It took a week to get here, but Western governments laid down their polka-dot guns and pulled out the financial howitzers against Vladimir Putin.
Wide-ranging new sanctions against Russia were announced on Saturday evening in a joint statement by the EU, UK, US and Canada.
After promising to “hit Russia very hard” with a barrage of sanctions, the UK’s first attempt at economic retaliation, presented to Parliament on Tuesday by Boris Johnson, was dismissed as the equivalent of a “punch in a shootout.”
Successive UK measures, announced on Thursday and Friday, were somewhat more significant, but far from inflicting serious damage. The measures taken by the United States and the EU have also lacked teeth, far short of the type of restrictions imposed on North Korea or Iran.
The UK has been pushing for more, joining Ukrainian leaders in calling for Russia to be kicked out of Swift, the main global payment system used by banks to move money across borders. Progress at the EU level has been hampered by concerns from Germany and Italy, both of which rely heavily on Russian gas imports to keep homes and factories powered. Hungary and France also resisted.
But as the existential threat of the capture of a European capital by Russian forces began to percolate, national leaders changed their positions, one by one. On Saturday, after a call with Ukrainian President Volodymyr Zelenskiy, Italy’s prime minister pledged full support for the EU line on sanctions, including Swift.
Shortly after, the first truly significant joint action was announced.
Some Russian banks will be kicked out of Swift, a first step to disconnect Russia from the international financial system. According to a German spokesperson, the banks concerned will be all those already sanctioned by the international community, as well as other institutions if necessary.
Restrictions are promised on the ability of the Russian central bank to spend its foreign currency reserves. This is an important step. Putin oversaw the hoarding of $500 billion in reserves, among the largest war chests held by a central bank in the world.
The EU will follow the UK in ending the sale of golden visas – a fast track to citizenship offered in exchange for cash. Cyprus, Malta, Portugal and the UK have sold residence to tens of thousands of Russians and other foreign nationals, with minimal checks to see if their wealth was obtained legitimately. The practice has been condemned by politicians across Europe as a national security risk, and its abolition will be welcomed by those concerned about rampant corruption.
A transatlantic task force will finally see the world’s largest democracies working together, across borders, to jointly freeze the assets of sanctioned individuals and companies. In another welcome move, the families and “enablers” of people on the sanctions lists will also be targeted.
Relatives and associates are often used to hold assets that their true owners would prefer to keep hidden, and penalties cannot be effective if they are excluded. The joint statement promises action against what the Kremlin’s top critic Bill Browder has described as the City of London’s “striped enablers” – the legion of lawyers, lobbyists, accountants and fund managers who have grown from commissions earned by helping to move fortunes acquired through corruption. of Russia and in the Western financial system.
There is no agreement yet on an end to Russian gas and oil imports. A Biden official has suggested payments for those exports could continue to flow through Swift, though the new measures, if passed, could prompt Putin to cut off supplies.
The devil, as always, will be in the detail of the laws enacted to support these actions, and the enthusiasm with which they are enforced.