#AceWorldNews – BRUSSELS – July 26 – The European Commission is preparing legislation on four types of economic sanctions likely to be imposed on Russia on Tuesday reported EUobserver
A meeting of EU ambassadors (Coreper) on Friday concluded that legal texts should be prepared for all four areas presented in a draft paper by the EU commission: restricting access to EU capital markets for Russian state-owned banks and companies, as well as banning trade in arms, sensitive technologies and goods that can be used both for civilian and military purposes.
This marks the so-called stage three of a sanctions regime on Russia which were for a long time taboo in EU quarters, with diplomats quipping that leaders would only go to "stage 2.99999" rather than adopt sanctions that could hurt their own economies.
However, ‘stage three’ economic sanctions against Russia have again fallen flat.
The diplomats who spoke to Reuters did not specify the names of the people and companies on the extended sanctions list, and said they would resume discussions on Friday morning.
It’s a further delay of sectoral, or economic, sanctions against Russia after EU foreign policy chief Catherine Ashton announcedon Tuesday the EU would outline tougher sanctions to hit Moscow on Thursday,if it failed to comply with the Malaysian Air Flight 17 crash investigation.
The new proposed sanctions included a ban on Russian capital markets, sanctions against Russia’s weapons industry and ‘sensitive technologies’, which would include Russia’s critical energy sector, the Financial Times (FT)reports.
EU officials are considering sanctions that would bar Russia from using European lending institutions and, conversely, ban Europeans from buying new debt from Russia’s largest banks, many of which are state-controlled.
“Restricting access to capital markets for Russian state-owned financial institutions would increase their cost of raising funds and constrain their ability to finance the Russian economy,” a 10-page memo presented to the European Commission, said, as reported by Bloomberg News. The memo was sent to all 28 EU ambassadors prior to Thursday’s meeting.
If adopted, EU sanctions would apply to all Russian banks that are more than 50 percent state-owned. Sberbank, VTB, the country’s two largest lenders, as well as Vnesheconombank, and Gazprombank (already sanctioned by the US) would fall into this category.
“It would also foster a climate of market uncertainty that is likely to affect the business environment in Russia and accelerate capital outflows,” the document said(RT)
According to the memo, €7.5 billion of €15.8 billion of bonds issued by Russian public financial institutions were sourced from EU markets, FT says.