Russian military forces invaded Ukraine on 24 February as commanded by President Putin. In its efforts to avert this escalation by means of diplomacy before it was too late, Germany had repeatedly stated, along with its international partners, that such a step would be met with serious economic and financial sanctions. Together with its partners, Germany responded to this war which is in violation of international law by imposing sanctions which have in the interim been stepped up several times. The sanctions have been tightened in light of the brutality used by the Russian military against Ukraine and the large number of civilian victims. On 17 May 2022, Foreign Minister Annalena Baerbock declared:
These sanctions we have jointly imposed ... strike at the heart of the Kremlin’s power, so as to further weaken this war of aggression that is in violation of international law, and to make clear that we will in no way tolerate the breaching of international rules.
What sanctions have been imposed?
In response to Russia’s illegal invasion of Ukraine, the recognition, contrary to international law, of the so-called “People’s Republics” in eastern Ukraine and given the brutality used throughout the invasion, the EU has to date adopted six far-reaching packages of sanctions, in close coordination with its G7 partners. Numerous other European and non-European countries have also signed up to these.
Holding the Russian leadership to account
The decision to invade Ukraine was taken by the Russian Government under President Putin and by key decision-makers in the Russian regime. They face targeted sanctions for their part in this decision (as “listed persons”). Decision-makers in Belarus have likewise done much to support Russia’s illegal invasion and are therefore also subject to sanctions. The list includes almost 1000 people – from President Putin and his daughters, as well as Foreign Minister Lavrov, to members of Russia’s Security Council, high-ranking military officers and members of the Duma, along with important Russian oligarchs who give Putin and his entourage their economic backing. Furthermore, the list includes officers who were involved in the war crimes that were committed in Bucha. The listed individuals’ assets in the EU have been frozen, and it is forbidden to do business with them. In addition, most of them are banned from entering the EU. Furthermore, visa facilitation agreements for Russian delegations, members of parliament, diplomats and business people have been suspended, and other similar steps taken.
In addition, the EU has closed its air space to Russian traffic with the exception of humanitarian and diplomatic flights. Russian aircraft are prohibited from landing or taking off in the EU, and may not overfly EU territory.
The EU is also taking action to counter Russian disinformation and has therefore suspended broadcasting activities by several Russian state-owned outlets, including RT/Russia Today, Rossiya RTR and Sputnik. European companies are also prohibited from advertising on these channels.
Stopping the financing of the war and the Regime
Extensive financial sanctions have cut the Russian regime off from its reserves in Europe and from the European financial market. As well as banning transactions with the Russian central bank, trade in new Russian government debt has been prohibited on the European capital market, as has the granting of loans to the Russian state. A number of other carefully chosen Russian and Belarusian banks have also had their assets frozen and transaction bans imposed. In addition, these banks have been specifically excluded from the SWIFT system for international payments. Furthermore, Russian state enterprises are no longer able to issue securities on European exchanges. Selected Russian businesses and banks have been completely excluded from the European capital market through even further-reaching refinancing restrictions. Russian investors now have only very limited access to the European capital market. Because Belarus is actively supporting the Russian invasion, these financial sanctions were extended to cover Belarus on 9 March 2022.
The income of the Russian state is also restricted by far-reaching import bans imposed by the EU in March and April affecting, for example, iron and steel products, cement, glass, wood and alcohol. This includes an embargo on Russian oil and petroleum products (with the exception of pipeline imports) and a ban on Russian coal, which will take effect when transitional periods expire. Moreover, the brokerage, financing and insurance, as well as technical support for and transport of, Russian crude oil in third countries has also been banned. The bans impact annual imports to the tune of some 65 billion euro. Other measures in the transport sector further tighten these restrictions: ships flying the Russian flag are not allowed to call at European ports – unless they are carrying essential goods. Russian and Belarusian lorries are no longer allowed to use the European road network.
Russian companies can no longer participate in EU public tenders. Together with its partners, the EU has also suspended Russia’s most favoured nation status under WTO rules, which will make it possible to increase customs duties on imports from Russia.
The aim shared by all the measures is to spiral the costs of financing the war. The sanctions that have been imposed are particularly effective because they have been imposed by all G7 states together. Russia cannot evade the sanctions through recourse to other major markets. In this context, it was particularly crucial for Switzerland to sign up to the sanctions.
At the same time, the sanctions have been designed with the aim of not directly targeting the Russian civilian population. In spite of the broad financial and economic sanctions, humanitarian exceptions are allowed, for example, to the flight ban.
Denying access to Western know-how and products
Russia’s industry is dependent on Western technology and products to maintain manufacturing and not least for modernisation processes. In response to Russia’s aggression, exports in this field have been largely prohibited. Microchips and maritime navigation technology are among the products affected, as is some software, equipment for the oil and gas sector, for setting up LNG plants, precursors and machinery from various sectors and aviation technology, including aircraft. An export ban has also been imposed on aviation fuel and certain chemicals required for fuel manufacture. In addition, a far-reaching ban on investment in the Russian energy sector is now in place. The export of all dual-use goods – i.e. goods that could be used for either civil or military purposes – has also been banned. This ban applies to a number of Belarusian companies, as well. The Russian Government and Russian companies can no longer benefit from European expertise for their economic services in the form of, e.g., auditing or economic consulting.
These measures, too, are strengthened by equivalent steps taken by the other G7 states. Russia is thus left with no alternative markets on which to procure the listed products.