State-owned Russian banks face EU sanctions

Diplomats explore curbing Russian access to markets, arms and energy technology

Russian president Vladimir Putin. The crash of the Malaysian Airlines flight, which US intelligence officials believe was shot down with a Russian-supplied missile, has stiffened Europe’s resolve, officials said. Photograph: Bloomberg

Russian president Vladimir Putin. The crash of the Malaysian Airlines flight, which US intelligence officials believe was shot down with a Russian-supplied missile, has stiffened Europe’s resolve, officials said. Photograph: Bloomberg

Fri, Jul 25, 2014, 01:00

The EU would target state-owned Russian banks vital to financing Moscow’s faltering economy in the most serious sanctions so far over the Ukraine crisis under proposals considered by EU governments yesterday.

Ambassadors of the 28-nation bloc discussed options to curb Russian access to capital markets, arms and energy technology in response to the downing of a Malaysian aircraft in an area of eastern Ukraine held by Russian-backed separatists on July 17th.

Talks on the options for stepped-up action drafted by the European Commission will continue this morning, an EU official said. Diplomats said decisions on wider sanctions were likely at the earliest next week.

However, the EU ambassadors did agree to add more people and entities to the EU’s asset-freeze list, using expanded criteria including Russian companies that help to undermine Ukraine’s sovereignty.

The names will not be published until late today but diplomats said it concerned 15 individuals and 18 entities, half of which were companies.

Firing across border

The US said yesterday that Russia was firing artillery across the border into Ukraine to target Ukrainian military positions in the conflict against pro-Russian separatists.

“We have new evidence that the Russians intend to deliver heavier and more powerful multiple rocket launchers to the separatist forces in Ukraine, and have evidence that Russia is firing artillery from within Russia to attack Ukrainian military positions,” US state department spokeswoman Marie Harf said.

Speaking at a media briefing, Ms Harf cited intelligence reports, but said she could give no more information on what the reports were based on.

Ambassadors also agreed to further expand the scope of sanctions to include companies and people who support Russian decision-makers responsible for the annexation of Ukraine’s Crimea region or for destabilising eastern Ukraine.

Debt-buying ban

Under one key proposal, European investors would be banned from buying new debt or shares of banks owned 50 per cent or more by the state. These banks raised almost half their €15.8 billion capital needs on EU markets last year.

“If implemented, such sanctions would be a serious blow to the Russian economy, exacerbating an already very likely recession this year and sustaining an economic depression for longer,” said analyst Michal Dybula of BNP Paribas.

The proposals included an arms embargo, although diplomats said it would apply to future deals and would not bar delivery of a French warship built for Russia under a 2011 contract.

The EU was also weighing restricting exports of technology for deep-sea drilling, shale and Arctic energy exploration and so-called civilian-military “dual use” items, diplomats said.

After months of hesitation, powerful EU states including Germany, Moscow’s biggest trade partner, are pushing for quick action as they believe Russia has consistently failed to meet international demands to end violence in Ukraine.

The crash of Malaysian Airlines flight MH17, which US intelligence officials believe was shot down in error by the rebels with a Russian-supplied missile, has stiffened Europe’s resolve, officials said. Most of the victims were Dutch. – (Reuters)