posted on Jan, 28 2015 @ 09:18 PM
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
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
- 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
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.