Europe Ready to Target Russian Companies With Sanctions

European Union leaders meeting in Brussels are preparing to go beyond the asset freezes and travel bans that have been levied against Russian and Ukrainian officials and instead begin targeting Russian companies, according to a leaked policy draft.

The decision would allow the European Union to go after "entities that are supporting materially or financially actions undermining or threatening Ukraine’s sovereignty, territorial integrity and independence," according to the memo obtained by the Financial Times and Bloomberg News.

If the measures outlined in the memo are fully implemented, Europe could also reduce economic cooperation between the bloc and Russia. The EU may freeze aid and stop funding new development projects, though not ones that support civil society groups, according to the draft. In addition, the draft, which could change, warns international banks not to finance projects in Crimea because the Ukrainian territory has been under Russian control since March.

The move represents a potentially significant escalation of pressure on Moscow because European leaders appear to have decided that Russian President Vladimir Putin hasn’t done enough to rein in pro-Russian fighters in eastern Ukraine. The tougher stance against Russia’s support of Ukraine’s separatists comes after nearly constant pressure from U.S. officials to get their European counterparts to be more aggressive. On Monday, July 14, the U.S. State Department released a list of evidence it says proves Moscow is still supplying Ukrainian militants with weapons, financing, and Russian fighters.

The strength of the expanded sanctions will depend on which companies the EU decides to target. It’s unclear yet whether the new measures will even go as far as the measures the United States has already put in place, which have, among other things, frozen the assets of scores of businessmen close to Putin and a handful of their companies. The EU list has not yet been released; in the past, the EU’s disclosures of its specific sanctions targets have lagged announcements of the broader shift in policy. The EU is not expected to target broad sectors of the Russian economy, which Washington has been threatening to do for months.

While the expansion of EU sanctions would be a win for Washington’s diplomatic efforts, it could also serve to put more pressure on Barack Obama’s administration to ratchet up its own response to Moscow. Top senators last week excoriated the administration for not acting on sanctions threats as evidence of Russia’s support of Ukrainian militants mounts. Tennessee Republican Bob Corker said the White House was acting as a "paper tiger" on Ukraine and "doing incredible long-term damage to our nation."