Cyprus Mail

EU to extend sanctions on Russia to end-2015

The European Commission building

The European Union will extend asset freezes and travel bans imposed on dozens of Russians and Ukrainians after Moscow’s annexation of Crimea to the end of this year, according to a draft statement seen by Reuters on Wednesday.

A draft statement, prepared for an extraordinary meeting of EU foreign ministers on Thursday and seen by Reuters, said sanctions imposed from March last year on people undermining Ukraine’s sovereignty would be extended until December 2015.

An earlier version of the draft had said the sanctions would be extended until September.

New sanctions could include further capital markets restrictions, making it harder for Russian companies to refinance themselves and possibly affecting Russian sovereign bonds and access to advanced technology for the oil and gas sectors, EU officials said on Wednesday.

EU foreign ministers are set to ask the executive European Commission on Thursday to prepare a new round of sanctions over Moscow’s role in eastern Ukraine, however officials said the measures may not be adopted by EU leaders until late March.

“Measures for financial markets would be the easiest to introduce. Sovereign bonds have been mentioned in the past among the options. They would also be quite effective because they would undermine the economic growth potential of Russia,” one official close to the discussions said.
A second official said the new measures against Moscow for its involvement in the conflict in eastern Ukraine could involve a shortening in the maximum maturity at which Western institutions and investors could lend to Russian companies.

That would make it harder for key corporations in the energy sector to refinance themselves.
The officials said one measure under consideration could make it harder or perhaps impossible for Western institutions and investors to buy Russian sovereign debt on issue in the primary market.

Both officials mentioned the possibility of imposing further restrictions on Russian access to advanced technologies in the oil and gas sector, which would make Russia’s ambitions for Arctic exploration for energy resources more difficult.

The idea of disconnecting Russia from SWIFT, an international bank transaction system, was not considered because it could lead to the creation of an alternative system by Russia and other countries that could be detrimental to the Belgium-based global clearing house.
No decisions on any sanctions have been made yet, because EU leaders first have to ask the Commission at a February 12 summit to research and prepare such measures. This usually takes 5-6 weeks, the first official said.

A final decision on whether new economic sanctions would be imposed on Russia is therefore likely to be taken in March, one official said.
Foreign ministers have called an extraordinary meeting for Thursday after Kiev said 30 civilians were killed in shelling of the government-held port of Mariupol by pro-Russian rebels on Saturday, shattering a five-month ceasefire.

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