21st Feb 2024

Hawkish Poland wants Gazprombank in new EU sanctions

  • Russian president Vladimir Putin opening a gas pipeline to Turkey in January 2020 (Photo:
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Poland is gunning for an EU crackdown on Russia's top gas bank, oil pipeline, and diamonds in upcoming sanctions.

"Given the bank's role in the Russian establishment's scheme to embezzle state money, and the Kremlin's use of the bank to advance political interests, the de-SWIFTing of Gazprombank is of priority and symbolic importance," Poland and the Baltic states said in a joint proposal.

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SWIFT is the world-leading bank transfer operator, based in Belgium.

Gazprombank is Russia's third-biggest lender and handles international payments for gas exports.

The EU bought 61 billion cubic metres (bcm) of Russian pipeline gas and 22 bcm of liquid gas last year, despite the war.

If Gazprombank was un-SWIFTed, EU countries would have to redirect payments via alternative operators, such as SPFS (run by Russia's central bank) or CIPS (run by China).

But if that was "unacceptable", then "as a minimum option, the freezing of the bank's assets should therefore be considered", Poland and the Baltic states said.

And, looking further forward, "a logical step is to introduce sanctions on gas imports from Russia, including in liquefied form," they added.

The EU has already de-SWIFTEed 10 Russian banks out of the 50 or so of its sizeable lenders, including its two biggest — Sberbank and VTB Bank.

"In addition to cutting off SWIFT, the EU should freeze the assets of as many of Russia's banks and financial institutions and their subsidiaries as possible," the EU hawks' proposal said.

"Failure to freeze the assets of banks and financial institutions means that even if banks are fully cut off from SWIFT, it will be possible to transact with them by other means," they warned.

Blocking Russia's Druzhba oil pipeline and diamond exports to Belgium were also labelled "priorities".

Russia is still pumping oil to the Czech Republic, Germany, Hungary, and Slovakia via Druzhba.

But "failure to sanction pipeline oil creates an imbalance in the oil and fuel market due to the price differential between Russian oil and other types of oil", the hawks said.

And those affected by an EU ban on Druzhba could get "compensatory mechanisms", they said.

Diamond sales yield the Kremlin upwards of €4bn a year, primarily from Belgium, the UAE, and India.

"Given that the EU is the recipient of 41 percent of Russia's total diamond exports, such sanctions would probably be strongly felt in Russia," the proposal said.

Behind-the-scenes talks on the 11th round of Russia sanctions are already underway in Brussels, but there will be no decision by the time EU foreign ministers meet in Luxembourg next week, diplomats said.

Poland and the Baltic States have gained influence on EU relations with Russia since the war broke out.

But it's too early in the talks to say if those directly affected by their proposals — such as Belgium and Hungary — will drop long-standing objections, diplomats added.

The Polish-Baltic proposal also called for an embargo on Russian aluminium exports and barring EU port access to ships "that are leased to or carry cargo for entities registered in Russia".

Putin's terror

The EU has so far imposed visa-bans and asset-freezes on more than 1,600 Russian individuals and entities over its Ukraine invasion.

But for the Poles and Balts, the legal scope of the measures should be extended to cover the other face of the conflict — Russian president Vladimir Putin's "growing war authoritarianism and unprecedented crackdown on any form of dissent" at home.

The joint proposal was circulated one day after Russia sentenced a disabled dissident, Vladimir Kara-Murza, to 25 years of hard labour in a penal colony.

New listing criteria should include Russians guilty of "violations of the freedom of assembly in the context of anti-war demonstrations" and "violations of the freedom of speech in the context of mass censorship", the sanctions memo said.

Those placed on the new-model EU blacklist should include "officials and entities responsible for the development and use of the facial recognition system in Moscow, which was employed to carry out mass arbitrary detentions of the participants of protests in opposition to Russia's invasion of Ukraine and to identify draft evaders," it added.


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