The Daily - How Europe Came Around on Sanctions

Episode Date: March 2, 2022

As Russian forces bombard Ukraine’s cities and strike civilian areas with increasingly powerful weapons, the European Union has adopted the largest package of sanctions ever imposed on a single country.The 27-nation bloc overcame a reputation for internal division to agree on the penalties — but will they be enough to help bring the war to an end?Guest: Matina Stevis-Gridneff, the Brussels bureau chief for The New York Times.Have you lost a loved one during the pandemic? The Daily is working on a special episode memorializing those we have lost to the coronavirus. If you would like to share their name on the episode, please RECORD A VOICE MEMO and send it to us at [e-mail]. You can find more information and specific instructions here.Background reading: As sanctions batter the economy, Russians face the anxieties of a costly war.From culture to commerce, sports to travel, the world is shunning Russia to protest the invasion.Want more from The Daily? For one big idea on the news each week from our team, subscribe to our newsletter. For more information on today’s episode, visit nytimes.com/thedaily. Transcripts of each episode will be made available by the next workday. 

From New York Times, I'm Michael Barbaro. This is The Daily. As Russian forces bombard Ukraine's biggest cities and strike civilian areas with increasingly powerful weapons, the 27 countries of the European Union have overcome their reputation for internal division by adopting the largest package of penalties ever imposed on a single country. Today, my colleague in Brussels, Matina Stevis-Gridnev, tells the story of how that happened and whether

it will be enough to end Russia's war on Ukraine. It's Wednesday, March 2nd. Matina, describe the actions that the European Union has taken against Russia over the past few days to try to end this war and ensure that there are consequences for it invading Ukraine. Well, Michael, the measures that the European Union has taken against Russia for the invasion of Ukraine are, frankly, stunning. As Russian forces unleash their assault on Kiev and other Ukrainian cities, we are resolved to continue imposing massive costs on Russia. on Russia. The most useful way to look at them is to sort of divide them in two categories, one being broadly economic and the other being not economic. Bottom line is pretty clear. These are big and staggering penalties, sanctions. So when it comes to the economy... Their actions go after powerful individuals, including Vladimir Putin himself.

The European Union decided to freeze Putin's and Foreign Minister Sergei Lavrov's assets. That's a very, very unusual move. More oligarchs added to the EU sanctions list yesterday. But then the EU went much further. list yesterday. But then the EU went much further. It started going into the plumbing of the relationship between the EU and Russia. The US and its European allies imposed sweeping new financial sanctions aimed at crippling Russia's economy. That economic relationship is really quite integrated. Right. And while everyone knows about Europe's energy dependency on Russia, gas and oil and so on, the relationship actually goes much deeper than that. It goes into the banking sector. It goes into trade. And so the European Union sanctions really got into the nitty gritty of that relationship. We will paralyze the assets of Russia's central bank. This will freeze its transactions.

And it made it impossible for the central bank to liquidate assets. Through the sanctions, the European Union is trying to freeze out the Russian central bank from the global financial system, together with the United States and Canada and Britain, of course. This basically cripples the country's ability to finance this war, which is exactly what the Europeans and the Americans want to do. They're also stopping their own banks and their own capital markets from doing any kind of transactions with a vast majority of Russian banks and counterparts that until previously were daily interlocutors for European business and banks.

I mean, this is really the equivalent of financial shock and awe. But what's also quite important is the non-economic stuff that the European Union has done. is the non-economic stuff that the European Union has done. For the first time ever, the European Union will finance the purchase and delivery of weapons and other equipment to a country that is under attack. The European Union is mobilizing this sort of obscure fund for the first time in its history to actually purchase and distribute lethal weapons to Ukraine. I'm not talking about helmets and flak jackets or just bullets. I'm talking about rocket-propelled grenades and serious military hardware that Ukrainians can use to fight Russia.

Right. Weapons of war. Precisely. This is a watershed moment. And the European Union has been a thing for 30 years. Its history is very well recorded. And we know that these are steps that have not been taken before. We continue to coordinate closely with partners around the globe, and we remain in close contact with our Ukrainian friends. And from where I'm sitting in Brussels, which is the headquarters of the European Union, what looks so significant and unique in

this moment is that no one really thought this level of unity and action would be possible, probably Vladimir Putin included. Why not? Why did nobody think that the EU could pull off what it just did? Well, Michael, think about it. It's almost a trope. European Union fragmented, divided. These are the adjectives you always hear associated with the EU. And the reason is it's a club of 27 countries, in fact, that are sovereign and have their own interests. And so the relationship with Russia is the single most divisive topic for the European Union's foreign policy. And EU countries need to have complete unanimity to make any foreign policy decision. Not one can disagree. Absolutely not. Other decisions can be made by

simple majority or reinforced majority. But in foreign policy, it has to be every single one of the 27 on board or nothing. And so if you think about that, 27 countries, each with a unique relationship to Russia, closer or further away from them, dependent on them for gas and oil and other things, and a demand that they all agree on such an ambitious package of sanctions and measures together with transatlantic partners in Britain, you start realizing how unusual that is. And the EU hasn't shown that it can act like that. Over the last decade, if we cast our mind back, it's gone from crisis to crisis, the Eurozone debt crisis, the migration crisis, then Brexit with Britain leaving the EU, literal fragmentation. Really, at no point over the last decade have we seen the bloc really sticking together.

