US sanctions against Russia could hit the EU, too

The US sanctions against Russia are not as harmless as they seem. They target the market for Russian government bonds – and could be extended to European companies at any time. Deadline: 14 June.

As of this date, American banks and financial firms will be prohibited from buying new debt instruments from Russia. Old government bonds are not affected for the time being, writes the “New York Times”. However, that could come at any time.

The ban could also be extended to foreign – i.e. European – banks.

But it does not stop American institutions from dealing in previously issued Russian bonds. And it does not, for now, apply to foreign banks or investment firms — the way the United States extended the reach of sanctions on Iran.

New York Times

The sanctions against Iran are seen as a “model”. There, the USA has also forbidden European companies to invest under threat of punishment. The EU has not managed to do anything to counter this.

It is all the more astonishing that the EU is joining the Russia sanctions. Don’t they know that US President Biden is threatening to tighten them even further – and does not rule out “extraterritorial sanctions”?

These would then also affect EU companies. This is already the case with the sanctions against the Nord Stream 2 gas pipeline.

There, the German government is still resisting – but in the case of the new anti-Russia sanctions, it has already given up any resistance…

P.S. By the way, most Russian government bonds are held by domestic investors. Therefore, the US sanction does not (yet) hit the economy to the core. But a tightening is already in place, as described above.

This post was first published on the Blog “Lost in EUrope”. More posts here