New Financing Restriction Sanctions Possible Against Russia

Reuters announced late today that the EU appears to be seriously considering further capital control restrictions against Russia. In a Thursday meeting EU ministers discussed potential sanctions to be applied against Russia. The targets are a mix of the same as in previous rounds but just tighter along with brand new sanctions
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ca.reuters.com...

Targets mentioned were:
- Shortening the maturity period for any loans to various enterprises. Currently it's a mixed bag between 30 days and 90 days for various state owned banks, energy companies and military hardware producers. This change would have little impact now as most of these businesses are already forced to seek alternate long term financing. If the maturity period was zero these companies would face significant problems selling internationally. There may be significant amounts of financing shifted to the shorter term limits and bypassing the current sanction that the EU and US are targeting to stop completely.

- Sovereign bond buying restriction, one of the new targets. Clearly this is a required target as the Russian government is providing massive amounts of financing domestically since the sanctions started. Without this a giant loophole in the Sanction regime exists and Russia will drive a truck through it shortly. This is a serious and dangerous target to include in Sanctions.

- Expanding lending maturity restrictions to all Russian businesses. Eventually sanctions will need to be expanded to all Russian companies or dummy companies can seek international financing and pass it along to sanctioned companies. Another giant loophole that will need closing for an effective long term sanction regime.

- Further Oil and Gas technology purchase restrictions. Previous targets were to impede exploration and drilling in the Arctic. This could be expanded to some other difficult to extract drilling methods. Likely it will simply be some fine tuning of critical drilling tech that can delay Russian Oil and Gas production.

- Disconnecting Russia from the SWIFT international banking transaction system is not on the table. This type of sanction will likely never happen as Russia will clearly bypass it as Russia of course needs to conduct international business. A sanction of this type simply generates a competitor for SWIFT.

The EU ministers will return to meet on Feb 12 and task a commission with developing the sanction outlines with an expected implementation in early March. Greece stood out as clearly not be interested in additional sanctions against Russia. This appears to be some leverage the new Greek governing party plans to use against the EU in upcoming debt negotiations that are expected to be extremely contentious. It is unclear if Greece would actually stand in the way of the EU continuing or adding to sanctions against Russia.

a reply to: noeltrotsky

As you mentioned Greece - it;s no coincidence that the Left wing party that won was financially backed by Russians and the first visit to the new PM was by the Russian ambassador...

The leaders of the far-left Syriza party are blatantly pro-Russia. Alexis Tsipras, the new prime minister, has echoed the Russian line that "neo-Nazis" are part of Ukraine's government (they are not, though some are parliament members, and neo-Nazi units fight on the Kiev side in the eastern Ukraine conflict). He has gone out of his way to stress Greece's "strategic partnership" with Russia. And the first foreign official he met with as prime minister was Russian ambassador Andrei Maslov.

Source

So don't think for a moment the EU hasn't noticed this. Greece are playing a dangerous game.

a reply to: noeltrotsky

At what point will Putin feel cornered and lash out in a serious way to those he opposes? What will be the breaking point for Russia? Surely the population is beginning to feel some impact of the sanctions by now.

Absolutely Greece is headed out the door of the EU in a very rapid hurry.

www.theaustralian.com.au...

Their new defense minister previously said,
"Panos Kammenos, the defence minister and leader of the Independent Greeks, said after the annexation of Crimea that “we publicly support President Putin and the Russian government who have protected our Orthodox brothers in Crimea”.

Greece looks to be 3/4 the way out of the EU. I suspect Germany already has the ECB pulling printed Euro's out of it's local branch in Greece.

a reply to: aboutface

Russians are amazingly stoic people. The sanctions and resulting increases in food prices are a badge of honor to them. Trying to buy a home at 17.5% interest rate sucks however. They need to start seeing massive layoffs before people really openly defy Putin in any serious numbers. Putin will make sure the big companies don't lay off that many people however.

I think Putin will quickly go for all that he truly wants out of Ukraine very soon. He needs a land bridge to Crimea. He also needs a bargaining chip to give back to look like he's giving something up. He'll send Russian forces in openly soon under the pretext of protecting Russians in a UN style peace initiative.

a reply to: noeltrotsky

One of the State owned Oil firms is talking about shedding 15-25% of it's 449,000 workforce as a result of the sanctions and economic woes. That's a lot of jobless peeps...

Job losses are yet to feed through, but state-run gas giant Gazprom is said to be planning to axe between 15% and 25% of its 459,000-strong workforce.
BBC Link

Is there no way for all sides to take a step back before we all blow ourselves up?

a reply to: stumason

It would surprise me if Putin allowed 60.000 to 100.000 people to be laid off right now. Good link though! I'd love to see actual job loss numbers. Here is one but it's not attributed to sanctions,

"Putin has already had a taste of discontent. Reforms to the healt hcare system, facing a 21-per-cent cut in federal spending under existing plans, sent thousands of health workers into the streets to protest against job losses."
www.theglobeandmail.com/report-on-business/international-business/european-business/russias-budget-cuts-threaten-long-term-economic-prospects/article2 1903645/

a reply to: aboutface

Putin has sold his Ukraine actions as righting previous wrongs from EU and NATO encroachment. His popularity used to be propped up by good economic performance, now it is held up by restoring national pride. I don't see much room for retreat if Putin wants to remain leader of Russia. He can't 'abandon' Russians living in neighboring territories because he has played up defending them for a decade now.

He sold his actions to his public in a way that left him no real retreat. Unless the EU and US are willing to abandon Crimea and accept it remaining Russian and recognizing that legally I don't see any solution. After Putin leaves office I think there will be room to find compromise, but it won't include Crimea remaining Russian. That's a no go for the West.

Before this all began, Ukraine itself seemed to be already divided culturally with the eastern portion being strongly pro-Russian. How will a war solve this? Putin will never give up Sevastopol.