Home Business the noose of sanctions tightens around the Russian economy

the noose of sanctions tightens around the Russian economy

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Under new sanctions, in response to the massacre of civilians in Boutcha, the European Union is preparing to ban Russian coal from its market. This should deprive Russia of 4 billion euros in revenue per year. This is a far cry from what the income from the sale of gas and oil represents. But for the first time, the EU is attacking income from the energy sector, the heart of the Russian economy.

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The European Union is the first customer of Russian coal, which represents 45% of its supplies. This measure remains inexpensive for the EU because ” Russian coal can be easily replaced “, according to experts from the Bruegel circle, based in Brussels. Australia, Indonesia, South Africa, Colombia and the United States can increase their deliveries. Europe also has large stocks. In an emergency, German and Polish coal mines could also increase production.

However, this measure demonstrates the determination of developed countries to go further with sanctions. “Sooner or later, measures on oil and even gas will be necessary”even estimated Wednesday, April 6 the President of the European Council Charles Michel.

The mea culpa of the German president

In Germany, the country that is most reluctant to face these measures, opinion is changing. It is now mostly in favor of stopping oil and gas imports. President Frank-Walter Steinmeier admitted having committed a ” error “ by supporting the construction of the Nord Stream 2 gas pipeline between Russia and Germany.

“I didn’t think Putin would put up with his country’s economic, political and moral debacle to feed his incredible madness. In this I was wrong.” he said, regretting “not having listened to the warnings” of its European partners.

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The fifth package of sanctions aimed at Russia should include, in addition to the end of coal imports, the ban on the entry of Russian ships and trucks into European territory, new measures against banks. The list of personalities hit by an asset freeze is also expected to grow.

The United States, for its part, has blocked dollar payments from Russian state accounts held on United States territory. She can no longer use them to pay her debts. This measure aims to asphyxiate Russia financially and thus prevent it from financing the war. Washington will also ban any new investment in Russia.

London blocked 60% of Putin’s war chest

The scope of sanctions continues to expand. They are beginning to produce effects, while the rise in prices in Russia is already 20% over one year. Every day, developed countries announce that they have taken new measures. The British Foreign Minister, Liz Truss, thus indicated on Tuesday April 5 that the United Kingdom had frozen 350 billion dollars of Russian foreign exchange reserves, i.e. “ more than 60% of Vladimir Putin’s war chest”. The Netherlands announced on Wednesday that it had seized 14 yachts belonging to Russian oligarchs at a shipyard.

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France is not left out. According to figures provided by the Ministry of Economy, it seized 22 billion euros in assets from the central bank of Russia. In addition, there are 850 million euros in assets belonging to Russian individuals under sanctions or to their entourage. The bulk (539 million) is made up of real estate, the rest corresponds to bank deposits or financial investments. At least three vessels were also seized, including theLove vero in La Ciotat, an 86-meter yacht, owned by Igor Setchine, boss of the Rosneft oil group and close to Putin.

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Banks are called upon to apply these sanctions. “All financial institutions must put in place internal rules, free up resources and train their staff to implement sanctions. They have an obligation of result with regard to the freezing of assets”explains David Masson, lawyer for the firm Racine.

Ukraine demands more

They must therefore screen their clients to identify the Russian personalities sanctioned if “their activity provides substantial income to the Russian government”, the official justification for these punitive measures. The life of those who are targeted becomes very complicated: “The sanctioned people can live in their property but cannot rent it, sell it or even give it away, specifies Sandra Graslin-Latour, lawyer from the same firm. All the funds held in their bank accounts become unusable, except to pay their taxes and current charges. Any other transaction must be authorized by the General Directorate of the Treasury, which assesses whether the payment can take place or not.

These measures put real pressure on Russia. But they are not enough to bend the Kremlin. Ukraine continues to ask for more and grows impatient. She would like all Western companies to leave the Russian market, an end to all banking transactions and oil and gas purchases: “The only thing missing is a principled approach from some leaders, political or economic, who still believe that war and war crimes are not such terrible things as financial loss”, pleaded Ukrainian President Volodymyr Zelensky. It calls for total economic isolation from Russia, which Europe is not yet ready to accept.

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