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29 Jan, 2015 12:38

EU to tighten noose on Russia, expected to extend sanctions

The EU is expected to extend and add new sanctions against Russia Thursday. They could include blocking Russia from the SWIFT global payment network, or further actions to block Moscow from Western lending.

Further sanctions against Russia will be revealed later Thursday, when EU foreign ministers meet in Brussels.

The EU is worried by the recent gains by anti-Kiev rebels, and the 30 civilian casualties from a rocket attack in Mariupol last weekend, which both the anti-Kiev rebels and governments forces blame each other for. This was the latest surge in violence in Ukraine since the September ceasefire.

READ MORE: E. Ukraine militia denies shelling Mariupol, accuses Kiev of provocation

The most likely outcome will be an extension of current measures until September 2015, according to Reuters, which has seen a draft of the final resolution. If SWIFT, the Society for Worldwide Interbank Financial Telecommunication (SWIFT), is turned off in Russia, it would instantly cut off EU-sanctioned banks from global finance. SWIFT is the world's biggest electronic payment system, processing trillions of dollars daily. Similar action was taken with Iran in 2012 to pressure Tehran into nuclear talks. A 3-day notice was given before the designated banks were cut-off entirely from SWIFT services.

Russia launched a 'SWIFT alternative' in December.

The Foreign ministers are likely to leave the final decision on widening the sanctions to national leaders who will meet at a follow-up summit on February 12.

Russia has vowed to respond economically to any further sanctions, and on Monday Prime Minister Dmitry Medvedev warned the response could be “unlimited.”

READ MORE: Russian PM vows ‘unrestricted’ response if banned from SWIFT payment system

View image | gettyimages.com

States split

A majority of EU members are ready to levy new sanctions against Russia, as they consider the anti-government rebels in Kiev are not abiding by the ceasefire agreed to in September. However, a minority of countries staunchly oppose the political and economic standoff with Russia, as it further complicates EU growth recovery.

The new leadership in Greece has openly called for an end to Russian sanctions, and may veto any future sanctions against Moscow.

In August, Moscow banned agriculture imports from the EU in retaliation to sanctions that targeted the financial and energy sectors in the Russian economy.

READ MORE: Russia bans agricultural products from EU, USA, Australia, Norway, Canada

Sanctions may cost the EU over €16 billion a year, according to estimates. Russia was Germany’s 7th largest export market according to the German statistics service. In 2015, German exports to Russia could drop 15 percent, or by €4 billion, the head of Germany’s Chamber of Industry and Commerce, Volker Treier told Reuters on Thursday.

Like it or not, the EU has to decide to suffer with the impact further #sanctions against #Russia will have on their economies. 1/2

— Nina Ivanovna (@ninaivanovna) January 27, 2015

Russia has said it may resume trade on an individual basis with France, Hungary Italy, Denmark, and the Netherlands.