European Commission President Ursula von der Leyen said on Thursday morning that the EU would impose “large-scale and targeted” sanctions on Russia over its aggression in Ukraine, targeting its financial sector, freezing Russia’s assets and allowing Russia to use technology. export will be banned. Biden condemned the attack and said the US and its allies and allies would impose “severe sanctions” on Russia. The leaders of the Group of Seven countries will meet on Thursday.
EU leaders will also gather in Brussels on Thursday evening to try to bridge differences over how much to launch a massive sanctions package at this stage and reserve as a deterrent to the Kremlin launching a full-fledged invasion of Ukraine. How many measures should be taken in
Diplomats involved in the discussions said immediate sanctions measures would be among the range of options available, including new targeting of Russian banks, energy embargoes and export controls – but the extent of the measures to be taken is in question. Leaders are also set to give the political green light to hit Belarus with additional sanctions over its role in the Ukraine crisis.
Among the issues that leaders will have to decide on Thursday is whether to impose sanctions on Russian President Vladimir Putin. While no country has taken that option off the table, the capitals are divided as to when they should make the move. Some, including Germany, are concerned that sanctioning the Russian leader now could prevent a diplomatic off-ramp from the crisis.
Work is also underway in Brussels to make it easier for the EU to impose sanctions on Russian business executives and oligarchs, but it is not clear whether the move will be taken immediately.
EU officials said they expected the new package of measures to be formally adopted on Friday or Saturday at the latest. All 27 member states are required to sign.
In the past two days, after Mr Putin sent troops to two different regions of Ukraine, Western countries have imposed sanctions on Russian sovereign debt, six Russian banks, several wealthy Russians linked to Mr Putin’s inner circle, Defense Minister Sergei Took the first round. Shoigu and other high officials. They also blocked the Nord Stream 2 natural-gas pipeline. A senior US administration official described the measures as “only a sharp edge of pain can we give”.
US, EU and British officials said they had more powerful financial weapons in their arsenal and were using them as a measure of action taken by Mr Putin. These include sanctions on very large Russian banks, restrictions on investment in Russian gas projects, and export controls designed to deprive Russian industry of technology needed for long-term economic growth.
Ms von der Leyen said the measures would undermine Russia’s economic base “and its ability to modernize” and block Russian banks’ access to European financial markets.
“These sanctions are designed to have a huge impact on the interests of the Kremlin and their ability to finance the war,” she said. “They should not underestimate the resolve and strength of our democracies.”
On Tuesday, a senior Biden administration official said possible plans include killing the nation’s most important banks.
“No Russian financial institution is safe if this attack continues,” the official said.
US officials say that overall, the sanctions are intended to jolt Russia’s financial system, jolt the country’s markets, stifle its vital industries and cripple economic growth. They are relying on the economic pain from sanctions to create enough political pressure on the Kremlin to halt or end the campaign in Ukraine.
Beyond the fact that the first tranche failed to stop Russian incursions, the efficacy of the remaining sanctions remains to be seen, and the collateral pain they could bring to Western companies and economies.
In recent years, Mr Putin has sought to buffer the Russian economy against potential Western sanctions. Moscow has increased its emergency funds reserves that can be used to stabilize the currency. In addition, Russia’s economy is stronger than it was during 2014’s annexation of Crimea and provoking conflict in Ukraine’s Donbass region, which prompted the Obama administration to impose sanctions. Oil prices are on an upward trajectory – on Thursday Brent crude climbed above $100 a barrel for the first time since 2014 – consolidating the country’s most important revenue source.
Mr. Putin also has some advantage of his own: Russian energy accounts for about 40% of the gas imported by the EU, and European countries have said they will not voluntarily stop buying it. EU officials are working closely with the US and other allies to increase their energy supply options if the Kremlin responds to European sanctions by reducing its gas or oil sales in Europe.
Officials and analysts say such sweeping sanctions risk rising energy prices and could hurt European economies, which have deep trade and financial ties with Russia. EU countries have yet to agree on whether the bloc should establish a financial plan to compensate those who are hardest hit, and the prolonged conflicts within the EU and with the US and UK could threaten unity.
