War in Ukraine: Sanctions taken by the EU to “suffocate Russia’s function”

European Union leaders, held at the summit Thursday evening after the United States, tightened sanctions on Russia after the first step, Salvo. “Russian leaders will face unprecedented isolation,” said Commission Chairman Ursula von der Leyen. “This is the strictest sanctions ever implemented,” added Josep Borrell, head of EU diplomacy.

“I don’t know if Putin has measured the extent of the sanctions decided. It’s a matter of choking Russia’s function,” said Jean-Yves Le Drian of the French Inter, this Friday morning. Reacted. “The package of measures announced is very spectacular. It addresses the seriousness of the situation,” continued the Foreign Minister.

  • Ban new debt

Specifically, the European Union will significantly limit access to Russia’s European capital markets, in particular, hindering and increasing the cost of debt financing. In other words, in a coordinated move, the United States and Europe have decided to ban Russia from raising new debt in any currency in its markets.

“We are imposing sanctions on Russia’s sovereign debt. The government can no longer raise money in the West or exchange debt in Europe,” US President Joe Biden said Tuesday night. Already declared in. European sanctions want to believe Ursula von der Leyen, “accelerating inflation, accelerating capital outflows, and gradually eroding the industrial base.”

The idea behind this debt sanction is to suffocate Russia financially and permanently deprive foreign resources. The EU “wants to break all relations between Russia and the global financial system,” explained Minister of Economy Bruno Le Mer this Friday morning. He declared to the media that the Russian economy “wants to financially isolate Russia (…) and deplete its funds” shortly before the start of the Treasury Ministers’ meeting in Paris.

Results can weigh on the value of the ruble in the short term, especially with the snowball effect of imported products on the purchasing power of Russian consumers, Russia has also turned very well and other partners like China. You can find financing close to. In addition, Russia has a real fortune with foreign exchange reserves estimated at around € 560 billion and a sovereign wealth fund of around € 160 billion. Wool stockings that should allow him to cushion the impact of sanctions for a period of time.

  • End of export of “important technology”

The European Union has also decided to reduce access to Russia’s “key technologies”, rob electronic components and software and give its economy a “serious penalty”, Ursula von der Leyen said this week. Added on Thursday night. This is specifically related to the ban on the export of aircraft, aviation and space industry parts and equipment to Russia, as well as the refining technology of the petroleum industry. These restrictions also affect dual-use products (civil and military).

  • Weaken people close to the elite and Putin

The idea is also to reach the Russian elite. EU banks will be banned from accepting deposits from Russian citizens in excess of € 100,000 and some Russian state-owned enterprises will be blocked from access to European funds. It also goes through the freezing of assets or the disapproval of personality considered close to Vladimir Putin. “The impact will be greatest for the Russian elite,” Ursula von der Leyen assured. By the way, Belarus, accused of being involved in Russian operations, will also be subject to additional sanctions.

  • No block of Swift interbank system

But the European Union is not completely advanced. Ukrainian President Volodymyr Zelensky called for blocking Russia’s access to the Swift Banking messaging system and financially isolating it from the rest of the world, as Iran did in late 2019. .. Currently, about 300 Russian banks and institutions are using this system to transfer funds between banks.

Neither the United States nor the European Union have pushed this lever yet. This will be the highest penalty. By crossing this border, some states, including Germany, are afraid that Russia will suddenly cut its gas supply. However, Germany is 60% dependent on Russian gas.

Germany’s Treasury Minister Christian Lindner explained on the ARD television channel that such measures “would carry a high risk that Germany would no longer receive gas and other raw material deliveries from Russia.” Italy, Hungary, Cyprus, Austria, Slovakia and even Latvia are in the same situation as Germany.

Sanctions by the European Union are not sufficient for the President of Ukraine. “All the possibilities of sanctions are not exhausted yet. Pressure on Russia should increase,” he said. He seems to have heard. At the end of the morning this Friday, the European Union informed Moscow that it intends to impose other sanctions “as an urgent matter.”