself against the Russian invasion
Oleksii Makeiev, Ukraine’s Special Envoy on Sanctions | Photo courtesy of Oleksii Makeiev

By Luke Johnson

Luke Johnson is a Berlin-based journalist focusing on Russia and Eastern Europe

05 Sep 2022

The West should continue its energy sanctions against Russia, amid the spectre of high gas prices this winter and a likely recession in Europe, a top Ukrainian diplomat told The Parliament on 3 September.

“Sanctions work in a mid- and long-term perspective, in many cases. This is why we have to stay where we are. We don’t need to pull back the sanctions leverage,” Oleksii Makeiev, Ukraine’s Special Envoy on Sanctions, said, speaking over Zoom from Kyiv.

Makeiev said higher gas prices were part of the cost of supporting Ukraine: “If we as citizens make our own contribution, paying a thousand euros more in a year for gas and heating, that would be a generous contribution and assistance to help Ukrainians.” Without sanctions and Western arms, Ukraine would not be able to defend itself against the Russian invasion, he added.

According to multiple media reports, Makeiev is destined to become the next ambassador to Germany. In July, President Volodymyr Zelenskyy recalled the former ambassador to Germany Andriy Melnyk, after Melnyk made comments defending the 20th-century Ukrainian nationalist and Nazi collaborator Stepan Bandera, which angered the governments of Poland and Israel. Makeiev declined to comment about the reported ambassadorship, Melnyk or German policy on Ukraine.

“If politicians or governments are hesitating, we in Ukraine are calling [on Europeans] to show how brave you are.”

For Germany and Europe at large, the sanctions push currently is at a perilous moment. Late on 2 September, the day before this magazine’s interview with Makeiev, Gazprom announced it was shutting off the flow of natural gas from the Nord Stream 1 pipeline indefinitely, which runs from Russia to Germany. In recent weeks, optimism had grown that Germany could manage through winter with a limited flow of Russian gas. However, the shutdown significantly raises the possibility that Germany will have to make do with no Russian gas at all.

Despite the fact that Germany has increased its gas storage supplies to 80 per cent and new liquified natural gas terminals are scheduled to come on line in December, The Financial Times warned that “gas stocks in storage alone are not enough to meet winter demand without normal Russian export flows.”

Natural gas prices had tumbled in recent days before the Gazprom announcement, but futures are still up seven times what they were last year. German leadership has maintained a “keep calm and carry on” attitude about heating over the winter, with Chancellor Olaf Scholz telling the daily Berliner Morgenpost recently that “we will get through the winter.” 

Mainstream voices in global affairs, like The Economist and CNN’s Fareed Zakaria, have recently begun to question the wisdom of energy sanctions against Russia. Russia has managed to sell its oil at discount prices to China and India, and may end up with a current account surplus of $264 billion, second only to China. According to the International Monetary Fund, Russia’s economy is set to contract by six per cent, a far cry from the 15 per cent drop predicted in March. Europe, meanwhile, faces a likely recession this winter with expected inflation and energy shortages.

While there’s little disagreement that Western sanctions will devastate Russia’s economy and war effort in a few years – particularly as Russia faces semiconductor shortages that United States officials say has forced its military to resort to using chips from dishwashers and refrigerators in tanks, in addition to shortages of components of aviation and motor vehicles – there are questions over how long the sanctions will take to bite, and how much longer Ukraine’s military can hold out.

The announcement of the Nord Stream shutoff came hours after the G7 announced an ambitious agreement capping the world price of Russian oil. However, it is not yet clear whether China and India will take part in the agreement, and how it will be enforced, as maritime insurers, who would be responsible for ensuring that buyers and sellers respect the cap, have said the plan isn’t workable.

Makeiev rejected that sanctions were helping Russia. “High prices are helping [Russia],” he said, calling for a cap on the price of Russian oil and gas.

“If politicians or governments are hesitating, we in Ukraine are calling [on Europeans] to show how brave you are. We also call on the governments [of Europe] to talk honestly to their own voters and say that, ‘Of course prices are skyrocketing, but not because of sanctions, [but] because Russia started a genocidal war in the 21st century.’”

Makeiev noted that Ukrainians are looking ahead to a difficult winter too: “It might happen that the temperature in European homes will be two or three degrees less than before, but just imagine how Ukraine will survive this very winter. It is a bit colder in Ukraine than in Germany in winter. We are also struggling,” he said.

“It might happen that the temperature in European homes will be two or three degrees less than before, but just imagine how Ukraine will survive this very winter. It is a bit colder in Ukraine than in Germany in winter.”

Apart from Russian energy, the other issue animating European foreign policy minds is the question of visas for Russians. The European Union has stopped short of banning Russians from entering the Schengen zone, but has made the process of getting a Schengen visa more expensive and lengthier. On 1 September, EU foreign ministers announced the suspension of a 2007 visa facilitation agreement with Russia, which had eased the process. The move came after Ukraine and the Baltic states had called for a total visa ban, which France and Germany opposed. Makeiev said the agreement was a “very good” step, but said Ukraine would “love” a complete tourist ban. “Look at the reaction of the Russian public on the discussion around visa ban – they went mad because it would hit practically every Russian,” he said.

Beyond Russians trying to enter the EU, Makeiev also had harsh words for prominent Russian liberals who had opposed Russian President Vladimir Putin, such as Alexei Navalny – who the Kremlin attempted to kill by poisoning and is sitting in a Russian maximum-security prison – and Mikhail Khordokovsky, who was forced to emigrate in 2013 after a 10-year prison term in Siberia.

“They might be liberal, but their liberal tradition stops when they are asked about whom Crimea belongs to, and they fail completely,” he said before adding, “unfortunately, you would not be able to give me names of one thousand or [even] one hundred Russian liberals that denounced this war.” (In Russia, calling the Ukraine war a war is punishable by up to 15 years in prison.)

As for further sanctions, Makeiev said all Russian banks should be cut off from the SWIFT payment system and called for sanctions on Gazprombank, which Washington and Brussels have declined to take action against as it handles the payments of Russian gas to Europe. Makeiev, however, acknowledged that sanctions, which the US and Europe have deployed to an unprecedented extent to try to stop Russia’s invasion, have their limits. “Sometimes I joke that actually the most efficient sectoral sanctions is when the Ukrainian armed forces just shell the sectors with a Russian military base,” he said.

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