Wednesday

14th Apr 2021

US and EU prepare to strike Russian banks, energy firms

  • Kerry (l) and Steinmeier: US sanctions ready to go, EU needs one more week to finalise options (Photo: state.gov)

The US and EU are preparing to strike at Russian banks, energy and minerals firms if Russia invades mainland Ukraine.

Speaking to US senators in Washington on Tuesday (8 April) secretary of state John Kerry used blunt terms to describe events in Ukraine's Donetsk, Kharkiv and Luhansk regions in recent days.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

“Everything that we’ve seen in the last 48 hours from Russian provocateurs and agents operating in eastern Ukraine tells us that they’ve been sent there determined to create chaos … These efforts are as ham-handed as they are transparent,” he said.

“No one should be fooled, and believe me, no one is fooled by what could potentially be a contrived pretext for military intervention just as we saw in Crimea.”

“The United States and our allies [the EU] will not hesitate to use 21st-century tools to hold Russia accountable for 19th-century behaviour,” he noted, adding: “tough new sanctions on those orchestrating this action and on key sectors of the Russian economy, in energy, banking, mining – they’re all on the table.”

In Brussels, the European Commission will on Wednesday brief EU countries’ ambassadors on preparations for what the Union calls “stage three" sanctions.

EUobserver understands the draft measures designate curbs on Russian banks and financial services firms, trade in certain commodities, bans on EU companies’ services for Russian oil and gas corporations, and a potential arms embargo.

The oil and gas sector sanctions could cover transfer of technology, investments in new exploration and infrastructure, and peripheral services such as insurance or logistics, but not an Iran-type ban on EU imports of oil and gas.

The EU is also preparing to blacklist more Russian officials from a draft list of over 100 people, 33 of whom were already put under a visa ban and asset freeze in March.

Kerry’s warning comes ahead of his meeting with Russian FM Sergei Lavrov, Ukraine’s acting foreign minister, and EU foreign affairs chief Catherine Ashton next week.

But some diplomats fear the Russian invasion could begin before the weekend.

The US ambassador to the OSCE, a multilateral body in Vienna, Daniel Baer, in a statement published on Tuesday, said elite Russian army units and airforce assets on Ukraine’s border are ready to “conduct short-notice, sustained, offensive military operations into Ukraine” with “quick-strike capability and air support to potential ground operations”.

A Kiev-based diplomat from one EU country told EUobserver: “Russia is getting ready to occupy eastern and southern Ukraine, cutting it off from the sea, and securing key Ukrainian arms industry facilities which service its own military.”

If Russia escalates, the US is ready to impose sanctions immediately on the basis of an existing White House “executive order”.

EU foreign ministers are meeting in Luxembourg on Monday. But they are playing catch-up because EU sanctions proposals are unlikely to be finalised before the middle of next week.

The options paper is being drafted by commission line departments, primarily DG energy and DG trade, and co-ordinated by the commission’s secretary general, veteran Irish official Catherine Day.

It is taking time because it includes impact assessments on potential Russian retaliations, including “asymmetric” retaliations along the lines of its recent ban on EU pork, as well as on “burden sharing” of the impact among EU countries.

It is concerned that increased EU-Russia tensions could see world oil prices spike, putting more money in Russia’s war chest.

But EU diplomats say the slow pace is also linked to political signals from leading EU countries, including France, Italy, Germany, and Spain, on how far Europe is prepared to go.

For his part, German foreign minister Frank-Walter Steinmeier, the most senior member of the centre-left SPD party in Chancellor Angela Merkel’s coalition, caused upset in Berlin by saying the EU was wrong to make Ukraine choose between closer ties with the West and membership in Russia’s “Eurasian Union”.

"That is a very problematic remark ... it was Russia and not the EU that forced Ukraine into such a choice," Andreas Schockenhoff, a Russia specialist in Merkel’s centre-right CDU party, told Reuters on Tuesday.

"Just because Russia categorically insists that Ukraine must never become a member of Nato, we shouldn't have to accommodate this," he added.

News in Brief

  1. US officials call for J&J vaccine pause over blood clots
  2. Putin refuses to talk about military build-up, Ukraine says
  3. EU bank to help Greece manage corona-recovery funds
  4. Johnson & Johnson vaccine deliveries to EU begin
  5. EU sanctions commander of Iran's Revolutionary Guard
  6. UK opens investigation into ex-PM Cameron lobbying
  7. 'Significant differences' in EU-UK talks on Northern Ireland
  8. Bulgarian PM reveals price rise in new EU-BioNTech deal

Opinion

Why Russia politics threaten European security

Russia could expand hostile operations, such as poisonings, including beyond its borders, if it feels an "existential" threat and there is no European pushback.

Analysis

Ten years on from Tahrir: EU's massive missed opportunity

Investing in the Arab world, in a smart way, is also investing in the European Union's future itself. Let's hope that the disasters of the last decade help to shape the neighbourhood policy of the next 10 years.

Stakeholders' Highlights

  1. Nordic Council of MinistersDigitalisation can help us pick up the green pace
  2. Nordic Council of MinistersCOVID19 is a wake-up call in the fight against antibiotic resistance
  3. Nordic Council of MinistersThe Nordic Region can and should play a leading role in Europe’s digital development
  4. Nordic Council of MinistersNordic Council to host EU webinars on energy, digitalisation and antibiotic resistance
  5. UNESDAEU Code of Conduct can showcase PPPs delivering healthier more sustainable society
  6. Nordic Council of MinistersWomen benefit in the digitalised labour market

Latest News

  1. How the pandemic became an EU goldmine for crime
  2. China responds to 'low-efficacy' vaccine fears
  3. Merkel party chiefs support Laschet's chancellor bid
  4. EU refuses to bail out Montenegro's China loan
  5. Industry lobby to 'co-decide' on nearly €10bn EU public money
  6. Why Ursula von der Leyen won't go
  7. Incorporating gender in trade policy to benefit all
  8. Does Italian regionalism actually work?

Join EUobserver

Support quality EU news

Join us