The European Union (EU) had a vigorous early response to Vladimir Putin’s aggression in Ukraine, aimed at disrupting Russia’s financial system and economy. Ending EU imports of Russian hydrocarbons would be a powerful next step and is an absolute priority. But other actions can and should be taken now while an oil and gas ban is being debated. Specifically, the EU should extend harsh sanctions to most or all of the largest Russian banks, including the largest one that plays a central role in Russia’s financial system, Sberbank. There is no good reason for the EU not to do so immediately.
On April 6, the United States Treasury announced full “blocking” sanctions on Sberbank and on Alfa-Bank, Russia’s fourth-largest bank, meaning US entities cannot conduct any transactions with them, and their US assets are frozen. Together with previous actions announced on February 22 and February 24, this action largely or completely prevents six out of Russia’s top 10 banks, representing more than 60 percent of total Russian banking assets, from conducting any transactions subject to US jurisdiction. While the United States could do even more, its actions are much more than equivalent EU actions. Of those same top 10 banks (leaving aside the Central Bank of Russia), the EU has blocked only four (not including Sberbank and Alfa-Bank), adding up to only a quarter of total Russian banking assets, as illustrated in the figure.