THE STATE OF THE EUROPEAN UNION

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THE STATE OF THE EUROPEAN UNION
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to gain 500 more square miles of territory than
they had under their control when the Minsk
Protocol was signed. The massive mobilisations
that continue to be declared by both Kyiv and
the rebel regions are threatening to broaden the
scope of the conflict and have further aggra-
vated already tense relations between Russia
and the European Union and the United States.
As of the end of January, the Donbass con-
flict had caused 5,300 fatalities, 11,500 injuries
and generated close to 1.5 million refugees, al-
most half of whom have fled the country – pri-
marily in the direction of Russia. In addition to
this massive humanitarian disaster, the conflict
has also been responsible for the destruction of
homes, infrastructure and industrial installations
throughout what was once the most prosper-
ous region of Ukraine, the reconstruction of
which will be very expensive.
The reaction of the European Union and
the New Minsk agreement
The EU has condemned the actions of Russian
troops in Crimea since early March 2014. The
first EU political and economic sanctions de-
signed to pressure Russia to suspend its interven-
tion in Crimea were approved on 17 March
2014, immediately following the Crimean status
referendum. The most newsworthy measure ap-
proved at that time was a list of travel bans and
asset freezes targeting specific individuals and
businesses1. As of January 2015, this list, which
has been amplified on a number of occasions,
contains the names of 132 individuals and 28
companies. Other measures taken by the EU
have included the suspension of cooperation
1
eu_sanctions/index_en.htm
programmes and the reorganisation of a G 8
meeting originally slated to take place in Sochi,
Russia, as a G 7 event in Brussels.
As Ukraine had yet to hold elections, the po-
litical part of an Association and Free Trade
Agreement between the EU and Ukraine was
signed on 21 March by the political leaders who
had assumed power in the wake of the Maidan
protests. Pro-European businessman Petro
Poroshenko, who won a first-round victory in the
country’s presidential elections on 25 May, signed
the economic part of the agreement on 27 June.
In July, shortly after the downing of flight
MH17, the EU approved a new packet of sanc-
tions that placed restrictions on access to
European capital markets for state-owned
Russian financial institutions and prohibited the
sale, supply, transfer and exportation to Russia
of material and equipment employed by the pe-
troleum and gas industry, or that could be used
for military purposes. Moscow retaliated a
month later by placing an import ban on
European agro-food products, which according
to Commission estimates, represent over 5 bil-
lion euros in annual EU export revenue. The
Spanish Foreign Affairs Minister has calculated
that the actual total cost of EU sanctions, in
terms of lost export revenues, could be as high
as 21 billion euros. In September, the EU ap-
proved a new round of sanctions barring sev-
eral Russian energy firms, including Gazprom,
and other Russian companies in the defence
sector from raising long-term financing in
European capital markets.
Meanwhile, Ukraine’s economic situation
continues to deteriorate in the absence of rev-
enue once generated by export trade with
Russia and its mining and industrial sector,
which has been severely affected by the Donbass
conflict. A 7% contraction of its economy has
provoked drastic cutbacks in social programmes.