G7 finalizes economic and financial sanctions on Russia

Efficient, fast and large scale. The three keywords define the sanctions imposed on Russia by Western democracies for military aggression in Ukraine. At an extraordinary meeting on Tuesday, the G7 finance minister welcomed the first impact of various announcements of sanctions since last Thursday in front of Ukrainian counterpart Serhiy Marchenko.

With the closure of the Moscow Stock Exchange by March 5th and the collapse of the ruble in the foreign exchange market, these sanctions have already had a major impact on the Russian economy. “It is important that the reduction of the activities of the Central Bank of Russia is already more effective than expected,” said German Treasury Minister Christian Lindner, who will chair the G7 this year in Berlin. “The ruble is in free fall and the battlefield of Vladimir Putin is seriously affected. This measure has a limited impact on us, but has the greatest impact on Russia. Other technologies Questions will be explained soon. »»

Technical details

In fact, much remains to be done in detail to make all planned measures effective. Start by excluding Russian offices from Swift’s financial information transmission network. The exact list of related establishments is under finalization. This exclusion does not prevent the effective transfer of capital from one bank to another, but it does significantly hinder operations.

In 2019, when some Iranian banks were shut down from the network, “in fact, after a while we found that commerce was completely shut down,” Bercy emphasized. This exclusion of Russian banks will inevitably have an impact at the international level. However, the European countries that were the source of the proposal fully envision them.

Similarly, the Minister is working hard to catalog the assets and assets of approximately 488 Russian entities and 26 oligarchs subject to these measures. “Don’t hesitate to add names as needed,” says one Bercy. In France, the services of the Ministry of Finance, the Directorate General of Finance and Tracfin are set up to track buildings, financial assets and yachts, and especially to seize them. “We are working closely with the Ministry of Justice to see what the means of seizures are,” says Bercy. Asked about the possibility of seizure of paintings from the Morozov collection on display at the Louis Vuitton Foundation, Bercy shows that these items are not within the framework of European measures.

Inflation is skidding

In the morning, the French Finance Minister evoked a “complete economic and financial war” against Russia and regretted “inappropriate” terms that violated Paris’s “de-escalation strategy” before returning to his remarks. did. Invasion. Russians from Ukraine. But the G7’s western democracy, like Vladimir Putin, has all the intent to disrupt the Russian economy. Conflicts affect the economies of developed countries.

Given the rise in commodities and energy prices, the resurgence of inflation is very realistic. Inflation in Italy reached 5.7% in February, the highest level since 1995. In Germany, it was 5.1% in the same month. France is considering extending the tariff shield on energy prices. “The subject of similar support measures at the European level should be discussed at the Ecofin Council on Wednesday,” we slipped into Bercy.

The Ukrainian crisis will undoubtedly affect the post-pandemic economic recovery in Europe. In this regard, Italy wants to extend the suspension of the European Stability and Growth Pact (PSC). However, in Paris, it is argued that the current situation is not comparable to that in the midst of a pandemic crisis. The European Commission must announce its 2023 proposal in this area this Wednesday.