The European Commission is readying legislative background for four types of economic sanctions that are to be imposed on Russia on 29 July. A round-table attended by EU ambassadors that took place on Friday (July 25) summed up that the four areas of sanctions should include restricting access to EU capital markets for Russian state-owned firms, banks, and financial institutions as well as putting a ban on trade in arms and sensitive technologies and goods that can be used for military but also civilian purposes. This is described as the “third stage” of sanctions on Moscow.
Although EU diplomats were for long unprepared to implement stage three quipping that they would only go to “stage 2.9999”, the mood has changed dramatically with the crash of the Malaysia Airlines plane in mid-July. Foreign ministers opted for four areas of economic sanctions that could be implemented. No country has raised any objections to this next step against Moscow, although a “yes” would be normally required from every single EU member state government. However, in a letter that EU council boss, Herman van Rompuy, sent to the member states governments, Brussels chooses the “so-called written procedure in adopting sanctions”.
Mr van Rompuy added that the economic sanctions package “strikes the right balance when it comes to cost-benefit ratio and scalability-reversibility over time. It should have a strong impact on Russia’s economy while keeping a moderate effect on EU economies.” The planned ban on trade in arms will apply only to any future contracts and so will restrictions in capital markets. Only the ban on future contracts is in a way designed to protect the EU economy as London and Paris could be severely hit by a full ban on financial transactions.