Sun, 22 May 2022

Energy supplies to Europe would be threatened if sector hit by financial measures

Germany has reportedly demanded that proposed sanctions against Russia over the crisis in Ukraine do not include restrictions on energy, insisting that the sector be exempted if measures are taken to block banks' access to US dollars.

That's according to Bloomberg, citing documents seen by the New York news agency.

The EU and the US are currently working on a package of measures designed to deter Russia from considering a military incursion into Ukraine, as Moscow stands accused of placing 100,000 troops on the border, with some claiming that the Kremlin is planning an attack. This claim has been repeatedly denied, but tensions remain at an all-time high on the frontier.

During discussions for potential measures against Moscow, Germany has reportedly insisted that, without an exemption for energy transactions, oil and gas supplies to Europe could be seriously threatened. These worries are also shared by some other countries, the newspaper claims, noting that a carve-out for energy could be included in the final agreed package, designed to be introduced in the case of an invasion.

A package of sanctions is being finalized by Washington and Brussels and is likely to include restrictions on Moscow's ability to exchange rubles into foreign currencies, and may also target trade with the West in specific sectors. However, the European Union's 27 members are yet to come to an agreement, with each having its own interests connected to the Russian economy. For example, Berlin is concerned about the potential impact on German financial systems if Russian assets are frozen and transactions are prohibited.

Earlier this month, German newspaper Handelsblatt reported that the EU and the US have refused to consider disconnecting Russia from the SWIFT international bank payment system, noting that it could destabilize financial markets and help create an alternative payment infrastructure that would no longer be dominated by Western countries.


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