The European Union has strengthened its sanctions against Russia, following lengthy discussions, after agreeing to a set of restrictions covering the military, financial services and energy sectors.
While they remain below the so-called Level 3 Sectoral sanctions that the EU had warned of, analysts say they will effectively have the same impact, though by including restrictions across sectors, it will spread the impact and damage caused to Europe across the region.
The EU introduced sanctions effectively blocking Russian banks — state-owned and development banks — from accessing European capital markets, covering equity, debt issuance with a period of longer than 90 days, and brokering services. It has also imposed an embargo on the sale of arms to Russia, though it will only apply to future contracts, thereby excluding France’s current €1.2 billion deal to sell two warships to Russia.
The sale of so-called dual use products that can be used in the military sector will also be banned, as will some energy-related technology and equipment. The EU also warned the sanctions would cover export licenses for products used for deep-water exploration and production in Russia.
Hitting back “It is meant as a strong warning: illegal annexation of territory and deliberate destabilisation of a neighbouring sovereign country cannot be accepted in twenty-first century Europe,” European Commission President Jose Manuel Barroso said in a statement. The sanctions followed lengthy negotiations between EU member-states.
These were fuelled at points by sharp differences of opinion, particularly between Britain and France over whether the brunt of the sanctions should fall on the financial services or arms sectors. Countries such as Britain and Austria have particularly large exposure to the Russian banking sector, while an arms embargo will hit France particularly hard.
“Europe is much more exposed to Russia than the US, and Europe is much more heterogeneous than the US,” said Georg Zachmann of think tank Brugel ahead of the sanctions.
“There is a question of the distributive effect of such things and its much more difficult in Europe than in a single state.”
“The focus on these sectors shows that Europeans are determined to share and distribute the pain of sanctions across member-states,” says Carsten Nickel, an analyst at Teneo Intelligence. The US also increased its sanctions on Russia, adding a number of new companies and banks to its sanctions list.