New U.S., EU Sanctions Hit Western Europe, Not Russia
July 31, 2014 • 9:41AM

President Barack Obama called a Rose Garden press conference on Tuesday afternoon to bluster that new sanctions against Russia's energy, arms, and finance sectors, coordinated with similar sanctions approved by the European Union, "will have an even bigger bite" than the last round of sanctions, which had already "made a weak Russian economy even weaker."

Treasury Department sanctions target three banks, and Russia's United Shipbuilding Corporation (USC), which (not coincidentally) is involved in the French contract to supply Mistral-class amphibious assault ships to Russia, which Obama insists France must cancel, though France still refuses.

American statesman Lyndon LaRouche pointed out, yesterday, that the intention of these British-ordered economic sanctions, from the outset, is to punish Western Europe, to break it from Russia.

For Germany, the sanctions constitute the second destruction of German industry's Russia market. The first came with the aggressive implementation of shock therapy during the Yeltsin years, which led to an almost complete collapse of the former East German presence in the Russian market. During the early 1990s, billions-worth of machines, equipment, and vessels already ordered and partially paid-for by the USSR before 1991, were rotting away in the industrial centers of eastern Germany. The shock therapy was assisted by the Treuhand strategy under Birgit Breuel to switch the eastern economy away from Russia, and reorient toward the West at the loss of about 3 million industrial jobs. About two million eastern Germans emigrated to the western parts of the now united country, because there was no future for them, and what has been rebuilt in the past 25 years, has never compensated for the collapse of the formerly East German industry.

The economic warfare which the EU has now entered with its new catalog of Russia sanctions, will hit the German Mittelstand high-tech companies — which represent the vast majority of the 6,000 firms that are engaged in Russia — as well as big companies like Opel and Siemens. Car-makers like Opel already feel the backlash, as car sales in Russia dropped by 12 percent in May, and in June by as much as 17 percent; Opel is the most exposed in Russia, among German car-makers. Siemens, with its 2.3 billion euros of engagement in Russia, may face considerable losses across the entire range of products, from locomotives to energy equipment and medical technologies. It is reported that many German Mittelstand firms have been told by their prospective Russian trade partners, that because of the sanctions debate, Germany is considered an unreliable partner from now on, so that Russians are looking for Korean or other partners.

At the same time, firms also face losses from a devaluation of the ruble, under the sanctions, because they will receive fewer euros for their products.

In the case of Austria, Christoph Leitl, head of the Austrian Chamber of Commerce, told RIA Novosti that they "expect exports to fall around 20% this year over last year, and in tourism the collapse in Russian guests is already very strikingly tangible."