And the way that it did, just in the course of a week really is extraordinary. So let's talk about why that happened and why the historic pattern of the EU's 27 countries not coming to an agreement on foreign policy as it did here. Why did that pattern of inaction, fragmentation not hold here when it came to Russia? Well, the first and most obvious answer perhaps is that Vladimir Putin invaded Ukraine. Right. But to look at the other side of that and look within Europe for the answers that Europe gave to that action, we have to look not only at sort of top political level and leadership, but we also have to look in the bureaucratic

corridors of Brussels, across the Atlantic to the Biden administration, and ultimately over to Ukraine and its charismatic leader, Volodymyr Zelensky. And the forces in those three places coalesced into these outcomes. Explain that. So, first of all, here in the European Union, we have the European Commission, which is effectively an army of bureaucrats, most of them lawyers or subject matter experts. And what they do is not really something that people outside of Brussels follow closely. And it's very seldom that any one of those bureaucrats becomes some kind of hero or someone who's mentioned a lot in the press. But I think with all that in mind, it's worth looking at one person, a sort of tall, bespectacled German bureaucrat whose name is Bjorn Seibert. And he's the chief of staff

of the president of the European Commission. And, you know, I mean, not to be rude, but when you look at him, he's a very low-profile kind of guy. He's just, you know, a bit dorky, and he wears suits, but he always wears these trainers or sneakers, and people kind of chuckle about that.

But he turned out to be, and I'm quoting senior sources that spoke to me about him, the machine, the brains behind the European Union sanctions, and the point person coordinated with the United States, Canada, and Britain. the point person coordinated with the United States, Canada, and Britain. And it seems like he was uniquely qualified for this moment. He's a defense guy. He was, for so much of his professional life, immersed in the American defense ecosystem, so that when at the end of last year,

the United States started sharing intelligence with Europe that Vladimir Putin was preparing military action against Ukraine, start carefully, secretly, meticulously putting together this massive list of sanctions. And he did a few unusual things. One of them that was very important was that since he started this work in January this year, he kept everything top secret. He didn't put anything on paper. The thinking behind that being that if something leaked, first of all, it could tip off Vladimir Putin as to the EU's intentions. The other being that it could also trigger resistance and anger at individual EU member states, which was something he didn't want or need at that moment in his work. And the other thing he did that was quite unusual was that instead of meeting with all EU countries' representatives at the same time, he invited them into talks with different

smaller group configurations. And he used the dynamics between these smaller groups of countries and their officials to push forward consensus on his measures, sometimes using the opinions of one country to make the other country feel like they had come up with the idea for a sanction, for example. So he sort of played them a bit. And the reason the work that Bjorn Seibert and his close associates were doing since January in Brussels is so important is the sanctions are very technical things and complicated. And his work meant that they were actually ready and they were prepared to be put in front of European leaders for debate and signature as soon as it became clear that Putin intended to invade Ukraine. And I think that's where we have to talk about the broader role that President Biden and his administration played in bringing the European Union on board. And what do you see that role as being?

European Union on board. And what do you see that role as being? Well, first of all, it was U.S. intelligence shared with the European Union about Putin's plans for Ukraine that started this entire process. And I think President Biden played an active role in pushing this intelligence to the right people in Europe. But at first, he was kind of met with quite a lot of incredulity. People in important places in the European Union were like, oh, yeah, really? Your intelligence is so solid, like you knew that Afghanistan was going to fall to the Taliban in such a quick time. You know, there was a real loss of trust there, an erosion of confidence that came to the surface very quickly. And I think that President Biden's tone when he spoke with European Union leaders was really important. He sort of met them at their level and spoke like an equal partner rather than someone superior saying something to someone inferior.

