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Russian military forces invaded Ukraine on 24 February as commanded by President Putin. In its efforts to avert this escalation by means of diplomacy before it was too late, Germany had repeatedly stated, along with its international partners, that such a step would be met with serious economic and financial sanctions. Addressing the German Bundestag back on 27 January, Foreign Minister Annalena Baerbock said:
It’s hard not to see it as a threat when over 100,000 troops with tanks and guns gather near Ukraine for no apparent reason and more troops are being brought together in Belarus. [...] The Federal Government is united and resolute in its response [...] (in) close coordination with our EU and NATO partners and within the G7. We have made it quite clear, and in no uncertain terms, that renewed military action against Ukraine would have huge consequences for Russia. On this basis, we are working on a strong package of sanctions.
In response to President Putin’s war against Ukraine and the recognition, contrary to international law, of the so‑called republics in eastern Ukraine that preceded it, the EU has to date adopted four far-reaching packages of sanctions, in close coordination with its G7 partners. Numerous other European and non‑European countries have also signed up to these.
Holding the Russian leadership to account
The decision to invade Ukraine was taken by the Russian Government under President Putin and by key decision-makers in the Russian regime. They face targeted sanctions for their part in this decision (as “listed persons”). Decision-makers in Belarus have likewise done much to support Russia’s illegal invasion and are therefore also subject to sanctions. The list includes over 650 people – from President Putin himself, as well as Foreign Minister Lavrov, to members of Russia’s Security Council, high-ranking military officers and members of the Duma, along with important Russian oligarchs who give Putin and his entourage their economic backing. The listed individuals’ assets in the EU have been frozen, and it is forbidden to do business with them. In addition, most of them are banned from entering the EU. Furthermore, visa facilitation agreements for Russian delegations, members of parliament, diplomats and business people have been suspended, and other similar steps taken. The EU and its international partners augmented the measures on 15 March with a comprehensive export ban on luxury goods.
In addition, the EU has closed its air space to Russian traffic with the exception of humanitarian and diplomatic flights. Russian aircraft are prohibited from landing or taking off in the EU, and may not overfly EU territory.
The EU is also taking action to counter Russian disinformation and has therefore suspended broadcasting activities by the Russian state-owned outlets RT/Russia Today and Sputnik.
Stopping the financing of the war and the Regime
Extensive financial sanctions have cut the Russian regime off from its reserves in Europe and from the European financial market. As well as banning transactions with the Russian central bank, trade in new Russian government debt has been prohibited on the European capital market, as has the granting of loans to the Russian state. A number of other carefully chosen Russian banks have also had their assets frozen and transaction bans imposed. In addition, these banks have been specifically excluded from the SWIFT system for international payments. Furthermore, Russian state enterprises are no longer able to issue securities on European exchanges. Selected Russian businesses and banks have been completely excluded from the European capital market through even further-reaching refinancing restrictions. Russian investors now have only very limited access to the European capital market. Because Belarus is actively supporting the Russian invasion, these financial sanctions were extended to cover Belarus on 9 March 2022.
On 15 March 2022, the EU added an import ban on Russian iron and steel products. In addition, a far-reaching ban on investment in the Russian energy sector is now in place. Together with its partners, the EU will also suspend Russia’s most favoured nation status under WTO rules, which will make it possible to increase customs duties on imports from Russia.
The aim shared by all the measures is to stop President Putin and his backers – including those in Belarus – from having access to European capital, thereby making it far more expensive for them to finance the war. The financial sanctions that have been imposed are particularly effective because they have been imposed by all G7 states together. Russia cannot evade the sanctions through recourse to other major financial markets. In this context, it was particularly crucial for Switzerland to sign up to the sanctions.
At the same time, the sanctions have been designed with the aim of not directly targeting the Russian civilian population. In spite of the broad financial and economic sanctions, humanitarian exceptions are allowed, for example, to the flight ban.
Restricting access to Western know-how and products
Russia’s industry is reliant on Western high-tech for its modernisation. In response to Russia’s aggression, exports in this field have been largely prohibited. Microchips and maritime navigation technology are among the products affected, as is some software, equipment for the oil and gas sector and aviation technology, including aircraft. The export of all dual-use goods – i.e. goods that could be used for either civil or military purposes – has also been banned. These measures, too, are strengthened by equivalent steps taken by the remaining G7 states. Russia is thus left with no alternative markets on which to procure the listed products.