Russia sanctions will cost City millions

Europe and the US will announce co-ordinated sanctions today to hurt the Russian economy and target allies of Vladimir Putin in a major escalation of pressure on Moscow.
Britain will also send more than 1,300 troops armed with tanks to join a training exercise at Nato’s eastern border in Poland. The move is designed to reassure allies in Eastern Europe, but the stark return to Cold War tactics will further inflame tensions in the region.
As the crisis over Russia continued to grow yesterday, David Cameron took part in a rare five-way video conference call with President Obama, the German chancellor Angela Merkel, France’s president François Hollande and Matteo Renzi, the Italian prime minister. The group vowed further tough action after agreeing Russia is failing to take the necessary steps to de-escalate the situation in eastern Ukraine.
Intelligence officials say that Moscow is continuing to support Russian separatists, who are blamed for downing Malaysian Flight MH17 nearly two weeks ago, and has not stopped the flow of weapons across the border since the crash.
“Despite numerous calls made to President Putin, [the five leaders] regretted that Russia did not effectively pressure the separatists into negotiating or take concrete measures . . . to ensure control of the Russian-Ukraine border,” a statement posted on the French Presidential website said last night.
The EU will confirm today that it is moving to “level three” sanctions, which target entire sectors of the Russian economy, a significant step which Mrs Merkel rejected as unnecessary the day after MH17 came down.
The announcement will see a ban on EU funding for Russian banks, forcing Moscow to step in at great cost, a bar on the export of technology to support the energy industry and a new embargo on future arms sales and goods which could be used by the Russian military.
The curbs to the Russian financial sector are likely to cost the City of London hundreds of millions of pounds, although EU leaders have been at pains to stress the burden is being shared equally across Europe.
Germany’s high-tech energy exports to Russia are five times those of the UK while France’s arms exports are worth almost ten times those of Britain.
EU ambassadors are also finalising the list of “Kremlin cronies” who will face restrictions, on top of the 87 people and 20 organisations already subject to EU sanctions. Discussions have dragged on longer than expected and the list is expected to be “tiny”.
No 10 said last night that the co-ordinated move, an unusual EU-US show of solidarity, was a significant step forward and had taken considerable negotiation over the previous ten days. Germany’s change of attitude on the issue has been regarded as vital.
Michael Fallon, the defence secretary, hinted at a possible further expansion of Nato activity along its eastern flank, with Nato members due to meet in the coming weeks at a two-day summit to be hosted by Mr Cameron in Newport, southeast Wales.
The Ministry of Defence said that it would send a full battle group of 1,350 military personnel, equipped with more than 350 armoured and other vehicles to take part in Exercise Black Eagle in October. It is understood that about 20 tanks will be included in the deployment.
The move marks Britain’s largest commitment to the region since 2008.
Typhoon jets are already taking part in a Nato air policy mission, protecting the skies over the Baltic states of Lithuania, Latvia and Estonia. A company of British troops also took part in a military exercise in Estonia in May.