Putin is in international disgrace - the west must make him feel it. Photo: Peter Macdiarmid/Getty Images
Show Hide image

Any financial loss to Britain mustn’t obscure the aim of sanctions on Russia

The cost of recent economic sanctions will be felt in the west, but it’s a cost we can – and should – withstand. 

Barack Obama’s claim that “we have to see concrete actions, and not just words”, in an attempt to justify heightened economic sanctions on Russia, reveals a hidden optimism. The assumption being made is that the new sanctions will genuinely bring about material changes in the behaviour of Vladimir Putin’s shady regime.

The sanctions “have made a weak Russian economy even weaker,” claimed Obama. Maybe so, but this effect is not necessarily sufficient to bring success in altering Russia’s course of action. Moreover, there is the unpalatable potential for strongly adverse effects on the western economies themselves. That potential is now being realised. The US increased its economic sanctions on 16 July, and has done so again since. In the aftermath of the shooting down of flight MH17 on 17 July, the EU has joined it in imposing sanctions. The US’s sanctions began targeting particular Russian companies: two banks, two energy companies and eight arms ones. Four officials were also in the sights. The effect of these sanctions is to freeze assets, refuse financing and prevent the use of business links in the US.

This brings serious economic bite to bear against Russia. Since these are an example of “smart sanctions”, it is hoped they will avoid humanitarian damage, insofar as they are directed at specific members of Russia’s elite and not its people. Yet it is those same Russian citizens and companies with whom the west has the intimate, and mutually beneficial, business ties it uses for its own prosperity. This means that we must wield these particular sanctions as a double-edged sword.

For its part, the EU has also prevented Russian banks from accessing its capital markets. New contracts for military goods and oil-related equipment are also off limits. Yet as a backdrop to these moves lies Russia’s supply of energy to the EU. Thirty per cent of European energy is estimated to be imported from Russia, and the Baltic states, among others, are fully dependent on the nation for their supplies of gas. European companies with a stake in Russia are risking punitive action on their shareholdings and operations, as well as dreary prospects for the value of their shares at home.

This effect is not reserved for energy companies. Renault, the French automotive company, saw its shares fall by 4.5 per cent; BP is also set to suffer. It has a 20 per cent share in the oil group Rosneft, which is tied to the Kremlin. Today, Volkswagen and Siemens “voiced concerns,” and shares in Adidas have dropped by 15 per cent following its announcement of a profit warning. Britain is very vulnerable. The City of London is a global financial hub and Russian money is accustomed to flowing freely through it. The decrease in business for various overseas companies will result in further consequences for British banks. Now Anthony Bamford, chairman of JCB, has exerted his business influence, making his opinions known; he claimed that the sanctions seem "absurd" and "could put hundred of British jobs at risk".

To the credit of western nations, they have noted these effects, trading them off against the changes they wish to instil in Putin’s regime. The new Foreign Secretary Philip Hammond’s eloquent recognition of this fact came in his point that “you can’t make an omelette without breaking eggs”. The western nations are breaking all sorts of eggs. The meal in mind is their objective of forcing Russia to quell the anarchy it is funding in eastern Ukraine. It is a noble aim, spurred on by the flight crash. Such a flagrantly unnecessary loss of human life is a worthy cause for international action. If we can forget the duplicity involved when considering the situation in Gaza, western leaders have shown admirable resolve. The Russians had already been permitted too much room for diplomatic cant and propaganda.

But what of concerns voiced over the supposed impotence of western nations; over how, in reality, the losses we in the west will have to endure will not be worth it? Economic sanctions are the only occupants of the middle ground between diplomatic pressure and military action. The latter is unthinkable. Despite claims that Asia will be Russia’s loophole, and condemnation of the damage these sanctions will do to relations in the future, western governments do need to take a stand. When we are positioned at the bridge between an epoch of hostility and war, and a supposed “new world order”, failure to enforce standards of decency on the international stage produces nothing. Worse, in fact, it sets a much more dangerous precedent. The secession of land that has taken place in Ukraine was the first in a series of unacceptable actions from Putin, which must not continue. The US and EU must let that be shown, at the very least by defending the principles they supposedly support. Perhaps stronger sanctions still will prove necessary. We should be ready to deliver them.

