There have been a number of reports in recent days that the European Union may ramp up sanctions against Russia following the continuation of the crisis in Ukraine and the Crimea.
While there were reports of the EU removing certain entities connected with former Ukraine President Victor Yanukovych’s inner circle from its sanctions list, there have been threats that more sanctions can come if the violence was to increase.
The Wall Street Journal this week reported that about $640 million in assets held by banks owned upstream by three of Russian President Vladimir Putin’s friends are effectively frozen in the United States. These holdings include significant amounts in banks such as Citibank and J.P. Morgan Chase, among other large companies. Nonetheless, there has been virtually no official action on Ukraine by OFAC since the issuance of three somewhat-boilerplate general licenses in late January, authorizing activities such as mail and communications and certain types of remittances.
Those who are monitor Russia have surely noticed the drop in the Ruble’s value versus some hard currencies such as the Dollar and even the Euro. Compounded with the drop in oil prices, this has been particularly significant. With Russia in a bind, will it weather extra sanctions or will it even want to take any step that could push the tide in the United States and Europe towards that direction?
The bigger question (at least for purposes of this blog) is what what OFAC and the EU could do to tighten the sanctions regime against Russia. If trends continue, one may expect to see further designations, and a tightening of restrictions on certain types of sensitive goods going to Russia. Payments may become particularly tougher. However, it does appear that the consensus is not quite there to take a large step at the time being.