Ukraine crisis Q&A: The effects of sanctions as Crimea tensions continue


Charlotte McDonald-Gibson
Friday 21 March 2014 20:15

Q. How many people are now under sanctions?

A. Washington and the European Union have over the last two days expanded the number of Russians under travel bans and visa freezes. The initial list revealed by the US on Monday targeted four Ukrainians and seven Russians, including some top aides to Vladimir Putin. At that point, the EU blacklisted eight Ukrainians and 13 Russians, concentrating their sanctions on lower-level figures with direct involvement in the military moves and annexation of Crimea.

On Thursday night the EU added more politicians and Dmitry Kiselyov, the head of the Russian state news agency who a few days ago warned that Russia could turn the US into “radioactive ash”.

The US, however, went even further, adding 20 more names and hitting the oligarchs who provide “material support” to the Russian government. They included the Kremlin banker Yuri Kovalchuck and billionaire businessmen Arkady and Boris Rotenberg, brothers whose ties to Putin extend to being his judo sparring partners. A bank, Rossiya, was also put under sanctions. There is substantial cross-over between the EU and US lists, with Deputy Prime Minister Dmitry Rogozin and Putin aides Sergey Glazyev and Vladislav Surkov on both lists.

Q. How will the individuals be affected?

A. People on the EU sanctions list will not be able to travel to the bloc, or access any cash, stocks, shares or other assets in financial institutions in the European Union. Property they own in the EU cannot be sold or rented. EU companies cannot carry out any business transactions with the individuals.

The US sanctions are very similar, and the impact was already being felt yesterday. Visa and MasterCard stopped providing services to Rossiya and SMP, a bank owned by the Rotenberg brothers, meaning account holders can no longer use their cards. Russian stocks were down and credit agencies put the country on notice in response to the measures.

Q. What has Russia’s reaction been?

A. Soon after Washington unveiled its updated list on Thursday, Putin announced entry bans on nine American politicians including House Speaker John Boehner and five US senators. Russia’s foreign ministry had earlier this week vowed retaliation for the EU measures. The statement did not specify what this might be, but many Eastern European nations rely on Russian oil and gas, and there are fears the supply could be cut.

Q. What effect will Russia’s moves have?

A. The travel bans were met with bemusement from the US, as none of those listed appear to have any assets in Russia or were planning on holidaying there. John McCain tweeted: “I guess this means my spring break in Siberia is off, my Gazprom stock is lost, and my secret bank account in Moscow is frozen.” Any halt of energy supplies, however, would have more serious consequences for Europe’s economies and would not be taken so lightly.

Q. What about more punitive economic sanctions?

A. Both the US and EU announced their new sanctions with the warning that worse will come if Russia makes any moves to further destabilise the situation in Ukraine.

The EU leaders’ communiqué did not spell out exactly what those “further steps” might be, but David Cameron said the movement of any troops outside Crimea and further into Ukraine could be a trigger for harsher sanctions. These could include an arms embargo, bans on importing Russian gas and oil, and restrictions on financial services. The problem is the impact that would have on Europe’s economies, which would all be differently affected depending on what sector is sanctioned.

With this in mind, the EU heads of state have tasked the bloc’s administrative arm with investigating and proposing some options for sanctions which would evenly share the burden.

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