EU - No Sanctions Against Russia Over Georgia

by Rob Walker | September 2, 2008 at 10:15 am

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Despite being severely chastised, the Russian government is upbeat after hearing from the EU that there would be no sanctions against their country for their attack on south Ossetia.

Quite coincidentally, I'm sure, the question was asked of the Russian government whether they would consider suspending the flow of oil to the West, which they denied would happen.

Questions still lingered at the EU however, as they couldn't understand why Russia would go after Georgia in this matter. At the same time, Russia says they have no idea why there remains any confusion.

The EU did, however, threaten to terminate a new partnership pact and threatened to postpone talks with Russia if they did not pull out of Georgia by mid-september.

Russia’s top leaders were upbeat Tuesday in the wake of the European Union’s (EU) recent refusal to hit the Kremlin with sanctions over its continued troop presence in Georgia.The EU’s emergency summit Monday on the Caucasus produced a statement sharply criticising Russia, but imposing no sanctions for retaining ground forces in Georgian territory, and recognising the renegade Georgian provinces of South Ossetia and Abkhazia as independent.

Moscow made it clear that it will not cut energy supplies to European countries in retaliation for the European Union's (EU) decision to suspend talks on a new partnership deal with Russia.

The European Union member states met in Brussels on Monday and threatened to postpone talks with Russia. They also threatened to terminate a new partnership pact if the country did not withdraw its troops in Georgia by mid-September.
However, the EU was unable to reach an agreement on sanctions against Russia.

Meanwhile, the Russian markets have evened out somewhat, as swings of 5 per cent in either direction had become the norm.

Volatile at the best of times, Russian shares have been prone to especially violent swings as Russia's military intervention in Georgia and falling oil prices added fuel in Russia to a broader sell-off in emerging markets shares.
Swings of five percent have almost become the norm for Russian indexes. But on Tuesday, even as oil tested five-month lows [O/R], Russian asset prices were largely flat, displaying resilience despite lingering concerns about political risk.