EU’s first batch of Russia sanctions to target 351 lawmakers, high-ranking officials, banks

[EPA-EFE/IAN LANGSDON]

EU foreign ministers unanimously agreed on Tuesday (22 February) on an initial set of sanctions against Russia, putting politicians and officials on EU blacklists, banning trading in Russian state bonds, and targeting imports and exports with separatist entities.

The package, coordinated with the US, the UK and Canada, “will hurt Russia, and it will hurt a lot,” the EU’s chief diplomat Josep Borrell told reporters after the extraordinary meeting.

The step followed the decision by Russian President Vladimir Putin on Monday (21 February) to recognise the separatist-controlled eastern Ukraine regions of Donetsk and Luhansk as independent, then deployed troops there, whilst still denying plans to invade Ukraine – prompting the US, UK and EU to discuss potential punitive measures.

Russia’s formal recognition of two breakaway regions in eastern Ukraine is “illegal and unacceptable,” European Council President Charles Michel and European Commission President Ursula von der Leyen said earlier on Monday as they spelled out proposals for the first stage of the sanctions package in an initial statement.

The package specifically targets those who were involved in the illegal decision to recognise the breakaway regions.

It involves all 351 members of the lower house of the Russian parliament who voted in favour of the recognition. The other 17 who abstained and opposed it would not be affected.

Putin, however, is not on the sanctions list, Borrell confirmed.

Furthermore, the listings include 27 individuals and entities “who are playing a role in undermining or threatening Ukrainian territorial integrity, sovereignty and independence”, including military, economic operators, disinformation exponents.

Those include the commanders of Russia’s army, navy and air force, the Kremlin’s chief of staff, the head of state-run television channel RT and the foreign ministry’s spokeswoman, according to the EU’s official journal published on Wednesday (24 February).

The targets will be subject to asset freezes and travel bans, which means they will not be allowed to enter or transit through EU territory.

The measures also foresee a ban on trading in Europe of Russian state bonds and more generally target the ability of the Russian state and government to access the EU’s capital and financial markets and services – designed to limit their capacity to finance their policies.

Banks involved in financing separatist activities in eastern Ukraine could also be targeted.

The two regions are to be removed from a free trade deal between the EU and Ukraine, “to ensure that those responsible clearly feel the economic consequences of their illegal and aggressive actions,” the statement said.

Borrell also praised Germany’s decision to halt the controversial Nord Stream 2 pipeline in light of Russia’s incursion into Ukraine, which according to him, ‘completed’ this first sanction package.

Next sanctions steps

Borrell admitted the bloc “could have gone further” but said that compromises had to be made in order to accommodate the positions of all countries.

The bloc was ready to impose further penalties if the situation at the border deteriorates and turns more violent, he noted.

“We didn’t want to show off all our cards from the beginning,” he said, calling Tuesday’s package a “first step.”

“We’re afraid, we believe this story has not finished,” Borrell said.

The EU considers the measures under discussion on Tuesday as the first round of sanctions, of a package that could have up to four escalatory stages, according to several EU diplomats.

“We can scale up the intensity depending on how the situation evolves,” an EU official said, adding that the EU had coordinated its action with the US overnight and that this was mirroring sanctions taken when Russia annexed Crimea in 2014.

Taking steps to limit or ban Russia’s access to the Belgium-based SWIFT global interbank payments system used for Russian money flows “is not part of this first package,” an EU official said, without saying if it could be added on later on.

SWIFT off Russia sanctions list, state banks likely target – US, EU officials

US and European officials are finalizing an extensive package of sanctions if Russia invades Ukraine that targets major Russian banks, but does not include banning Russia from the SWIFT financial system, according to US and European officials.

Internal resistance

However, despite the speed of the work on the first stage of sanctions, not all EU member states agree when it comes to Russia or their gas dependency on Moscow.

This could potentially complicate the adoption of the next sanction stages, with some EU officials and diplomats having expressed concerns it could be watered-down.

EU officials and diplomats have said EU member states could be grouped into three camps, depending on their level of commitment to the next stages of the cascading sanctions package.

Some EU member states such as Austria, Hungary and Italy, counted as Moscow’s closest allies in the bloc, would prefer more limited sanctions – either to avoid provoking Putin or to avoid potential domestic economic fallout.

However, regarding rumours Austria and Germany would try to soften EU sanctions, Austrian Chancellor Karl Nehammer, speaking on Tuesday morning (22 February) following a crisis cabinet meeting, said those are “at best rumours and most likely the result of disinformation campaigns that come with conflicts.”

“On the contrary, Austria has always signalled full support of the European Commission when it comes to setting clear signals towards Russian aggression,” he added.

Moderates want to see a comprehensive range of measures discussed in recent weeks for the event of a Russian invasion of Ukraine be rolled out once further escalation on Moscow’s part occurs.

Baltic and Central-Eastern European member states favour tough sanctions to be imposed immediately, since Russia is already showing military aggression towards Ukraine with the recognition of the separatist entities.

“How we react as European Union will define our character and indeed the future of Europe,” Lithuania’s deputy foreign minister, Arnoldas Pranckevicius, told reporters in Brussels.

EU partners’ moves

For weeks, the United States and its Western allies have said that a full invasion of Ukraine by massing Russian forces would trigger devastating economic sanctions.

Washington already imposed limited sanctions on Monday (21 February), but stopped short of putting in place sanctions it said would make Russia an “international pariah”. Observers were left to deliberate what, in President Joe Biden’s eyes, would actually prompt that.

A White House press conference with further announcements is scheduled for Tuesday evening.

On Tuesday (22 February), Britain slapped sanctions on five Russian banks and three billionaires, in what Prime Minister Boris Johnson called “the first barrage” of measures in response to the Kremlin’s actions in Ukraine.

Britain sanctions Gennady Timchenko and five banks, Johnson says

Britain on Tuesday (22 February) slapped sanctions on Gennady Timchenko and two other billionaires with close links to Vladimir Putin after the Kremlin chief ordered the deployment of troops to two breakaway regions in eastern Ukraine.

As part of a coordinated Western response, the five banks targeted by Britain – Rossiya, IS Bank, General Bank, Promsvyazbank and the Black Sea Bank – and the three people sanctioned will see any UK assets frozen.

The individuals concerned – Gennady Timchenko, Boris Rotenberg and Igor Rotenberg – will be barred from entering the UK and all British individuals and entities will be banned from dealing with them and the banks.

Switzerland has been holding off on imposing sanctions on Russia, but will reassess the situation once the EU has announced its sanctions package, Swiss State Secretary Livia Leu told reporters earlier on Monday.

After Russia annexed Crimea in 2014, Switzerland had snubbed other Western partners when it did not sign up to sanctions, but decided that the country could not be used to circumvent the EU’s sanctions. Though having a similar effect, Bern was criticised for sending the wrong political message to Moscow.

**Oliver Noyan contributed to this story.

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