The European Commission has published a new strategy to strengthen Europe’s financial system, including measures to tackle the impact of ‘unlawful’ unilateral sanctions imposed by ‘third-country partners’.
The commission’s proposals “aim to better enable Europe to play a leading role in global economic governance, while protecting the EU from unfair and abusive practices.”
The strategy contains several actions to mitigate the impact of sanctions imposed by non-EU countries .It follows a report from the European Parliament in November raising concern about the impact of US sanctions on Iran, Cuba and Russia on EU businesses.
The strategy will see the European Central Banks and supervisory authorities carry out an analysis of vulnerabilities regarding the ‘”unlawful extraterritorial application of unilateral measures by third countries” and take action to address vulnerabilities found.
The commission will explore ways to ensure the uninterrupted flow of essential financial services, including payments, with EU entities or persons targeted by third-country unilateral sanctions. It will also set up a working group to look at technical issues related to the transfer of financial contracts denominated in Euro or cleared outside the EU to central counterparties located in the EU.
“There are a few EU-based financial market infrastructures with global operations that provide depository and messaging services”, the European Commission said in a strategy Q&A response on its website yesterday.
“Their international operations by definition make them subject to foreign laws and policies. This also makes them vulnerable to disruptive actions by third countries, including through the unlawful extraterritorial application of unilateral sanctions.
“It is important for the EU to preserve the global reach of these infrastructures, while safeguarding the open strategic autonomy of the EU.”
The strategy also seeks to promote the uniform implementation and enforcement of the EU’s own sanctions. It pledges to develop a database to aid effective reporting and exchange of information and will “ensure that EU funds provided to third countries are not used in violation of EU sanctions”.
A dedicated system allowing for the anonymous reporting of sanctions evasion, including whistleblowing, would also be set up under the plan.
The strategy also includes measures to promote an international role for the Euro, by supporting the development of Euro-denominated instruments, and bonds.