(Feb 15): The European Union is poised to force banks to report information on Russian Central Bank assets as part of the bloc’s latest sanctions package targeting Moscow for its war in Ukraine, according to draft proposals seen by Bloomberg.
Getting a handle on the scale of central bank and other sanctioned state-backed assets that have been immobilised in the EU is seen as a first step to exploring options to potentially using those funds to contribute to Ukraine’s reconstruction.
The European Commission, the bloc’s executive arm, also proposed strengthening the reporting obligations on frozen assets linked to sanctioned Russian companies and individuals, and suggested fines — of as much as €50,000 for individuals and 10% of annual turnover for entities — to be imposed for failure to provide the required information, the documents say.
“We propose, among other things export restrictions on multiple electronic components used in Russian armed systems — such as drones, missiles, helicopters,” she told the European Parliament. She said the bloc will also sanction Iranian entities, including those linked to Iran’s Revolutionary Guard, as it seeks to halt Tehran’s provision of drones to Russia.
The EU is aiming to adopt its 10th package of sanctions next week ahead of the one-year mark of the Russian invasion. European leaders have also sought to boost support for Kyiv — through weapons pledges and meetings with Ukrainian President Volodymyr Zelenskiy — before renewed offensives in the coming weeks.
The latest suite of measures would also introduce extensive trade restrictions on goods used by Russia’s military, including technologies, components, heavy vehicles, electronics, and rare earths. The EU is also proposing a ban on goods from transiting through Russia to lower the risk of sanctions being breached and to introduce import restrictions into the EU of Russian rubber and asphalt.
The EU is also looking to sanction dozens of individuals and entities, including politicians and military personnel, as well as:
- Alfa Bank, Rosbank and Tinkoff Bank JSC, as well as the National Wealth Fund of the Russian Federation
- Media groups that have engaged in propaganda in support of aggression against Ukraine
- A Russian reinsurer of ships exporting Russian oil
- A UK-registered shipping company accused of using its vessels to transport stolen Ukrainian grain on behalf of Russia.
The reinsurance company is controlled by the Bank of Russia, which since the war has more than tripled the capital available to the firm to 300 billion roubles (US$4.1 billion), according to one of the drafts. In turn, the reinsurance firm provides services and guarantees to a Russian insurance company that the EU is also looking to sanction. The insurance and reinsurance are being used by Russian ships and cargoes to redirect their oil to countries such as India after European firms withdrew their services, one of the documents says.
Critical infrastructure
The proposed measures will be discussed by member states this week and may change before the package is approved. EU sanctions need the backing of all member states to be adopted.
Other proposals include an extension of the suspension of the broadcasting licences of media outlets controlled by the Russian state and which are accused of spreading propaganda, and manipulating and distorting facts, targeting the EU and its neighbours.
The EU also wants to restrict Russian nationals from holding posts in the governing bodies of the operators of critical European infrastructures and entities, according to the documents. EU citizens would be exempt from the provision.
Similarly, the package of sanctions, if approved, would prohibit providing gas storage capacity to Russian nationals and residents, as well as entities established in Russia.
The EU’s sanctions are finally starting to make a real impact on Russia’s economy, limiting its revenues and constraining its trade, the bloc’s foreign policy chief, Josep Borell, told the European Parliament on Wednesday.
“The sanctions are a slow-action poison, a little bit like arsenic,” he said. “It takes time to take an effect.”