Coal, Natural Gas, And Oil Sanctions Off The Table, What About Caviar And Vodka?

The EU is running out of ways to sanction Putin. Purely symbolic measures are all the EU really has.

The Wall Street Journal notes Russians Can’t Sell Vodka or Caviar to the EU Anymore

The import bans are a very small part of a fifth package of wider sanctions imposed on Russia by the bloc over its invasion of Ukraine. The new sanctions package includes a range of energy, financial and targeted sanctions against oligarchs as well as import and export bans. The EU is also sanctioning Russian President Vladimir Putin’s two daughters. The sanctions are set to come into effect later Friday.

Most of Russian caviar production is consumed at home. The EU imported 1.7 million euros, equivalent to about $1.85 million, of caviar from Russia in 2021. In 2020, Russia’s global caviar export volumes fell to their lowest level in years, according to a European Commission report.

Also on the latest import ban list is vodka, Russia’s best-known alcoholic import. In 2021, the EU imported €78 million worth of vodka, according to the bloc’s statistical office.

EU Sanction List 

• Various oligarchs 
• Putin
• Putin's daughters
• $1.85 million of caviar
• €78 million worth of vodka

Not On Sanction List

• Natural Gas
• Oil
• Coal

This week the EU could not even get an agreement on banning Russian coal. The European Council president made that proposal but it did not fly. 

All it takes is one nation out of 27 to block sanctions. This is why it is extremely difficult for the EU to get an agreement on anything. 

It took over 10 years for the EU to get a very simple trade agreement with Canada.

Changes to agricultural policy won't happen because France will never agree. For 30 years France has killed the lifting of agricultural tariffs in global trade negotiations. 

Eurobonds aren't a good idea, but a majority of the Eurozone countries want them The debate is moot because all it takes is one nation to block them. Not only does it take a unanimous vote to change them, but Germany would also have to change its own constitution to allow them. As it currently stands Germany, Finland, and Austria will not agree to Eurobonds and debt comingling.

An EU army (another bad idea) will also take unanimous consent.

Occasionally, the EU manages to do something. When that happens it's because there was a carve-out in the initial EU treaty that for some small subset of things it only takes majority consent.

US Sanction Policy Forces Russia to Default

Meanwhile, US Sanction Policy Forces Russia to Default. Let's Go Over the Ramifications

Russia cannot pay its dollar-denominated debt and in some cases euro-denominated due to US sanctions. 

Q: Who is Russia defaulting on?
A: Primarily European companies but US companies as well.

Essentially, the US is forcing Russia to not pay its bills which means Russia keeps its Euro and dollar reserves.

Russia cannot buy US items directly but it still can get them from China, India, or other countries that refuse to enforce US sanctions.

Warning to India 

*U.S. HAS WARNED INDIA AGAINST ALIGNMENT WITH RUSSIA, DEESE SAYS

— *Walter Bloomberg (@DeItaone) April 6, 2022

The US also warned China. 

The Stupidity of it All 

Quite frankly, a full EU sanction of Russia would be downright idiotic.

That explains the wait.

— Mike "Mish" Shedlock (@MishGEA) April 4, 2022

To understand the absolute stupidity of sanctions please consider

De-Globalization: New Supply Chains Are Inefficient and Will Drive Up Inflation

Who's sanctioning whom?https://t.co/AbHIkj0l7L

— Mike "Mish" Shedlock (@MishGEA) April 4, 2022

Who's Sanctioning Whom?

These sanctions not only don't work, but they have also backfired miserably.  

A surge in European energy prices means the region is now spending almost a tenth of its GDP on energy, the highest share since 1981. We see Europe as the most exposed to the energy shock and at risk of stagflation. See our weekly commentary. https://t.co/alWI2glWqJ pic.twitter.com/zNktF1Iiba

— Elga Bartsch (@bartsche) April 5, 2022

Note that Putin Will Collect a $321 Billion Windfall Partially Thanks to Sanctions

Massive Urge to Do Something

Despite sanctions backfiring, the US and EU insist on more of them. 

We are now down to the bottom of the EU barrel including sanctions on Putin's daughters, vodka, and caviar. 

When it comes to sanctions and meaningful actions very few realize Sometimes the Best Thing to Do Is Nothing At All

At least caviar and vodka won't backfire like some of the other actions have done.