EU proposes 21st package of sanctions against Russia, targeting banks
Overview of the EU's Latest Sanctions Package
By Julia Payne
BRUSSELS, June 9 (Reuters) - The EU has proposed a 21st package of sanctions against Russia for its war in Ukraine, heavily targeting the country's banks and crypto networks as well as drone production, oil traders and refiners, EU chief diplomat Kaja Kallas said on Tuesday.
Details of the Proposed Sanctions
The new package will propose listing 170 individuals and entities. These include close to 90 banks - the biggest in one go - and would take the total number of listed banks to over 100, or more than half of Russia's 213 internationally connected lenders.
The banks will come under the full weight of EU sanctions including asset freezes, travel and transaction bans. The package will be presented to EU ambassadors on Wednesday for negotiations. Sanctions require unanimity to be adopted.
Impact on Russian Banking Sector
Western sanctions already heavily target Russia's banking system and its major banks were disconnected in 2022 from SWIFT, a secure global financial payment instructions system.
However, Russian companies now uses a broad network of smaller lenders to evade sanctions and continue trading.
"We intend to deal a heavy blow to Russia’s financial sector, imposing assets freezes on close to 90 banks and additional transactions bans on over 30 banks in Russia and other third countries," Kallas said in a post on X.
An EU diplomatic source, speaking on condition of anonymity, said the aim was to weaken Russia's financial system and incentivise Moscow to negotiate a peace deal with Ukraine.
Russian Economic and Banking Stability
Russian economic growth slowed sharply to just 1% last year, from 4.9% in 2024, which officials blamed on high interest rates, Western sanctions and a strong rouble.
Influential Russian think tank TsMAKP has repeatedly warned of a looming banking crisis, which the central bank denies.
"The banking crisis continues to unfold in a latent form - due to the masking of asset quality deterioration through the restructuring of overdue loans, as well as the dominance of state-owned credit institutions," TsMAKP said in a May 10 note.
Russia's deputy central bank governor, Filipp Gabunia, said last week the bank did not see signs of a banking crisis and restructurings had stabilised.
Crypto Measures and Third Country Involvement
CRYPTO MEASURES
The package proposes transactions bans on 35 banks - four of which are outside Russia - as well as 11 crypto platforms that help Russia evade Western restrictions including in third countries.
European Commission President Ursula von der Leyen said the package lays the basis for future tougher measures on crypto at country level.
"... we will introduce the possibility of a full third country ban for crypto asset services. It will act as a strong deterrent for the countries hosting platforms that help Russia evade our sanctions," von der Leyen told reporters.
Kyrgyzstan was the first third country hit by the EU's anti-circumvention tool in part for its role in Russian crypto transactions. The 20th package of sanctions banned EU sales of metal-cutting machinery and telecoms machines.
Oil Price Cap and Additional Restrictions
OIL PRICE CAP FREEZE
The Commission proposes to freeze the oil price cap at its current level for six months to avoid rewarding Moscow with higher revenues thanks to the Iran war. The current level is $44.10, well below Brent oil futures which are trading above $90 a barrel.
In addition, the listings include a third country oil refiner and oil traders. The Commission proposes to tighten restrictions on Russian liquefied natural gas (LNG), such as tanker resales; list 30 more vessels in Russia's shadow fleet; and expand the listing criteria to vessels involved in refuelling sanctioned ships or offloading cargo.
The package also includes import restrictions on fish for the first time as well as import and export restrictions on high-performance metal alloys critical for defence and aerospace.
Reporting and Editorial Credits
(Reporting by Julia Payne, additional reporting by Andrew Gray in Brussels and Gleb Bryanski in Moscow; Editing by Louise Heavens and Susan Fenton)
