Next steps: EU likely to target Russia’s financial sector, ban technology exports

According to EU diplomats, there is large unity among the EU27 on the necessity to impose this next package "tonight, or as soon as possible". [European Council]

**Adds more details on second sanctions package 

The EU is expected to give political approval to the second package of sanctions following Russia’s invasion of Ukraine later on Thursday (24 February), which could include a range of far-reaching measures. However, some member states are sceptical about what should be in the package.

European Commission President Ursula von der Leyen said on Thursday morning the EU would place “massive and targeted” sanctions on Moscow, aiming at its financial sector, freezing Russian assets, banning the export of technology to Russia and “weakening the country’s economic base”.

Her comments came as the EU executive presented an outline of the second draft package of measures to EU ambassadors, reconvening at 5pm CET to finalise technical work and the legal documents.

EU leaders will then debate this evening and give a political green-light, while the package as such will be formally adopted tomorrow.

As EURACTIV understands, six additional areas are to be part of the second sanctions package: the financial, energy and transport sector, dual-use goods, visa policy and additional listings.

The EU is likely to take additional measures on financial interactions with Russian banks beyond the currently banned institutions, financing of Russian state-owned enterprises and financial flows and investments from Russia to the EU.

On energy, an EU export ban could specifically cover equipment and technology needed for the upgrade of Russian oil refineries to Euro-6 standards.

The transport sector sanctions could involve an export ban on aircraft, space, spare parts, technology and related services.

Further export restrictions for dual-use goods could be included as well.

Russia’s political leadership and oligarchs who support President Vladimir Putin are also likely to be targeted by further sanctions, EU diplomats said.

This would also include additional sanctions listings against all remaining Duma members and members of Russia’s National Security Council.

Moreover, according to draft summit conclusions, EU leaders will call for “the swift preparation of a further sanctions package that will also cover Belarus”, from whose territory Russian tanks reportedly advanced across the border into Ukraine.

The EU‘s visa facilitation agreement with Russia is also up for discussion in the context of punitive measures, but could potentially only involve diplomatic and service passports, without targeting normal citizens, an EU official confirmed.

According to EU diplomats, there is large unity among the EU27 on the necessity to impose this next package “tonight, or as soon as possible”.

However, it is still unknown how hard this package will be in the end, since member states are split in two camps: one pushing for stronger sanctions in the face of a full-out Russian invasion, and the other more reluctant.

Swift, but no SWIFT?

Ukrainian Foreign Minister Dmytro Kuleba renewed his calls on Western allies to ban Russia from the SWIFT international payments system, one of the toughest non-military sanctions the West could impose.

“I will not be diplomatic on this. Everyone who now doubts whether Russia should be banned from SWIFT has to understand that the blood of innocent Ukrainian men, women and children will be on their hands too. BAN RUSSIA FROM SWIFT,” Kuleba said.

According to several EU diplomats, however, the second sanctions package does not include steps to limit or ban Russia’s access to SWIFT but the option to revisit and potentially add the issue at a later stage is not excluded.

Some EU countries, especially Eastern Europeans, have floated this idea for this second sanctions stage.

However, Germany and Italy – amongst others – have been far more hesitant to go for the so-called ‘nuclear option’, out of fear that Europe might suffer significant economic fallout of such a decision.

Compensation, humanitarian aid

The issue of financial compensation for those member states worst hit by counter-sanctions is “premature” as it’s not yet possible to anticipate what Russia‘s counter-measures will be, an EU official said ahead of the EU27 summit.

One EU diplomat familiar with summit preparations said the main objective is “to show unity, to show support for Ukraine and Ukrainians, to show determination in the massive package we will put into effect sometime tomorrow”.

“It is also to show empathy to member states closest to Ukraine and are now faced in the 21st century with something we felt we had left behind in the 20th century,” the diplomat added, referring to Ukraine’s neighbouring countries Poland and the Baltic States.

This will also be closely linked with EU member states geographically close to Ukraine, which are bracing for an influx of refugees.

Speaking alongside NATO Secretary-General Jens Stoltenberg and European Council President Charles Michel, Von der Leyen said on Thursday refugees from Ukraine “are welcome” in Europe.

“We have with all the front-line member states now explicit contingency plans to welcome and host immediately those refugees from Ukraine,” she said, voicing hope that “there will be as few as possible refugees, but we are fully prepared for them, and they are welcome.”

EU leaders are also likely to make way for another aid package to Ukraine.

Next steps

Later on Thursday, EU leaders are expected to discuss and give political approval on the measures before a potential extraordinary EU foreign affairs ministers meeting formally signs off on the package on Friday.

This second round of sanctions would build on an initial round approved by the EU on Wednesday, agreed in response to Russia’s recognition and initial troop deployment into eastern Ukraine’s contested Donbas region.

They targeted numerous members of Putin’s inner circle, including his defence minister, military commanders, prominent media personalities, banking executives and state-controlled financial institutions.

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

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.

[Edited by Nathalie Weatherald/Zoran Radosavljevic]

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