Another key challenge for Western countries: enforcing export controls, especially if China chooses to help Russia circumvent sanctions by filling gaps in restricted technology trade, analysts and industry executives have said.
And the measures against big Russian banks would make it harder for Western companies to conduct commerce that would otherwise be allowed under the sanctions regime, which includes importing Russian gas and oil.
The sanctions are expected to ban any financial or business transactions with the goal of including provisions for the dollar, euro and pound, which represent most of the world’s trade and a safe haven of bank asset value and emergency reserves. keep as. In addition to depriving funding targets and increasing business costs, curbs on access to the world’s largest reserve currencies can be expected to depress the value of the Russian ruble. Such depreciation squeezes government and business budgets and reduces household spending power.
A senior administrative official said recently that Sberbank and VTB among Russian banks are likely to be targeted under the next round of sanctions. According to the administration, both banks have assets of about $750 billion, which is more than half of the total assets in Russia.
Forbidding companies and people in the West to do business with banks would strip them and their customers from access to the US dollar and other currencies, and could trigger domestic deposit flights.
However, the move would hurt Western companies and governments doing business in Russia by preventing them from making payments through the country’s biggest banks. International companies must find alternative ways to pay affected suppliers or employees. The business can be placed as letters of credit and other financing resumed.
Sanctioning those big banks would hamper companies’ import and export payments, hinder companies’ ability to raise funds and pay off debt overseas, and make it harder for them to buy and sell Russian ruble.
For now, European officials say, the bloc will not seek to ban Russia from the Belgium-based SWIFT global financial network, although the foreign ministers of Estonia, Latvia and Lithuania issued a joint statement on Thursday calling on the EU to act. called upon. Some EU officials have described it as a last resort.
Export controls would impose restrictions on the sale of technology dependent on US software and equipment to Russian entities in certain critical sectors, which would hinder long-term economic growth.
“We are denying Russia anything they need and they cannot substitute from elsewhere or produce at home,” a senior administration official said.
US officials have said export controls would be enforced through a powerful policy tool known as the Foreign Direct Products Rule, which the Trump administration used to influence China’s Huawei Technologies Co.
Using the rule to target multiple industrial sectors as opposed to a single company is a new strategy that could potentially have a broader impact, given the global dominance and ubiquity of US chip-making tools and software. For example, the US move could prevent a foreign company that makes a piece of technology in a different foreign country from selling that item to Russia, if the device uses any US chips.
British officials say they have spent weeks preparing a sanctions package. The country’s role as a major global financial center and long-term reserves for investment by wealthy Russians places it at the heart of a coordinated acceptance policy aimed at squeezing the Kremlin.
British officials recently said they wanted to ban the Russian government from issuing loans on London markets, restrict exports of key technology components to Russia, and freeze the UK assets of a broad cast of Russian oligarchs. Were working on further sanctions including the plan.
“We will give them a tough fight in the future,” Britain’s Prime Minister Boris Johnson said.
In Brussels, European officials have been working for weeks on a package of measures that is not only coordinated with Washington, London and other Western partners but could gain approval from all 27 EU member states.
Diplomats said further action from Brussels could include a block on high-tech exports to energy and other sectors, possibly including semiconductors; comprehensive measures to pull additional Russian state and private banks out of European financial markets; restrictions on new investments in Russian gas projects; and export controls to other Russian regions.
On Wednesday, a group of EU countries prompted officials to rapidly expand norms under which Russians could more easily be allowed to go after Russian oligarchs, which have hitherto been part of the bloc. measures have remained untouched.
Brussels has had to ensure that the cost of the sanctions package and any potential Russian retaliation will be shared fairly across the EU. Diplomats said that in discussions, EU member states such as Italy, Spain, Cyprus and Germany have supported a more gradual approach to lifting sanctions. France, Poland and the Baltic states have argued for ensuring Russia’s latest aggression with sweeping sanctions.
While EU sanctions packages often take weeks to assemble, some EU diplomats have raised concerns that the bloc is not ready to move more quickly.
“So while Putin is driving by force in Ukraine, the EU sits in the back seat, lounges and waits,” said an EU diplomat.
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