After the Russian invasion of Ukraine, the European Union tightened its sanctions against Moscow.
For the first time, the assets of Russia’s head of state Vladimir Putin and his foreign minister Sergei Lavrov are also to be frozen. According to information from EU diplomats, Germany, among others, prevented Russia from being excluded from the international Swift process.
What is planned?
“We are hitting the Putin system where it needs to be hit: not just economically and financially, but in his power core,” said Federal Foreign Minister Annalena Baerbock (Greens). She was alluding to the planned sanctions against Putin and Lavrov, which were added to the sanctions already decided on Friday. According to information from EU diplomats, Germany and Italy initially hesitated.
The heads of state and government had previously agreed to limit Russia’s access to financial markets and key technologies. The sanctions are said to target Russia’s financial, energy and transport sectors, the export of dual-use goods that can be used for civilian and military purposes, the issuing of visas and a number of “Russian individuals”.
They will come into force as soon as the relevant legal texts are published in the Official Journal. This is expected late Friday evening or Saturday. According to the draft, which was available to the AFP news agency, the Russian state railway company RZD, the vehicle manufacturer Kamaz and the shipbuilder USC are affected by new sanctions. The Russian private banks Alfa Bank and Bank Otkritie should also be on the sanctions list.
What about the exclusion from the Swift financial process?
Ukrainian President Volodymyr Zelenskyj is calling for it, but Germany and a few other countries are putting the brakes on it. The exclusion of Russia from the Swift international payment system would have dire consequences for the Russian economy: the banks would no longer be able to communicate with financial institutions in other countries. This would slow down or completely prevent the flow of payments and goods.
However, this would also affect foreign companies operating in Russia. Federal Finance Minister Christian Lindner (FDP) referred to German companies with branches in Russia. In particular, gas deliveries from Russia, on which Germany is more dependent than other EU countries, are no longer so easy to pay for. Due to the blockade of Russian banks, however, business transactions with Russia are “almost over”, said Lindner.
What has the EU decided so far?
The first package of sanctions that was imposed in response to Putin’s recognition of the pro-Russian separatist areas in eastern Ukraine has been in effect since Wednesday. It is aimed at three Russian banks and 23 officials close to Putin, including Defense Minister Sergei Shoigu, Kremlin Chief of Staff Anton Vaino and the editor-in-chief of the state television channel Russia Today, Margarita Simonyan. Their assets will be frozen in the EU, as will those of 351 Russian MPs. They are also subject to entry bans. The federal government has also put the Nord Stream 2 Baltic Sea pipeline on hold for the time being.
How is Russia reacting?
According to Foreign Minister Baerbock (Greens), the first package of sanctions should be a “stop sign” for Putin. However, it did not deter him from invading all of Ukraine. “There will of course be retaliation,” Kremlin spokesman Dmitry Peskov said on Friday. These could be “symmetrical or asymmetrical,” he added.
What do the Russia sanctions mean for Germany?
Federal Economics Minister Robert Habeck (Greens) said they would also “hit the German economy hard”. In Brussels, it is considered likely that energy prices will continue to rise – for example if Russia retaliates with gas deliveries. An EU diplomat said Germany will pay the highest price of any member country because of its dependence on Russian gas.
Is the EU’s action against Russia new?
No. Since the annexation of Crimea in 2014, the EU has imposed sanctions on Russia several times, but President Putin has not been impressed. Economic sanctions were also aimed at Russian state banks and the oil and gas industry. An arms embargo was also imposed.
What’s next?
Several EU politicians are already in favor of another package of sanctions. French Foreign Minister Jean-Yves Le Drian also called for punitive measures against Belarus. The question of excluding Russia from the Swift system would then arise again. According to Federal Finance Minister Lindner, “all options” are on the table.