The European Union (EU) is looking to introduce even more sanctions to the increasing list of punitive measures directed at Russia. On Monday, EU foreign ministers will converge to discuss the sixth round of sanctions on Russia for invading Ukraine. However, business news suggests that the bloc also still faces constraints brought on by Europe’s reliance on Russian energy production – particularly oil and gas. This dependency by some member countries on Russian energy has created a divide over the planned ban.
European countries currently reliant on Russian gas include Germany, Italy, Austria, and Hungary. However, European Commission President Ursula von der Leyen is adamant in the quest to further sanction Russia. During a recent visit to Kyiv, von der Leyen stated that the EU would increasingly punish President Vladimir Putin via “rolling sanctions.” As she put it:
“We are mobilizing our economic power to make Putin pay a very, very heavy price. We have imposed five waves of unprecedented sanctions against Russia. And we are already preparing the next wave.”
So far, Russia has been hit hard financially, with most of its largest banks blacklisted. Late last week, four Russian banks already ousted from the SWIFT global payments system were blacklisted by the EU. Among them was the Eastern European country’s second-largest bank VTB, which had already incurred sanctions in the US and UK.
In addition, the Eastern European country’s oligarchs are also suffering the repercussions of the fallout. So far, these repercussions include freezing their financial assets abroad and inflicting travel bans. On Friday, the UK announced it was joining the US and European Union to launch a personal attack on Putin. This would see the Russian president’s own daughters having their assets frozen. Also, Putin’s daughters would face travel bans in these countries.
More Details Surrounding the Current Russian Business News, Banking & Financial Situation
Despite the financial strain so far imposed by Western powers on Russia for invading Ukraine, a few small financial institutions are exempt. Furthermore, some Russian banks also remain connected to the SWIFT infrastructure, especially those with links to Asia and the Middle East. This is because Russia is mostly free from international sanctions in these regions.
The EU’s oil and gas boycott would presumably hit Russia the hardest. Although not officially in effect, there are already discussions about whether or not this is possible. This particular sanction is one that Ukrainian President Volodymyr Zelensky has repeatedly called for.
In the latest wave of sanctions, the US and UK sought to totally block Russia’s largest bank, Sberbank, as the banking giant has approximately a third of all banking assets.
Additionally, Russia also incurred a ban on its coal exports into the EU, which many view as the first move on energy supplies. According to the EU, Russia has realized more than 35 billion euros ($38 billion) in gas, oil, and coal sales to the bloc. By placing a moratorium on coal, the EU looks to shave off around 8 billion euros a year from the total figure.
John Smith, a partner at the law firm Morrison & Foerster in Washington, DC, spoke on the sanctions so far. According to Smith, who is also the former director of the US Treasury’s Office of Foreign Assets Control, it is:
“…both extraordinary and ground breaking the amount of sanctions imposed.”
Smith further stated that he expects several more sanctions to be imposed on Russia. According to him, “in many aspects, it is the tip of the iceberg.”
The government of Ukraine also happens to be one of Smith’s clients.
EU Looks to Finance Ukrainian Arms Supply
Apart from negatively impacting Russian business, the EU also seems to be in unanimous agreement on financing the supply of weapons to Ukraine. According to several diplomats of the bloc, there would soon be an additional 500 million euros available for that. The funds will go into a “European Peace Facility” to bankroll Ukraine’s arms purchases. This would bring the total amount available to 1.5 billion euros.
The EU’s foreign policy chief Josep Borrell addressed the arms situation last week while also in Kyiv with von der Leyen. According to him:
“I am sure we will put on the table another 500 million (euros) more to continue supporting you. We are ready to tailor these resources to your demands. This from the military point of view is clear to us — we have to provide the kind of weapons that you need to continue to fight.”
As it stands, Ukrainian military forces, and their Western allies, anticipate a key battle with the Russian military in Donbas. In fact, they believe that the outcome of this showdown will determine the war. According to the US, the EU, and NATO, Russian forces are currently regrouping in order to capture the entire Donbas region. News of either side’s victory or failure would largely further affect each region’s business as the war rages on.
