It has taken a week to reach this point, but western governments have put down their peashooters and wheeled out the financial howitzers against Vladimir Putin.
Far-reaching new sanctions against Russia were announced on Saturday night in a joint statement from the EU, UK, US and Canada.
Having promised to “hit Russia very hard” with a barrage of sanctions, the UK’s first attempt at economic retaliation, presented to parliament by Boris Johnson on Tuesday, was dismissed as the equivalent of taking a “peashooter to a gunfight”.
Successive UK measures, announced on Thursday and Friday, were a little more meaningful, but a long way from inflicting serious damage. The steps taken by the US and the EU also lacked bite, falling well short of the kind of restrictions currently imposed on North Korea or Iran.
The UK has pushed for more, joining Ukraine’s leaders in calls to expel Russia from Swift, the main global payments system used by banks to make cross-border money transfers. Progress at an EU level was hampered by the concerns of Germany and Italy, both of which are heavily dependent on imports of Russian gas to keep homes and factories supplied with energy. Hungary and France were also resistant.
But as the existential threat of the capture of a European capital by Russian forces began to percolate, national leaders shifted their positions, one by one. On Saturday, after a call with Ukraine’s president, Volodymyr Zelenskiy, the Italian prime minister vowed to fully support the EU line on sanctions, including Swift.
Not long after, the first truly meaningful joint action was announced.
Selected Russian banks will be expelled from Swift, a first step in disconnecting Russia from the international financial system. According to a German spokesperson, the banks affected will be all those already sanctioned by the international community, as well as other institutions if necessary.
Restrictions are promised on the ability of the Russian central bank to spend its foreign currency reserves. This is an important step. Putin has overseen the hoarding of $500bn in reserves, among the largest war chests held by any central bank in the world.
The EU will follow the UK in ending the sale of golden visas – a fast-track route to citizenship offered in exchange for cash. Cyprus, Malta, Portugal and the UK have sold residency to tens of thousands of Russians and other foreign nationals, with minimal checks on whether their wealth was obtained legitimately. The practice has been condemned by politicians across Europe as a national security risk, and its abolition will be welcomed by those who worry about creeping corruption.
A transatlantic taskforce will finally see the world’s biggest democracies working together, across borders, to jointly freeze the assets of sanctioned individuals and companies. In another welcome move, the families and “enablers” of those on sanctions lists will also be targeted.
Relatives and associates are often used to hold assets their real owners would prefer to keep hidden, and sanctions cannot be effective if they are excluded. The joint statement promises action against what leading Kremlin critic Bill Browder described as the City of London’s “pin-striped enablers” – the legion of lawyers, lobbyists, accountants and money managers who have grown fat on commissions earned from helping move corruptly acquired fortunes out of Russia and into the western financial system.
As yet there is no agreement on ending imports of Russian gas and oil. A Biden official has suggested payments for these exports could continue to pass through Swift, although the new measures, if enacted, could prompt Putin to switch off the supply.
The devil, as always, will be in the detail of the laws enacted to support these actions, and in the enthusiasm with which they are enforced.