Russia, the EU, and Sanctions as Subsidy

Yglesias has a new post up on the package of sanctions the EU is preparing for Russia, and one in particular seems interesting, an EU embargo on Russian arms:

While the EU exports €300 million a year in weapons to Russia, EU countries import about €3.2 billion in Russian-made equipment. Those imports mostly go to former Warsaw Pact countries such as Poland, whose militaries have a legacy of using Russian arms. This is an appealing target because Eastern and Central European countries are also, in general, the countries most eager to see the EU take a more anti-Russian tilt.

Yglesias mentions one reason this is practical, that the brunt of this would be borne by the most militantly anti-Russian countries.  France and Italy don’t operate MiGs – Poland and Latvia do, and this embargo would cut them off from replacement parts.  If they’re interested in taking this step, there’s no visible main impediment. And it might actually make an impression. While 3.2 billion Euro comprises a whopping 0.2% of the Russian economy (by my back of the envelope estimate), it’s a fairly significant sector of the economy dominated by interests close to the state.

One thing Yglesias doesn’t mention: on this issue, the political economy lines up beautifully.    The 3.2 billion Euros won’t be lost, especially since the bulk of those imports are to Eastern European countries that are currently getting quaky and plowing money into their military.  Poland will keep buying fighter jets, but it won’t be buying MiGs – they’ll be buying Eurofighters, Saabs, and F-16s.  This embargo could function as a de facto subsidy to the big European military contractors that are mostly located in Western Europe.  I imagine that Airbus and BAE are leaning hard on their friends in the EU as we speak.

I can’t speak for the rest of the package, but this seems likely to happen.


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