And this became extremely important in this next point. I think President Biden's message to Europe and European leaders as they embarked on this was that, you know, I can do a lot of things to counter Russia's aggression in Ukraine from Washington and from where I sit, but it's not going to be as impactful as what you guys do in Europe. You are so close to Russia geographically, but also economically. And so if you and I don't work together

to take coordinated actions, it's not really going to matter. He's not going to feel the pressure. He's telling them, I can't do this without you because U.S. sanctions won't mean as much as European sanctions because of the proximity and the interdependence with Russia. Exactly, Michael. But this story wouldn't be complete

without talking about a third very important person. And that person is President Volodymyr Zelensky of Ukraine. On Thursday night, hours after his country's been invaded by Putin's army, he is brought into a meeting by European Union leaders here in Brussels by Videolink. At this point European Union leaders here in Brussels by video link. At this point, European Union leaders have already agreed on a number of important sanctions, but Zelensky is sort of patched into this meeting

from his bunker in Ukraine, and he tells leaders, look, this could be the last time you see me alive. You need to do more for me. You need to suspend Russian banks from SWIFT, which is this interbank global financial transactions network. You need to sanction Vladimir Putin and Russia's foreign minister, Sergei Lavrov.

I need you to send me weapons. And these are things that European Union leaders really did not want to do when they went into that meeting. But once they saw him, you know, they were sitting in their suits in this comfortable room in the safety of central Brussels. And they see him in his sort of military outfit in a bunker in Ukraine, in his sort of military outfit in a bunker in Ukraine, telling them, this may be the last time you see me alive, people who spoke to the leaders immediately after that meeting tell me that the mood had shifted completely and things that had minutes ago been impossible and off the table,

like sanctioning Putin and Lavrov, suddenly were done. Suddenly, Russia has been slapped with what one senior source told me is the largest prohibition of financial interactions in history. Basically, the biggest sanctions ever placed on a country. That's it. We are seeing an unprecedented and almost unified

international reaction. The U.S. and the EU sanctioning the Russian Central Bank, the EU for the first time ever financing the purchase of weapons to a country under attack. We'll be right back. So, Matina, what has been the impact of this unprecedented package of sanctions on Russia

so far? Because, of course, these sanctions are designed to hurt. So how much have they hurt Russia? Michael, it looks like some of these sanctions have delivered pretty immediate blows to Russians and the Russian economy. The world is putting Russia's fortress economy to the test. Let's just start with the most obvious thing, which is the ruble, the Russian currency, which has collapsed. The sanctions, including removing select Russian banks from the SWIFT, prompting lines at banks to withdraw rubles, also threatens runaway inflation inside Russia and severe recession. And there are elements of those sanctions that are immediately hurting Russians on the street.

So overnight visa and MasterCard both saying they will, of course, comply with sanctions. Russians use Apple Pay and Google Pay the way you and I do. So that means they won't be able to do transactions, their Apple Pay, their Google Pay will stop working. And they found themselves unable to do so. And they found themselves unable to do so. In fact, I saw photos from the Moscow metro where people were trying to swipe themselves in with their smartphones using Apple Pay and Google Pay to pay for their tickets. And they weren't able to do that. And it goes beyond the economy to other things that were very symbolic of an increasingly globalized and interconnected Russia. globalized and interconnected Russia.

So let me be very clear. Our airspace will be closed to every Russian plane. One thing being it's effectively closed European skies for Russian travelers. The European Union is banning Russian flights over Europe right now. So really, you can't fly. They're also getting frozen out of important global events. Now, two of soccer's largest governing bodies, including FIFA, have suspended all Russian clubs and national teams from competitions. That includes high-profile Russian artists.

A Russian conductor who's a friend and supporter of Putin's will no longer lead an orchestra at Carnegie Hall over the next three days. Sympathizers and supporters of Vladimir Putin. The Carnegie Hall spokeswoman said the change was made due to recent events. The hit that Russians are taking in terms of sort of integration into your 21st century lifestyle, of integration into your 21st century lifestyle, it's undoing a decade or longer of many Russians, especially urban Russians, being able to lead a modernized, globalized lifestyle. So if the goal is to punish Russia for this invasion and for violating international law, what you're describing sounds like a success.

But if the goal of these sanctions is to end the war or compel Russia to pull back its troops from Ukraine, that does not look as much like a success, right? Well, obviously the war in Ukraine is still going on. So on the face of it, you're right. But what sanctions are doing is a little more complicated. They're planting seeds of dissent against Vladimir Putin for what he's doing in Russia, the outcomes of which will take some time to play out. And we're already seeing signs of that. We are seeing anger and protest on the street in Russia. And we're also hearing elites in Russia that have always supported Vladimir Putin expressing a concern and saying, maybe it's time for peace. Mm-hmm. Martina, I want to turn back to Europe for just a minute. You had mentioned that a reason

why European leaders were reluctant to punish Russia this severely was that their economies are so tied up with Russia's economy, and that sanctions could hurt Europe as much as it could hurt Russia. And I'm curious, now that the pain has arrived to the Russian economy, has it also arrived in the European economy? Well, we're already seeing glimmers of that. Just even the fact that European air carriers can't travel to Russia anymore, that's loss of income at the back of the coronavirus pandemic, which decimated European airlines.

