Austria is still “blackmailing” Ukraine using EU sanctions, the same way Hungary did — to protect a bank doing business in Russia.
When asked by press about Russia sanctions in Brussels on Friday (15 December), Austrian chancellor Karl Nehammer said he “welcomed” the EU summit communiqué.
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Raiffeisen Bank executives in talks with Kyiv at same time as EU summit (Photo: Valentina Pop)
The EU “welcomes the adoption of the 12th package of sanctions” on Russia, the communiqué also said.
But the warm words gave a false impression, because Nehammer also imposed a last-minute veto on the sanctions on Friday morning, which have not been legally adopted yet.
“They imposed a study reserve, which could be lifted on Monday or early next week,” an EU source said.
“EU [summit] conclusions are political statements, not legally binding decisions”, the source added.
A “study reserve” is when a national capital requests extra time to look at legal small print before signing an EU decision.
But this is also misleading, because Vienna isn’t studying anything.
Instead, the Austrian government is holding talks with Kyiv this weekend in a final effort to strong-arm Ukraine into delisting Austrian lender Raiffeisen Bank from its Sponsors of War register.
“It makes me sad to see Ukrainian lives put on one side of the scale and the commercial interests of an Austrian bank in Russia on the other side,” a Ukrainian contact said.
The 12th round of Russia sanctions was to impose an EU ban on imports of Russian diamonds, tighten EU exports of high-tech goods, and blacklist mercenary firms, according to a draft.
Raiffeisen Bank has 9,000 employees in Russia, where it does consumer banking, and where it made €2bn profit last year.
It is “beneficial [chiefly] to the Russian elites, as it allows them to continue transferring funds abroad”, after earlier EU sanctions disconnected most Russian banks from the Swift international-transfers grid, Russian financial consultant Ivan Fedyakov previously told this website.
Ukraine’s Sponsors of War list is meant to cause reputational pain for Western companies like this.
“Their blackmail won’t be successful,” a Ukrainian contact told EUobserver, saying the bank must take real steps to exit Russia if it wants to get off the hook.
It remains to be seen if Kyiv holds out.
But Nehammer’s “blackmail” recalls the playbook of Hungarian prime minister Viktor Orbán, who also held up the EU’s 11th round of Russia sanctions from June to October, until Ukraine delisted Hungarian bank OTP, despite its roaring trade in Russia.
And one side-effect of Austria’s tactics is that Raiffeisen Bank’s PR staff are now de facto conducting EU foreign policy.
The bank sent its PR chief, Paul Pasquali, to hold talks with Ukrainian officials on 8 November, for instance.
Raiffeisen Bank also wrote to Kyiv on 6 December seeking the delisting of five of its executives, but when Kyiv wrote back on Friday (15 December) asking for proof that they were no longer working on Russia, Nehammer’s new “study reserve” slammed down.
“They [Nehammer’s team] gave the green light on Thursday, then on Friday morning they reintroduced their reserve,” the EU source said.
When asked by EUobserver about the behind-the-scenes imbroglio, Austria’s EU-embassy spokesman said on Friday: “Austria fully welcomes the [summit] conclusions, which include the 12th package of sanctions”.
Nehammer’s office didn’t reply on Saturday.
When asked if these kind of tactics were ethical, Pasquali, from Raiffeisen Bank, also didn’t reply.
Meanwhile, if there is no Vienna-Kyiv deal next week, then the last chance to adopt the 12th round of Russia sanctions this year will expire, as EU institutions start Christmas holidays.
But if Nehammer and Pasquali think Kyiv’s backlist is bad for their image, then Vienna’s veto-tactics are making them look worse, for some EU diplomats.
“Austria has been quietly playing on Russia’s team for a long time — they’re a huge problem in the EU. Potentially explosive. To be watched closely,” a senior EU diplomat said.
“It’s not Austria learning from Hungary, but the other way around,” the diplomat said, adding: “I never understood why everyone forgives them [the Austrians] so easily, treats them with kid-gloves compared to Orbán, or other EU rogues”.
