E.U. Sanctions

From Austria with Love

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Austrian Chancellor Werner Faymann (R) receives Russia's President Vladimir Putin in Vienna June 24, 2014. Source: REUTERS
  • Why it matters

    Why it matters

    The decision to shield two Austrian banks from E.U. sanctions against Russia will likely help preserve stability in central Europe and avoid problems in the region’s banking sector.

  • Facts

    Facts

    • Economic punishment against Russia for its role in the Ukrainian conflict isn’t supposed to harm the countries issuing sanctions.
    • If the Russian banks were on the sanctions list, it would have sparked long lines of nervous depositors at branches and possibly a dangerous domino effect in central and eastern Europe.
    • Austria is deeply linked to Russia’s economy.
  • Audio

    Audio

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Oh, Vienna! Austria has convinced Brussels to temper its economic punishment against Russia for supporting separatists in the bloody Ukrainian conflict. The Russian banks VTB and Sberbank, which conduct their European business from Vienna, have been excluded from E.U. sanctions.

The special deal that Austria has negotiated for itself will not only please the Moscow bankers – several countries in central and eastern Europe also depend on the two Russian financial giants.

Specializing in traditional savers and borrowers, VTB and Sberbank have amassed deposits worth billions of euros in Austria, Germany, Hungary and across the Balkans. If the banks had been put on the sanctions list, it would have led to long lines of nervous depositors at office branches and possibly a dangerous domino effect. In light of the troubled financial sector in Austria and southeastern Europe, that would be sheer poison.

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