The bite of economic sanctions
Dubai has emerged as a haven for wealthy Russians fleeing the impact of sanctions. The UAE has not put sanctions on Russia and has continued to provide visas to non-sanctioned Russians while many Western countries have restricted them. Property purchases in Dubai by Russians surged by 67% in the first three months of 2022.
The UK announced additional sanctions, banning the export of management consulting, accounting and PR services to Russia.
European Commission President Ursula von der Leyen announced the Commission’s proposals for a sixth package of EU sanctions:
crude oil imports from Russia would be phased out over six months and refined products by the end of 2022
oil service companies would be prohibited from working in Russia
any vessel registered under the flag of a Member State or owned by an EU citizen or entity would be prohibited from transporting Russian crude or oil products and there would also be a ban on providing any financial or other services for such transport
sanctions would be imposed on military officers involved in suspected war crimes in Bucha and Mariupol
three of the biggest Russian state-run broadcasters would be banned
the export of accountancy, legal and PR services to Russia would be banned
Sberbank and two other Russian banks that were initially allowed to remain on the SWIFT system when others were removed would now be removed
sanctions would be imposed on the head of the Russian Orthodox Church, Patriarch Kirill, who is a strong supporter of President Putin.
The oil sanctions are of particular importance - making it difficult for Russia to sell the oil it currently supplies to Europe to other countries would force Russia to shut down production as it does not have capacity to store unsold oil. There has been a shift in emphasis with sanctions designed to not only reduce the income that finances the war, but to do long-term damage to the Russian economy.
These proposals have to be agreed by EU governments amidst some pushback as sanctions begin to bite. Notwithstanding government concern, voters thus far continue to back sanctions despite the economic cost: a survey by Eurobarometer finds 80% support across the EU for sanctions against Russia (and 67% support for using EU money to purchase and supply military equipment to Ukraine).
There is concern about how Russia might respond to these sanctions. As reported last week, it has already cut off gas supplies to Poland and Bulgaria - might it do so to the likes of Germany and Italy, who are much bigger importers?
The idea of seizing sanctioned Russian assets to pay for the reconstruction of Ukraine is gaining traction. European Council President Charles Michel has made clear that it is extremely important to not only freeze assets but also to make it possible to make confiscated assets available for the rebuilding of Ukraine. He has asked the Council’s legal service to find a legal solution that would facilitate this.