EU backs ‘massive and targeted’ sanctions to hit Russian economy

EU leaders backed a far-reaching package of sanctions targeting Russia on Thursday night following President Vladimir Putin’s invasion of Ukraine, as the bloc faces the biggest security threat in Europe since the second world war.

The proposals would freeze some transactions with a wide range of Russian banks, bar a number of state-owned companies from launching new listings on stock exchanges in the bloc and stop Russian nationals from making big deposits in EU banks.

The measures would also ban sales of aircraft and jet parts to Russia, block the sale of equipment needed to upgrade oil refineries and suspend visa-free travel for Russian diplomatic passports holders.

The bloc is discussing further measures as it seeks to ratchet up the pressure on Putin after Russian forces moved into Ukraine.

“We will hold the Kremlin accountable. The package of massive and targeted sanctions European leaders approved tonight clearly demonstrates that, ”said Ursula von der Leyen, European Commission president, after the meeting. “It will have a maximum impact on the Russian economy and on the political elite.”

Diplomats will work through detailed legislation with the aim of getting the package enshrined in law as soon as Friday. The Russian foreign ministry has pledged to respond “harshly” to EU sanctions.

Von der Leyen said the measures would be comprised of five “pillars” targeting the financial sector – with 70 per cent of Russia’s banking market affected – as well as energy, transport and visa policy. A set of export controls would also hit the country’s high-tech sector, undermining its ability to build a “prosperous future”, she added.

According to plans seen by the Financial Times, the measures would extend the list of Russian banks blocked from EU financing to Alfa-Bank and Bank Otkritie, two private lenders, on top of five state-owned institutions. Lending and the purchase of securities would be prohibited in a series of state-owned Russian enterprises, including companies in the aerospace and defense sector, shipping and shipbuilding.

Russians would not be able to make any new deposits of more than € 100,000 in EU banks.

The measures also contained a wide-ranging regime of export controls on goods that can be used by the military as well as an assortment of advanced technology items including electronics, sensors, telecommunications, marine applications and lasers.

The EU is working on further measures to target individual oligarchswhich will require legal changes that would allow it to act against a broader range of people.

Emmanuel Macron, France’s president, who held a heated conversation with his Russian counterpart on Thursday, said his government would soon introduce its own measures on individuals and assets. The EU package was an initial response that would inflict a “severe cost” on Russia, he added, warning that Putin wanted to bring Europe back to an era of “empire and confrontation”.

The EU has also demanded a round of sanctions against Belarus, which permitted Russian troops to operate from its territory, amid complaints from Baltic states that the existing regime contained too many loopholes.

Mark Rutte, the Netherlands’ prime minister, said the sanctions were the toughest he had witnessed in more than a decade in office. “This is already a huge package – a maximalist package [the likes of which] I haven’t seen since I’ve been part of sanctions discussions, ”he told reporters.

The EU’s measures, which have been in development for months in conjunction with the US, UK, Canada and other allies, did not directly target Putin or Russian foreign minister Sergei Lavrov, diplomats said.

Nor did they cut Russian banks from the Swift international payments system, although some member states are pushing for this to be discussed as part of further penalties. “You have to keep something up your sleeve,” said one official.

EU leaders also considered the bloc’s wider response to the attack, including the evolving humanitarian and refugee crisis on its borders. Romania has reported that thousands of people have lined up at the country’s checkpoints with Ukraine. Poland and Hungary also reported an increase in arrivals.