So we're going to be seeing and hearing more and more about that pain. But what's really changed is that European leaders are now prepared to openly talk about it. They're prepared to acknowledge that this is going to hurt their economies because of the massive amount of trade and other transactions happening between Europe and Russia. And we're talking about anything ranging from Gucci bags to fertilizer. They're going to take a hit.

Previously, it was, how can we avoid the hit? The conversation in Europe rather now is, how are we going to support ourselves from this hit that we have to take? So the question now is around the concept of sacrifice rather than avoiding sacrifice. Precisely. But of course, the question is, how long will Europeans be willing to make financial sacrifices if these sanctions stay in place for months, maybe years? Well, Michael, you're right about years, because one thing we do need to say about sanctions is that once they're in place, they're low. It becomes really hard to roll them back and entirely remove them. But just to answer

your question, we're seeing quite a lot of resolve among ordinary Europeans. And you're seeing that on social media, but you're also seeing that on the street. You're seeing thousands and thousands of Europeans marching in favor of Ukraine and in favor of these sanctions. But it goes beyond what's happening right now. It goes to the heart of the nature of the relationship that Europe has with Russia. And it's forcing through conversations that for so many years were theoretical,

like reducing Europe's dependence on Russian oil and gas and seeking alternative means of keeping European homes warm and European factories running. It goes to the heart of finding new markets outside Russia's elites for European goods and products. And ultimately, it goes to the heart of a debate, which is forcing Europe to face up to the fact that it's not just being coexisting with Russia and Vladimir Putin's Russia specifically, it's been enabling Vladimir Putin to continue his work and ultimately to invade Ukraine in the first place. And you're saying the epiphany here is that Europe can no longer do that. And they have to change their behavior meaningfully in order to prevent Vladimir Putin's Russia from doing the very thing he just did in Ukraine. Exactly. Europe is finally confronting that it's part of the problem. With that in mind, I'm curious what the experience of the past few weeks

means for the idea of Europe, and specifically what it means for the European Union? Well, Michael, in so many ways, I think Putin has done something he really didn't intend to, which is to make the European Union stronger. This crisis is forcing the EU closer together and becoming something it sort of always wanted to be, but never quite managed because it let divisions and disagreements and kind of quite narrow interests get in the way. It's making the European Union see itself as one, which is the first step to actually being one and presenting and projecting itself

as one power on the global scene. There's this phrase that's going around a lot in Brussels right now, and it's kind of funny because it's a Vladimir Lenin quote, which goes a bit like this. It says, there are weeks when decades happen, and the EU is three decades old. And it really feels like decades worth of work and integration have happened in this just one past week. Well, Matina, thank you very much. We appreciate it.

Thank you, Michael. On Tuesday, in the latest sign of Europe's fury over Russia's war in Ukraine, about 100 diplomats walked out of a speech delivered in Geneva by Russia's foreign minister, Sergei Lavrov. In his speech, Lavrov criticized the European Union for its sanctions, saying they were a sign of, quote, hysteria. saying they were a sign of, quote, hysteria. Meanwhile, Russia continued to attack civilian targets in Ukraine, striking two apartment complexes north of Kyiv and a major administrative building in the city of Kharkiv,

killing at least seven people. We'll be right back. Here's what else you need to know today. Six days ago, Russia's Vladimir Putin sought to shake the very foundations of the free world, thinking he could make it bend to his menacing ways. But he badly miscalculated. In his first State of the Union address, President Biden declared that Russia's invasion of Ukraine

had weakened Russia and unified the West, announced that the United States would join Europe in closing its airspace to Russian flights, and asked Americans to brace themselves for potential economic hardships like higher prices that may result from the sanctions imposed on Russia by the U.S. and Europe. To all Americans, I'll be honest with you, as I always promised I would be. A Russian dictator invading a foreign country has cost around the world. And I'm taking robust action to make sure the pain of our sanctions is targeted at Russian economy

and that we use every tool at our disposal to protect American businesses and consumers. Turning to domestic affairs, Biden said that lowering inflation was his top priority and outlined a plan to tackle it by increasing domestic manufacturing and reducing America's dependence on foreign goods. And he called on Americans to rethink how they approach the pandemic. Let's use this moment to reset. So stop looking at COVID as a partisan dividing line. See it for what it is.

A god awful disease. Today's episode was produced by Rob Zipko, Sidney Harper, and Luke Vanderplug. It was edited by Paige Cowett and John Ketchum, contains original music by Dan Powell and Marion Lozano, and was engineered by Chris Wood. Our theme music is by Jim Brunberg and Ben Lansford of Wonderly. That's it for The Daily.

I'm Michael Bilboro. See you tomorrow.