EU Raises Pressure On Moscow With Tougher Sanctions
The European Union tightened sanctions on Russia on Friday over its role in the Ukrainian conflict--restricting access to financing for top Russian banks, defense, and energy firms, and freezing...
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EU Raises Pressure On Moscow With Tougher Sanctions - Video
In a marked escalation of their sanctions campaign against Russia, the United States and the European Union hit the Kremlin on Friday with new penalties for its actions in Ukraine, targeting favored financial, energy and defense businesses.
The Western governments took steps to cut the flow of capital to these enterprises and to deprive the Russian energy sector, the foundation of the country's economy, of Western know-how and technology it needs to develop new energy fields. The measures will also sting for U.S. energy companies that have been dealing with Russian firms.
The West sharpened sanctions because of Russia's "direct military intervention and blatant efforts to destabilize Ukraine," Treasury Secretary Jack Lew said in a statement.
But officials said the U.S. and Europe could roll back those penalties if Russia observed all the points of a proposed peace plan and respects the week-old cease-fire in Ukraine's embattled eastern region.
The Obama administration hit Russia's largest bank, Sherbank, for the first time and also sanctioned 10 government defense and energy firms. The European Union sanctions, in addition to its penalties on defense, energy and financial firms, extended asset freezes and travel bans on 24 individuals believed to be connected to Russia's aggression in Ukraine.
To dry up Western financing, both the U.S. and the EU have made it illegal for their companies to buy debt with maturity of more than 30 days from key Russian banks.
The U.S. sanctions bar American companies from providing goods or services for the deepwater, Arctic and offshore and shale energy projects of five Russian companies: Rosneft, Gazprom, Gazprom Neft, Lukoil and Surgutneftegas.
The goal is to "effectively shut down this type of oil exploration and production activity," said an official who declined to be identified under ground rules set by the administration.
Among the U.S. firms that could suffer from the move is ExxonMobil, which has been working on a joint venture with Rosneft in the Arctic.
Analysts said this round of sanctions is likely to be especially painful to the Kremlin because it hits energy projects that are key to replacing fast-depleting Russian energy fields and also goes after state-run defense firms the government has been aiming to expand.
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U.S., European Union target Russian energy sector with new sanctions
By Jenny Anderson
LONDON: Tremors over a possible breakup of the United Kingdom have been felt here in recent days, as markets gyrate and banks make contingency plans.
Yet as Scotland nears its vote on whether to be an independent nation, bankers here worry that a split might unintentionally set in motion a push for what could be a much uglier divorce: an exit of Britain from the European Union.
"There's a sense of, 'If it could happen in Scotland, it could it happen in the UK,'" said Chris Cummings, chief executive of TheCityUK, a lobbying group for the financial sector.
If an independent Scotland would be complicated, a Britain alone in Europe would be a complete mess, financial executives say.
"Certainly the more important of the two is the potential of Britain leaving the EU," said Brian Hilliard, the chief British economist at Societe Generale in London.
Britain, for many businesses, particularly financial services, is a gateway into the rest of the 28-nation European Union, a market of 500 million people, more than the United States and Japan combined. For businesses like Citigroup or Goldman Sachs, having a London office means having a passport for nearly all of Europe. Without that unfettered access, the free flow of capital, talent, and goods and services would have to be renegotiated.
"It is hard to be the gateway to the EU if you are not in the EU," Cummings said.
A diminished gateway status would hurt the financial industry, which accounts for 7 percent of Britain's gross domestic product and nearly 4 percent of jobs. Finance attracts more foreign direct investment than any other sector, and Britain attracts more foreign direct investment than any other member of the EU, according to TheCityUK.
Bankers worry that without the promise of all of Europe behind it, London - rivaled only by New York as the world's leading financial center - would not attract the same interest, and neither would Britain.
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If Scoltand goes, will Britain exit European Union too?
The European Union must take on its biggest banks so they wont spark another crisis, said Michel Barnier, the blocs outgoing financial services chief.
The largest banks will remain too big to fail, too complex to resolve and too costly to save if the European Union doesnt go beyond current financial laws, Barnier said in an interview yesterday in Milan. He called on the next European Commission, which starts its term on Nov. 1, to press ahead with new rules on bank structure to rein in these risks.
Priorities also include better oversight of shadow banking, central counterparties and benchmark interest rates, Barnier said. He urged the 28-nation bloc not to be complacent with the changes it has put in place over the past two years.
It is necessary to make Europe better, Barnier said.
Barnier weathered Europes biggest post-war financial crisis during his term as commissioner and has sought to reshape the blocks markets as his legacy. In January, he proposed a wide-ranging plan to break up the biggest banks in a bid to prevent trading activities from interfering with lending to the broader economy.
The plan would ban proprietary trading and set out EU-wide standards for splitting up the most systemically important banks, pushing certain kinds of derivatives and other trading activities into separately capitalized units.
Germany, France, Spain, Poland, and Denmark are among at least 10 countries that have challenged Barniers approach to separation of trading activities, with some warning that the plans dont leave supervisors enough flexibility to decide whether to go ahead with separation, and that the range of activities to be split off is too wide.
The separation plan has also hit a legal snag, after in-house lawyers for the EU said that some exemptions built into the proposals needed to be scaled back or the legislation as a whole made more flexible.
A number of nations want the proprietary-trading ban to be scrapped in favor of an alternative approach, on concerns that a ban could simply push the trading outside of the regulated banking industry, according to a document prepared by Italy, which holds the rotating presidency of the EU.
Barniers proposal is the point of departure, said Swedens Gunnar Hoekmark, appointed to take the lead for the parliament on the file. Lawmakers have said that they expect the discussions on the final form of the measures to last at least a year.
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Barnier Says Next Commission Must Tackle Too-Big-to-Fail Banks
BRUSSELS: The European Union, Russia and Ukraine agreed on Friday to delay the implementation of an EU-Ukraine free trade pact until the end of next year, EU Trade Commissioner Karel De Gucht said.
Ukraine will continue to enjoy privileged access to the EU market until that date, he said, but it will not have to cut duties on imports from the EU in return.
The move appears to be at least partly a concession to Russia, which fears the EU-Ukraine agreement will harm its industry.
It has been urging the EU to refrain from implementing the free-trade pact with Ukraine until its concerns over the agreement are addressed.
The EU-Ukraine free trade pact is the centrepiece of a wide-ranging political and trade agreement which has been at the heart of Ukraine's political crisis over the last year.
Moscow had threatened to introduce import tariffs on Ukrainian goods if Kiev went ahead with the planned trade agreement from Nov. 1.
Ukrainian President Petro Poroshenko had also asked the EU to consider allowing Kiev to delay reducing customs duty on EU exports coming into the Ukraine under the new pact, Interfax Ukraine news agency reported.
Allowing EU products more cheaply into the Ukraine market could initially create problems for the weak economy there.
"We will delay the provisional application of the (free trade agreement) until Dec. 31 of next year," De Gucht told a news conference after talks with Russian Economy Minister Alexei Ulyukayev and Ukrainian Foreign Minister Pavlo Klimkin.
The EU will extend temporary tariff cuts it granted to Ukrainian products earlier this year until the end of next year, De Gucht said.
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European Union delays Ukraine free trade deal implementation to end-2015