FACTBOX-How might West respond to Russia over Navalny poisoning?

Sept 3- Chancellor Angela Merkel has said Germany will consult its NATO allies about how to respond to findings by a German military laboratory that Kremlin critic Alexei Navalny was poisoned with a Soviet-style nerve agent. Russia is already under international sanctions, including over its annexation of the Crimea peninsula from Ukraine in 2014 and its…

Sept 3 (Reuters) – Chancellor Angela Merkel has said Germany

will consult its NATO allies about how to respond to findings by

a German military laboratory that Kremlin critic Alexei Navalny

was poisoned with a Soviet-style nerve agent.

Russia is already under international sanctions, includingover its annexation of the Crimea peninsula from Ukraine in 2014and its backing for rebels fighting pro-government troops ineastern Ukraine.

Moscow denies involvement in the incident in which Navalnyfell ill after boarding a flight in Siberia and Russianauthorities and doctors have said they could find no evidenceNavalny was poisoned.

Below are some measures that might be considered againstRussia, based on proposals mooted in previous cases when theWest considered sanctions against Russia. Some proposals wererejected out of concern for the economic harm they could alsoinflict on Western countries and companies doing business withRussia.

TARGETED TRAVEL BANS/ASSET FREEZES

Western countries could consider targeted sanctions onRussian individuals deemed to have been involved in Navalny’scase.

“I believe in targeted sanctions against some individuals,the question is who will be named responsible,” said YevgenyMinchenko, a political analyst familiar with Kremlin thinkingwho said he did not expect harsh new sanctions.

The European Union said on Thursday sanctions would bepossible only when it was established who was responsible forNavalny being poisoned.

The EU can also impose sanctions on people or entitiesdeemed responsible for the development or use of chemicalweapons, regardless of their nationality or location.

The EU and the United States already have travel bans andasset freezes in place against Russians accused ofresponsibility for grave human rights abuses, including the 2009death in prison of Sergei Magnitsky, a lawyer arrested afteraccusing Russian officials of tax fraud.

DIPLOMATIC EXPULSIONS

Britain and other countries expelled Russian diplomats afterRussian double agent Sergei Skripal and his daughter werepoisoned in the English city of Salisbury in 2018 with Novichok,the same nerve agent that was used against Navalny, according totoxicology tests conducted at the German military laboratory.

Britain blamed Russia for the Salisbury attack. Russiadenied the accusation and responded with tit-for-tat expulsions.

Some political figures favour tougher action than diplomaticexpulsions. Wolfgang Ischinger, chairman of the Munich SecurityConference and a former ambassador to Washington, saidexpulsions may be too soft a response in Navalny’s case.

ECONOMIC SANCTIONS

The EU already has sanctions in place on Russia’s energy,financial and arms sectors, and a ban on doing business withCrimea, over Moscow’s seizure of the peninsula.

Toughening such sanctions would require unanimity among theEU’s 27 member states. While some, such as Poland, are opencritics of Moscow, others, such as Hungary, might be lesswilling to back tougher economic sanctions against Russia.

NORD STREAM 2

Merkel faces calls, including from some members of her ownparty, to take punitive steps over the Nord Stream 2 pipelinethat is being built to carry natural gas directly from Russia toGermany. It is due to start operating early next year.

Punitive measures over the pipeline could include imposingpenalties on parties providing underwriting services, insuranceor reinsurance, and pipe-laying activities.

Some EU countries say the pipeline will undermine thetraditional gas transit state, Ukraine, and increase EU relianceon Russia for energy. The United States, keen to increaseshipments of liquefied natural gas to Europe, opposes thepipeline and has targeted some firms involved with sanctions.

But Merkel has been unwavering in her commitment to theproject and has made clear she in no hurry to act over theNavalny case, saying any response depends on Russia’s behaviour.

TURKSTREAM

Another option could be to take steps over TurkStream, apipeline project that will carry Russian natural gas to southernEurope through Turkey.

Russia is building TurkStream in two pipelines, the first ofwhich will supply Turkey and the second of which is to extendfrom Bulgaria to Serbia and Hungary.

Any action considered over TurkStream would be intended ineffect to suspend its further expansion to Europe.

The Russian foreign ministry has said that sanctions threatsagainst pipelines amount to “political pressure” and “unfaircompetition”.

SOVEREIGN DEBT

Another possible response that might be considered islimiting foreign investors’ ability to hold Russia’s sovereigndebt.

Non-residents hold 29.8% of OFZ rouble bonds, or slightlyabove 3 trillion roubles ($39.8 billion) as of Aug 1.

OFZ bonds are an important source of cash for statespending.

DISCONNECTING RUSSIA FROM SWIFT

Another possible step that could be considered isdisconnecting the Russian financial system from global SWIFTinterbank payments, which would make international financialtransactions nearly impossible.

Andrey Kostin, chief executive of Russia’s second largestbank, VTB, has said such a move would be comparable toa declaration of war.

($1 = 75.3548 roubles)(Reporting by Moscow bureau and Gabriela Baczynska in Brussels,Editing by Andrew Osborn and Timothy Heritage)

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