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Study: The EU should sharpen its sanctions policy; implications for Finland have been relatively minor

Government analysis, assessment and research activitiesMinistry for Foreign AffairsValtioneuvoston kanslia 27.5.2020 12.41
Press release 357/2020

In a world of intensifying geopolitical competition, the EU must sharpen its sanctions policy so that Europe can promote its values and defend its interests. Sanctions are among the toughest measures adopted by the Union in response to security threats and breaches of international norms, notes a study published 27th May on the EU’s sanctions policy and its implications for Finland. The study was conducted by the Finnish Institute of International Affairs (FIIA) and ETLA Economic Research (ETLA).

Challenges facing the EU’s sanctions policy

The study identifies a qualitative change in the EU’s sanctions policy that has occurred over the last 10 years. Stronger, targeted economic sanctions against Iran and Russia demonstrated the EU’s strength in the face of grave security policy challenges. However, the increasingly unilateral and unpredictable sanctions policy of the US and the UK’s withdrawal from the EU pose challenges to this more forceful approach.

In response to these challenges, the new study recommends that the EU and its Member States make a determined effort to strengthen their sanctions policy capacities and to clarify the strategic nature of the instrument. Efforts to strengthen planning and decision-making, as well as the implementation of sanctions, should ensure the Member States’ ownership of the policy. This will also help in working towards EU unity, which is vital for major sanctions decisions.

Implications of the EU’s sanctions policy for Finland

Both the EU and Russia have attempted to curb the economic impact of sanctions through targeted measures. In light of research based on export statistics, the impact of the EU’s sanctions on Russia in relation to the Union’s exports was modest. The effect of the Russian import restrictions was significantly stronger, however, with the EU losing around five per cent of its goods exports to Russia.

According to the findings, the negative effects of Russia’s countermeasures on Finland have been smaller than average when compared to other states worldwide, although the toll on individual sectors that depend on the Russian market, such as the dairy industry, has been more significant.

The study argues that the EU’s sanctions policy is vitally important for smaller and more export-oriented Member States such as Finland. It serves to advance their key foreign policy goals, such as defending international norms and addressing threats to security. Effective EU action is also vital for mitigating the secondary effects of the US sanctions on Iran, and for delivering a joint response to the challenges posed by increased geopolitical competition.

The publication is part of the implementation of the Government’s Analysis, Assessment and Research Plan for 2019.

Inquiries:

Juha Jokela, Programme Director, Finnish Institute of International Affairs, tel. +358 9 432 7730, [email protected]; Birgitta Berg-Andersson, Researcher, ETLA Economic Research, tel. +358 44 4650153, [email protected]

The Government’s joint analysis, assessment and research activities (VN TEAS) produce data used to support decision-making, everyday operations and knowledge-based management. They are guided by the Government’s annual plan for analysis, assessment and research. The content of the reports published in the publication series of the Government’s analysis research and research activities is the responsibility of the producers of the data in question and does not necessarily represent the view of the Government.