The European Union is convinced that the sanctions significantly weaken Russia’s ability to finance the war against Ukraine. What achievements of sanctions were reported in Brussels?
The European Union has imposed unprecedented sanctions on Russia for the war it unleashed against Ukraine. Until it stopped in Moscow. And in the EU itself, discussions are ongoing about how effective the measures have been introduced.
More than 600 Western companies have cut business in Russia
“We believe that the sanctions work, even if they take the time to reach their full effect. And we believe that these measures have significantly increased the cost of Russia’s aggression and created restrictions on the capabilities of its military, ”said EU Foreign Service spokesman Luc Devigne.
He spoke before the European Parliament’s foreign affairs committee, which held hearings on April 20 about the validity of sanctions against Russia. In total, five packages of restrictions have already been introduced in Europe.
Speaking about the specific impact of the penalties, Devigne provided some details. He quoted the words of the chairman of the Accounts Chamber of the Russian Federation Alexei Kudrin, who said that because of the sanctions, Russia’s economy “needs to be rebuilt.” Only the first stage of perestroika, according to Kudrin, will last two years.
In addition, Devin said that more than 600 Western companies have decided to cut or reduce their business in Russia – not only because of sanctions, but because “they have chosen the path of moral condemnation” of Russian actions. Federation. .
Russia is ready for financial sanctions
More details were provided by staff of the four Directorates General of the European Commission (EC), who also participated in the hearings.
The most powerful elements of the first package of sanctions were financial restrictions, in particular the freezing of Bank of Russia’s international reserves in the EU and G7 countries, as well as the disconnection of seven banks from the SWIFT financial messaging system. .
Financial stability spokesman Peter Grasmann said the sanctions “had a very strong impact on Russia’s ability to finance itself.”
As an example, he cited the “crisis in Russia’s financial markets”, due to which the Central Bank and the government of the Russian Federation have been forced to take “heavy” measures to “keep the financial system afloat. . “
After a strong collapse in late February and March, the ruble returned in April to the level before Russia’s full -scale invasion of Ukraine – about 85 rubles per euro. According to Grasman, the exchange rate can only be considered a market indicator when the market is functioning. And if the currency does not move freely, as it is in the Russian Federation now, then the ruble exchange rate “is not very useful as an indicator of our measures,” the official added.
“Destroying Russia by financial sanctions is not a small and difficult task. Russia is prepared,” Peter Grasman said.
That is, it has large financial reserves and a surplus in the current account, and in addition, Moscow has actively removed US dollars from its trading operations and “almost completely left the international reserve market in the United States.”
“And yet we caused them great damage,” – added the representative of the EC, but did not give specific figures for this damage.
The EU is looking for opportunities to confiscate Russia’s money
After the start of the Russian Federation’s massive invasion of Ukraine, the European Union imposed personal sanctions against a record number of people. The list already includes 1091 individuals and 80 legal entities. Their assets in the EU are frozen. However, finding their property is a difficult task. First of all, it has to do with the oligarchs, who, according to the European Commission, are on the list of more than 30.
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To search for the assets of the authorized Russians, the EC created a working group called Freezing and Confiscation. On April 8, he announced the freezing of nearly 30 billion euros of assets. An employee of the Directorate of the European Commission for Justice and Consumers, Peter Czonka, did not name new numbers at the hearings.
But he said the group works with banks, lawyers, notaries and anyone dealing with money or property transactions. After all, it really depends on them whether Russia’s assets will freeze.
There are three subgroups in this group. The first discusses freezing issues, the second discusses investigating possible crimes to confiscate property, and the third discusses creating a fund to which these assets will be sent. According to Chonka, the most difficult question is how to confiscate these assets.
“The right to property is respected in the EU,” he stressed, adding that confiscation requires a court verdict for committing a crime. In examples of such offenses, he cites money laundering or embezzlement, or evasion of penalties.
The EU has created a tracking system for Russian ships
Calls for the EU to close ports on Russian ships have long existed. In response, Brussels said it was technically difficult. But after the Bucha massacre, all states of the association agreed to it – even if only for ships flying the Russian flag and with some exceptions, for example, for carrying food, medicines, oil, gas, and certain metals. .
Permission for these exceptions is granted by national governments separately to each ship for each call to a particular port.
European ports have been closed to ships flying the Russian flag since April 17. Magda Kopczynska, representative of the EC Directorate General for Transport, called the implementation of such a measure difficult.
To this end, together with the European Maritime Safety Agency, they have created a system for monitoring maritime traffic in and near EU waters. Kopcińska expressed confidence that this system would prevent the avoidance of sanctions.
Energy in Russia – the impact of future EU sanctions
Energy is a key sector for Russia’s ability to finance its spending. Russia’s exports of energy resources were not touched until the fifth package of sanctions. And only after Bucha introduced a ban on the supply of coal and other solid fossil fuels.
For Russia, it will be sensitive, as a quarter of all its coal exports go to the European Union, says Ivo Schmidt, an employee of the European Commission’s Directorate General for Energy. True, this embargo will only take effect from August 10.
In addition, Brussels has banned the supply of technologies for oil refining to the Russian Federation. Schmidt noted that the consequences of these sanctions are difficult to predict, as some of the European technologies could be replaced by Russian or Chinese counterparts.
At the same time, after the ban on investments in the energy sector of the Russian Federation, credit agencies lowered the ratings of almost all Russian companies in this sector.
Representatives of the European Commission declined to disclose details of the upcoming sixth package of sanctions. However, Schmidt confirmed that “oil will definitely be a part of it.”
The chairman of the European Parliament’s Foreign Affairs Committee, David McAllister, summed up the opinion of the majority of MEPs at the hearing: “We believe that sanctions are a tool to encourage Russia to stop its brutal war of aggression against Ukraine. But for now, we must conclude that they have not reached their goal. Therefore, I urge the European Commission and the EU Council to think carefully about why this is so, and make sure the next package is the last. “
Source: Russian Service DW
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Source: korrespondent
