Gazprombank and Russian diamonds in line for EU sanctions

Gazprombank could be a prime target in a new batch of European Union (EU) sanctions on Russia expected in response to Moscow’s mobilisation decree to conscript 300,000 reservists into the Russian army and referendums in areas the union sees as Ukrainian sovereign territory.

Imports of Russian diamonds, one of the country’s top ten of non-energy exports by value, may also be banned from Europe in the EU’s next sanctions package.

Support for more sanctions

European Commission (EC) President, Ursula von der Leyen, made it clear last week that additional European sanctions are called for on her visit to New York for the opening session of the UN general assembly.

“President Putin is showing his weakness now because what you see is that he plans to mobilise personnel that is less trained, less experienced, less motivated. And he wants to start sham referendum on Ukrainian sovereign soil, so I think this calls for sanctions from our side again,” she told the CNN news channel.

She said that EU sanctions had been successful in expressing Europe’s opposition to Russia’s actions in Ukraine, saying they had left its “industry in tatters” as well as Aeroflot largely grounded. The union’s refusal to sell key components to Russia’s defence industry such as semiconductors has compromised Moscow’s military capabilities too she said.

Gazprombank in target

The key bank for Russia’s energy conglomerates selling oil and gas into European markets, Gazprombank, may be barred from the Swift system in the next round of EU sanctions according to Euronews.

It is reporting that a joint proposal by Poland, Ireland, Estonia, Latvia and Lithuania to bar the bank from Swift is also pushing for a ban on the import of diamonds that originate or have been processed in Russia.

A subsidiary of Gazprom the state-owned energy company, Gazprombank has so far not been added to the EU sanctions list and has been allowed to stay connected to Swift, unlike ten Russian and four Belarusian banks already disconnected from the international payments platform.

Diamond imports

Transparency International (TI) is also calling for a European ban of imported Russian diamonds. In an open letter to the EC, it says banning the import of diamonds can be an additional step limiting Russia’s access to global markets and foreign currencies.

Russian diamond mining is concentrated in the hands of Alrosa Group, in which the Kremlin has a large stake. While the US has already restricted the trade of Russian diamonds by sanctioning Alrosa, the EU has not taken any action yet, even though Belgium is Russia’s primary destination for diamond exports, the letter adds.

The CNN report, EU’s Ursula von der Leyen proposes new round of EU sanctions on Russia, can be found here.

The Euronews report, Poland, Ireland and the Baltics push for EU sanctions on Gazprombank and Russian diamonds, can be found here.

Transparency International’s, Open letter: sanctioning Russian diamond imports, can be found here.

Categories: Trade Based Financial crimes News

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