Economic sanctions are on the table as the Ukraine crisis evolves. After military options have been ruled out, both in Washington and in Brussels, the U.S. and the E.U. have been pondering on the way to pile financial pressure on Vladimir Putin. Since decisions need to be taken in little time, the different institutional agility shows also different diplomatic attitudes.
During the next few days, the U.S. Congress in Washington will debate three separate Ukraine-related bills. The first is a Ukraine loan guarantee that analysts expect to be passed by the weekend. The second is the Russia Sanctions Bill that is likely to take one more week before being approved. Finally the Congress will debate the very controversial IMF Quota legislation. The three measures can be gauged in comparison with analogous decisions in the E.U.
The U.S. Administration needs Congressional authorization for the loan guarantee. However, in order to cut corners and subvert procedural hurdles, the legislation simply adds the Ukraine to the list of countries eligible for the loan guarantee program (other countries include Israel, Tunisia, Jordan, and Egypt). These funds have already been identified in the State Department’s existing budget (though Congress has to give to the State Department the authorization to release the funds). On March 5 the E.U. Commission proposed a euro 11bn assistance package that needs to be approved by 28 ministers. The EU Council tasked all relevant bodies to process the assistance package rapidly and with a view to an early implementation. The degree of flexibility in the American legislative procedure is remarkable, but the top-down European decisions have been working as effectively and faster.
The U.S. sanctions bills are non-binding and more symbolic than anything, “condemning the violation of Ukrainian sovereignty, independence, and territorial integrity by military forces of the Russian Federation.” This legislation is designed to show a unified American government front and the options – visa bans, asset freezes, or others – can be ordered without Congressional authorization. At an extraordinary meeting on 20 February, EU foreign ministers had already decided to introduce sanctions against those responsible for violence and the use of excessive force in Ukraine. But after a complex internal and informal negotiation, Germany, the Netherlands and Italy, succeeded in averting sanctions to be directed against Moscow. The restrictive measures approved in Brussels included an asset freeze and visa ban on individuals responsible for human rights violations, violence and use of excessive force in Ukraine. The EU member states also agreed to suspend export licences for equipment which might be used for internal repression and to reassess export licences for equipment covered by Common Position 2088/944/CFSP. The European decision process looks far less transparent than the U.S.. Here what looms large is the weakness induced by the E.U. internal diversity that finds no compensation in the institutional setup.
An entirely different picture emerges from the problem of IMF quota. In December 2010, the IMF Board of Governors agreed to a reform package that increases the size of the funding and the representation of emerging market countries within the IMF. If the IMF implemented the reforms, Ukraine could get immediate support via loans. However the U.S. has not approved the reform yet and it is not expected to do it soon. The emergency EU leaders summit on March 6, on the contrary, stressed the importance of involving the IMF: “The IMF support will be very critical to unlocking support from the European Union”. The inherent supranational attitude of European institutions allows for a larger role to supranational institutions also at global level.