European Union curbed Russia’s access to bank financing and advanced technology in its widest-ranging sanctions yet over the Kremlin’s backing of the rebellion in eastern Ukraine.
EU governments agreed July 29 in Brussels to bar Russian state-owned banks from selling shares or bonds in Europe and restricted the export of equipment to modernize the oil industry, a key prop for Russia’s economy, an EU official told reporters. New contracts to sell arms to Russia and the export of machinery, electronics and other civilian products with potential military uses will also be banned.
“The political implications of the escalation in tensions are likely to cast a further chill over relations between Russia and the West,” Citigroup Inc. analysts including Eric Lee and Tina Fordham said in a note to clients before the EU decision. “Economic costs are starting to bite, but it could be a while before the economic consequences bear domestic political costs for Russia.”
Due to the reliance of many European countries on Russian oil and natural gas, the bloc stopped short of the full-scale commercial warfare that could damage its own economy, which is still shaking off the euro debt crisis. The calibrated blockade buried the notion of Russia as a “strategic partner” for the EU and risked retaliation by the Kremlin against European and U.S. companies active in the $2 trillion Russian economy.
The EU measures, endorsed by representatives of the national leaders, will take effect when the legal texts are published on July 31.