President Barack Obama and the leaders of Germany, Britain, France and Italy agreed on a conference call last night to impose wider sanctions on Russia’s financial, defence and energy sectors.
EU ambassadors are meeting today and are expected to target state-owned Russian banks and their ability to finance Moscow’s faltering economy.
European Council President Herman Van Rompuy has written to EU leaders asking them to authorise their envoys to complete an agreement by the end of today. That would avoid the need for leaders to hold a special summit to approve the sanctions.
Under a blueprint produced last week, European investors would be banned from buying new debt or shares of banks owned 50 percent or more by the state.
This is a big deal and there are increasing signs of investors turning their back on Russia lock, stock and barrel. However, with its giant FX reserves, the central bank can provide dollars to fund external debt for a considerable period of time. It whacked up interest rates last week possibly to try and curb a new round of capital flight.