Hope stems from an unlikely voice – Iran. In April, officials from Tehran claimed that the US has a capacity for “vicious” sanctions, as the nation has experienced. They advised the Kremlin to avoid being on the receiving end of such punishment. “The Americans essentially forced businesses to choose between doing business in dollars or dealing with Iran. That’s a no-brainer for most,” read the complaint. Should such humility eventually come from Putin’s regime, then progress would be made.

Photo:Getty
Show Hide image

Why isn't Labour putting forward Corbynite candidates?

Despite his successes as a candidate, the organisational victories have gone the way of Corbyn's opponents. 

The contest changes, but the result remains the same: Jeremy Corbyn’s preferred candidate defeated in a parliamentary selection. Afzhal Khan is Labour’s candidate in the Manchester Gorton by-election and the overwhelming favourite to be the seat’s next MP.

Although Khan, an MEP, was one of  the minority of Labour’s European MPs to dissent from a letter from the European parliamentary Labour party calling for Jeremy Corbyn to go in the summer of 2016, he backed Andy Burnham and Tom Watson in 2015, and it is widely believed, fairly or unfairly, that Khan had, as one local activist put it, “the brains to know which way the wind was blowing” rather than being a pukka Corbynite.

For the leader’s office, it was a double defeat;  their preferred candidate, Sam Wheeler, was kept off the longlist, when the party’s Corbynsceptics allied with the party’s BAME leadership to draw up an all ethnic minority shortlist, and Yasmine Dar, their back-up option, was narrowly defeated by Khan among members in Manchester Gorton.

But even when the leadership has got its preferred candidate to the contest, they have been defeated. That even happened in Copeland, where the shortlist was drawn up by Corbynites and designed to advantage Rachel Holliday, the leader’s office preferred candidate.

Why does the Labour left keep losing? Supporters combination of bad luck and bad decisions for the defeat.

In Oldham West, where Michael Meacher, a committed supporter of Jeremy Corbyn’s, was succeeded by Jim McMahon, who voted for Liz Kendall, McMahon was seen to be so far ahead that they had no credible chance of stopping him. Rosena Allin-Khan was a near-perfect candidate to hold the seat of Tooting: a doctor at the local hospital, the seat’s largest employer, with links to both the Polish and Pakistani communities that make up the seat’s biggest minority blocs.  Gillian Troughton, who won the Copeland selection, is a respected local councillor.

But the leadership has also made bad decisions, some claim.  The failure to get a candidate in Manchester Gorton was particularly egregious, as one trade unionist puts it: “We all knew that Gerald was not going to make it [until 2020], they had a local boy with good connections to the trade unions, that contest should have been theirs for the taking”. Instead, they lost control of the selection panel because Jeremy Corbyn missed an NEC meeting – the NEC is hung at present as the Corbynsceptics sacrificed their majority of one to retain the chair – and with it their best chance of taking the seat.

Others close to the leadership point out that for the first year of Corbyn’s leadership, the leader’s office was more preoccupied with the struggle for survival than it was with getting more of its people in. Decisions in by-elections were taken on the hop and often in a way that led to problems later down the line. It made sense to keep Mo Azam, from the party’s left, off the shortlist in Oldham West when Labour MPs were worried for their own seats and about the Ukip effect if Labour selected a minority candidate. But that enraged the party’s minority politicians and led directly to the all-ethnic-minority shortlist in Manchester Gorton.

They also point out that the party's councillor base, from where many candidates are drawn, is still largely Corbynsceptic, though they hope that this will change in the next round of local government selections. (Councillors must go through a reselection process at every election.)

But the biggest shift has very little to do with the Labour leadership. The big victories for the Labour left in internal battles under Ed Miliband were the result of Unite and the GMB working together. Now they are, for various reasons, at odds and the GMB has proven significantly better at working shortlists and campaigning for its members to become MPs.  That helps Corbynsceptics. “The reason why so many of the unions supported Jeremy the first time,” one senior Corbynite argues, “Is they wanted to move the Labour party a little bit to the left. They didn’t want a socialist transformation of the Labour party. And actually if you look at the people getting selected they are not Corbynites, but they are not Blairites either, and that’s what the unions wanted.”

Regardless of why, it means that, two years into Corbyn’s leadership, the Labour left finds itself smaller in parliament than it was at the beginning.  

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.