Kaja Kallas, the EU's chief diplomat, said that on Tuesday, the EU proposed a 21st set of sanctions against Russia in response to its war in Ukraine. The package would target heavily Russia's banks, crypto networks, oil traders, and refineries, as well as?as well?as? drone production.

The new package proposes listing 170 people and entities. This includes close to 90 of the largest banks in one go, and would bring the total of listed banks up to more than 100. That's over half of the 213 international lenders that Russia has.

Banks will be subject to the full force of EU sanctions, including asset freezing, travel and transactional bans. On Wednesday, the package will be given to EU ambassadors for negotiation. Sanctions must be approved by?unanimity.

Western sanctions have already targeted Russia's banking sector and major Russian banks were cut off from SWIFT in 2022, a global system for secure financial payment instructions.

But, Russian companies are now using a wide network of smaller lenders in order to continue trading and evade the sanctions.

Kallas wrote in a blog post that he intended to strike a blow against the Russian financial sector by freezing assets of close to?90 bank and imposing additional transaction bans for over 30 banks from Russia and third countries.

Unnamed EU diplomatic sources said that the goal was to "weaken Russia’s financial system" and to encourage Moscow to negotiate with Ukraine a peace agreement.

The Russian economy grew by just 1% in 2014, down from 4.9% in 2024. Officials blamed high interest rates, Western sanctions, and the strong rouble.

The influential Russian think tank TsMAKP warned repeatedly of an impending banking crisis. However, the central bank has denied this.

TsMAKP stated in a note dated May 10, that "the banking crisis continues in a latent manner - due in part to the masking asset quality degradation through the restructuring overdue loan, as well the dominance by state-owned institutions."

Filipp Gabunia said that the deputy governor of Russia's central bank, Filipp, stated last week that there were no signs of a crisis in banking and that restructurings have stabilized.

CRYPTO MEASURES

The package includes a ban on transactions for 35 banks, four of which are located outside Russia. It also includes 11 crypto platforms to help Russia avoid Western restrictions in countries like third-world countries.

The package, according to Ursula von der Leyen, President of the European Commission, lays the foundation for future measures that will be more strict on crypto at the country level.

"... We will introduce the possibility of a complete third-country ban on crypto asset services. This will be a powerful deterrent to countries that host?platforms which help Russia evade sanctions," von der Leyen said.

Kyrgyzstan is the first country to be hit by EU's anticircumvention tool, in part because of its role in Russian crypto transactions. The 20th set of sanctions prohibited EU sales of metal cutting machines and telecoms equipment.

OIL PRICE CAPT FREEZE

The Commission wants to freeze oil prices at their current level for a period of six months to avoid Moscow receiving higher revenues due to the Iran War. The current price is $44,10, which is well below Brent futures that are trading at over $90 per barrel.

The listings also include oil refiners and traders from a third country. The Commission proposes to tighten restrictions for Russian LNG, such as tanker sales; list 30 additional vessels in Russia's Shadow Fleet; and expand listing criteria by including vessels involved in refuelling or offloading sanctioned vessels.

The package includes restrictions on imports of fish, as well as on import and exports of high-performance alloys that are critical to defence and aerospace. (Reporting and editing by Louise Heavens, Susan Fenton and Susan Fenton; Additional reporting by Andrew Gray and Gleb Brnski in Moscow and Brussels).

(source: Reuters)