Sergey Lavrov's diplomatic visit to Italy, Ukraine's looming debt default and Moscow’s controversial decision to ignore some rulings of international courts all made headlines.
Russian Foreign Minister Sergey Lavrov delivers his speech at the Mediterranean Dialogues Conference Forum in Rome, Dec. 11, 2015. Photo: AP
Last week, right before Foreign Minister Sergey Lavrov's diplomatic visit to Italy, Rome announced that it would temporarily block the renewal of EU sanctions against Russia. In the meantime, the issue with Ukraine's refusal to repay its debt to Russia has not been resolved, and it became clear that a compromise was not likely to be found before the end of the year. Finally, another important development was the change in Russian legislation that now establishes the priority of national law over international court rulings.
Italy takes a stand against the renewal of sanctions
On Dec. 9, the EU made an unexpected move and did not automatically renew sanctions against Russia. The initiative was blocked by Italy. Rome stated that the issue was extremely important, so it needed to be discussed at the top level first, for example, on Dec. 14 at the Foreign Affairs Council or on Dec. 17-18 at the European Council.
Clearly, this is just a delay. The sanctions are likely to be prolonged. Still, the Italian protest introduces a number of pertinent elements into the sanctions war between Russia and the West.
First, after Rome's public act of defiance, the EU can no longer conceal that its members have very different opinions on sanctions in particular, and Russia-Europe relations in general. Europe understands that the conflict with Russia needs to be resolved, for it is detrimental to both Brussels and Moscow. It is important to point out that Italy's actions create a major precedent.
Second, admitting that the situation is ambivalent and needs to be discussed can lead to an interesting conundrum in February 2016, when Kiev fails to meet the deadlines for passing a number of regulations required under the Minsk Protocol.
It is possible that the West will again blame Russia for the disruption of the peace process, for it is common knowledge that failure to fulfill the conditions of the Minsk Protocol is the official reason for keeping sanctions against Russia.
However, if the disagreement over Russia widens the gap between the EU members, one of them might pose a logical question, "If Ukraine is jeopardizing the agreement, why should Russia be punished for it?" And neither Brussels, nor even Washington will be able to come up with an answer.
Ukraine’s debt default looms
The Russian authorities stated that they will be insisting on Ukraine’s default if Kiev fails to repay its $3 billion loan by Dec. 20.
"Of course, we will not put up with it. We will take the issue to court and push for it to be officially and legally acknowledged that Ukraine defaulted on the credit. We will then push for a sovereign default on all Ukraine's debts. What other options do we have?" says Russian Prime Minister Dmitry Medvedev.
Europeans are trying to convince Moscow to back down and restructure the debt on Ukraine's terms (i.e. by reducing the debt principal). Then Kiev will start servicing the loan. EU Ambassador to Russia Vigaudas Ushatskas hopes that, "Russia will show good will and support our common neighbor," for "good friends" should exercise debt forgiveness.
Moscow might respond by saying that the leadership of the neighboring country that uses every opportunity to warn vehemently of "Russian invaders," looks for “the hand of the Kremlin" in any anti-government proceedings, and tries to organize a humanitarian crisis in Crimea is no friend to Russia.
Instead, Russia publicly announced its debt restructuring plan: The repayment of principal shall be spread over a three-year-term; however, the West shall serve as the guarantor.
The U.S. and the EU turned down this offer and thus showed that “they do not see any possibility of Ukraine restoring its solvency," explains Lavrov.
Washington found another way out by suggesting that the International Monetary Fund (IMF) bypass its rules and keep lending money to Ukraine even if it defaults on its debt to Russia.
Russia vs. the international courts
The Federation Council of the Russian Federation passed the law on the the priority of national law over international court rulings. Several days earlier, the bill passed the State Duma (with 436 deputies voting for it and 3 against). Now the Constitutional Court of the Russian Federation can rule that the national government ignore the verdicts of international courts, including the European Court of Human Rights.
The legislative initiative was introduced by Alexander Bastrykin, the Chairman of the Investigative Committee.
Some questioned this course of action, but seemed to overlook the fact that a few countries, including the U.S., abide by the same legal principles. Previously, the issue was regulated by Clause 4, Article 15 of the Constitution of the Russian Federation, which states, "If an international treaty or agreement of the Russian Federation fixes other rules than those envisaged by law, the rules of the international agreement shall be applied."
The Federal Assembly decided to amend the legislation after it observed partial treatment of Russia in foreign and supranational courts whose verdicts are used to put pressure upon the Kremlin, as in the case of Yukos Oil Company vs. The Russian Federation, when the European Court of Human Rights ruled that Moscow pay billions of dollars to former Yukos shareholders.
It is possible that soon new charges will be brought against Russia, and the Kremlin will likely perceive them as a threat to its national interests - for example, Ukraine's lawsuits regarding its losses after Crimea was officially incorporated into Russia.