Selected Russian banks are banned from global payments
system, while Russian central bank will find it harder to spend $500bn war
chest
Juliette Garside
@JulietteGarside
Sun 27 Feb 2022 01.42 GMT
It has
taken a week to reach this point, but western governments have put down their
peashooters and wheeled out the financial howitzers against Vladimir Putin.
Far-reaching
new sanctions against Russia were announced on Saturday night in a joint
statement from the EU, UK, US and Canada.
Having
promised to “hit Russia very hard” with a barrage of sanctions, the UK’s first
attempt at economic retaliation, presented to parliament by Boris Johnson on
Tuesday, was dismissed as the equivalent of taking a “peashooter to a
gunfight”.
Successive
UK measures, announced on Thursday and Friday, were a little more meaningful,
but a long way from inflicting serious damage. The steps taken by the US and
the EU also lacked bite, falling well short of the kind of restrictions
currently imposed on North Korea or Iran.
The UK has
pushed for more, joining Ukraine’s leaders in calls to expel Russia from Swift,
the main global payments system used by banks to make cross-border money
transfers. Progress at an EU level was hampered by the concerns of Germany and
Italy, both of which are heavily dependent on imports of Russian gas to keep
homes and factories supplied with energy. Hungary and France were also
resistant.
But as the
existential threat of the capture of a European capital by Russian forces began
to percolate, national leaders shifted their positions, one by one. On
Saturday, after a call with Ukraine’s president, Volodymyr Zelenskiy, the
Italian prime minister vowed to fully support the EU line on sanctions,
including Swift.
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Not long
after, the first truly meaningful joint action was announced.
Selected
Russian banks will be expelled from Swift, a first step in disconnecting Russia
from the international financial system. According to a German spokesperson,
the banks affected will be all those already sanctioned by the international
community, as well as other institutions if necessary.
Restrictions
are promised on the ability of the Russian central bank to spend its foreign
currency reserves. This is an important step. Putin has overseen the hoarding
of $500bn in reserves, among the largest war chests held by any central bank in
the world.
The EU will
follow the UK in ending the sale of golden visas – a fast-track route to
citizenship offered in exchange for cash. Cyprus, Malta, Portugal and the UK
have sold residency to tens of thousands of Russians and other foreign
nationals, with minimal checks on whether their wealth was obtained
legitimately. The practice has been condemned by politicians across Europe as a
national security risk, and its abolition will be welcomed by those who worry
about creeping corruption.
A
transatlantic taskforce will finally see the world’s biggest democracies
working together, across borders, to jointly freeze the assets of sanctioned
individuals and companies. In another welcome move, the families and “enablers”
of those on sanctions lists will also be targeted.
Relatives
and associates are often used to hold assets their real owners would prefer to
keep hidden, and sanctions cannot be effective if they are excluded. The joint
statement promises action against what leading Kremlin critic Bill Browder
described as the City of London’s “pin-striped enablers” – the legion of
lawyers, lobbyists, accountants and money managers who have grown fat on
commissions earned from helping move corruptly acquired fortunes out of Russia
and into the western financial system.
As yet
there is no agreement on ending imports of Russian gas and oil. A Biden
official has suggested payments for these exports could continue to pass
through Swift, although the new measures, if enacted, could prompt Putin to
switch off the supply.
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