On Wednesday, the European Union cut seven Russian banks from the SWIFT payment system and banned Kremlin-controlled media RT and Sputnik from broadcasting in the bloc.
The measures, effective immediately, were the latest increase in Western-coordinated sanctions against Russia for its invasion of Ukraine, which is now in its seventh day.
“At the speed of light, the European Union adopted three waves of heavy sanctions against Russia’s financial system, its high-tech industries and its corrupt elite,” European Commission chief Ursula von der Leyen said. in a press release.
Last week’s cumulative punishment, also targeting Russian President Vladimir Putin, ministers and oligarchs supporting his regime as well as Russia’s central bank, has already sent Russia’s economy plummeting.
But so far there is no indication that this is deterring Putin from escalating his war.
And EU officials have said the sanctions – along with Russian countermeasures – will inevitably hit the bloc’s economy as well, albeit to a lesser extent.
“Signal” to Putin
Wednesday’s latest sanctions, reported since the weekend, bar listed banks from the SWIFT global interbank messaging network that enables fast and secure transactions.
The list included Russia’s second largest lender VTB Bank as well as Bank Otkritie, Novikombank, Promsvyazbank, Rossiya Bank, Sovcombank and VEB (Vnesheconombank), all of which were believed to have direct funding ties to Russia’s war in Ukraine.
The list did not name Russia’s largest bank Sberbank or another major one, Gazprombank, to allow EU countries to pay for Russian gas and oil deliveries.
But a senior EU official said the list would be ‘constantly reviewed’ and could be amended according to ‘evolutions of the situation on the ground’.
He added that with previous cumulative sanctions from G7 partners, “slightly more than 80% of the (Russian) banking system is subject to sanctions”, in the form of the SWIFT ban, asset freezes and financial sanctions imposed by the EU, the United States and Great Britain.
Switzerland – a major financial center outside the EU – has indicated it will follow EU sanctions.
The EU also prohibits any further EU investment in the Russian Direct Investment Fund and the supply of euro banknotes to anyone in Russia, except for personal use or for diplomatic reasons.
“This is the largest set of sanctions in the history of our Union. Today’s decision to disconnect major Russian banks from the SWIFT network will send another very clear signal to Putin and the Kremlin,” said von der Leyen.
RT, Sputnik banned
Brussels has also banned broadcasts from RT, formerly known as Russia Today, and Sputnik, both seen as Kremlin propaganda outlets repeating disinformation about what is happening in Ukraine.
“We are taking an important step against Putin’s manipulation operation and turning off the tap on Russian state-controlled media in the EU,” the bloc’s foreign policy chief, Josep Borrell, said.
Von der Leyen added: “We will not let the Kremlin apologists pour out their toxic lies justifying Putin’s war or sow the seeds of division in our Union.”
The EU said the two outlets “pose a significant and direct threat to EU public order and security” and said they were “essential and instrumental in advancing and supporting aggression against Ukraine and for the destabilization of its neighboring countries”.
He announced an immediate ban on their signals via satellite, cable, apps or the internet and a suspension of their licenses in the EU, specifically also targeting RT affiliates broadcasting in English, German, French and Spanish.
Risks for the EU
Officials have warned that Russia’s war in Ukraine will be deleterious to the EU27, compounding problems already experienced with supply constraints, soaring energy prices and inflation.
“The Russian invasion is likely to have a negative impact on growth in the eurozone,” said EU Economics Commissioner Paolo Gentiloni, adding that the risks “should not be underestimated.”
“We cannot exclude that another crisis factor may be involved, for example gas supply conditions, financial consequences or disruption of supply chains,” he said.
The EU official speaking on SWIFT sanctions said it was inevitable that the blocking of Russian banks from the system “will have an impact” on the EU and Western countries.
But, he said, “it is understandable and it is accepted”.