Sanctions on Russia must be extremely tough and comprehensive - Bank of Latvia governor

RIGA - Sanctions on Russia have to be extremely tough and comprehensive, Bank of Latvia Governor Martins Kazaks said in an interview with Latvia Radio on Friday. 

"The sanctions are part of assistance to the Ukrainians and ourselves. Sanctions will always be painful but they cannot compare to war. The sanctions on Russia therefore have to be very tough, they have to be comprehensive," Kazaks said. 

He also noted that the scope of the sanctions on Russia still can be expanded. "These are not yet the toughest sanctions - they still can and will be gradually increased," the head of the Latvian central bank said. 

Kazaks added that Western countries' reaction to Russia's aggression has been very fast - such sweeping Western sanctions have never before been adopted in a matter of days.  

Kazaks also indicated that Russia might also be disconnected from the financial sector, not just from the SWIFT messaging system. "SWIFT is just transaction matters and roundabout ways can be found sooner or later, for instance, Russia has already developed some  transaction systems, even though they may not be as modern, and transactions can be made also through China," the Bank of Latvia governor said.

As reported, Responding to Russia's invasion in Ukraine, EU leaders wrapped up an emergency summit early Friday with agreement to punish Moscow with "severe" sanctions targeting its financial, energy and transport sectors.

European Commission chief Ursula von der Leyen told a media conference afterwards they "will have maximum impact on the Russian economy and the political elite".

The summit started late Thursday, the day Russia started blasting military targets and sending tanks and paratroopers into its pro-Western neighbor Ukraine.

Ukrainian President Volodymyr Zelensky addressed the gathering by videolink, telling European presidents and prime ministers that "he does not know if he will be able to speak with us another time," Luxembourg's leader Xavier Bettel recounted as he left.

Von der Leyen said the packet of sanctions -- the second adopted this week by the EU -- is "targeting 70 percent of the Russian banking market, but also key state-owned companies including the field of defense".

She did not go into details, but a list drawn up by her commission, seen by AFP, proposed adding two Russian private banks -- Alfa Bank and Bank Otkritie -- to entities sanctioned by the EU.

It also called for Russians to be prohibited from putting deposits over EUR 100,000 in EU banks or from purchasing euro-denominated securities.

Von der Leyen said the measures "will increase Russia's borrowing costs, raise inflation and gradually erode Russia's industrial base".