Some G7 lobbyists fear sanctions against Russia will harm them also

Shortly after Russia invaded the Crimea in an effort to regain control from the Ukraine, the United States and the EU put in place economic sanctions against Russia. However, a few months later, many of the same advanced economies that supported this move and are a part of the G7 countries are less quick to implement harsh sanctions. Domestic lobbyists have played a role in the actions of some G7 governments out of concern for protecting the billions of dollars received from international trade.

G7 country map

G7 country map

The Group of 7 (G7) consists of the finance ministers and central bank governors from seven developed economies–Canada, France, Germany, Italy, Japan, the United Kingdom and the United States. The G7 represents 63% of the global economy, or US$241 trillion.

Sanctions against Russia would have a negative effect on the EU’s largest economy, Germany, according to a leaked EU report. Germany’s GDP growth is expected to be cut by 0.9 percent this year as a result of sanctions on imports of Russian gas and oil. Some in Germany also fear the loss of jobs and revenues as companies have to break ties with their Russian business counterparts. As a result, German business groups are lobbying Chancellor Angela Merkel to avoid harsh sanctions against Russia.

France is moving forward with its sales of warships to Russia despite warnings against this action in 2010 by former US Defense Secretary Robert Gates. The sale would amount to US$1.6 billion, according to a New York Times report. The first ship is expected to be delivered by the end of this year and the second ship, 2016.

A report reveals that Canada failed to impose sanctions against two Russian businessmen, who are close allies with Russian President Vladimir Putin. Again, the less-than-harsh sanctions result from business lobbying concerned about their simultaneous harm to Canadian businesses.

As pointed out in an earlier guest blog post, trade sanctions may not be effective against Russia. These cases are also revealing that these same trade sanctions can possibly be just as or more harmful to Russia’s trading partners. It is hard to say whether or not these concerns are real without the economic data to support the arguments by the business community. Nevertheless, they play a key role in scaling back the implementation of tough sanctions against Russia. So if trade sanctions are not effective, what approach do you think the G7 countries should take?

Note: I thank former Canadian trade policy advisor Garry R. Moore for bringing this issue to ITE’s attention. See Garry R. Moore’s related guest blog posts. Watch out for his post tomorrow, which sheds light on how Russia’s economy has been impacted by the G7 sanctions.

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About Dr. Sarita D. Jackson

is the President and CEO of the Global Research Institute of International Trade, a think-tank/consulting firm that examines trade policies and their impact on domestic businesses. Prior to heading GRIIT, Dr. Jackson was a tenured associate professor of political science in North Carolina and worked as a trade policy consultant for an Arlington-based consulting firm. She has participated in trade policy projects and conducted research on free trade negotiations in Botswana, Antigua and Barbuda, Dominica, Dominican Republic, Mexico and Panama. Dr. Jackson has also traveled to Chile and Argentina to study their political systems and economic integration policies.
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