Austria challenges Ukrainian blacklist to safeguard business ties with Russia

Austria is making a diplomatic move to have Raiffeisen Bank International, the largest Western bank in Russia, removed from a Ukrainian blacklist in exchange for endorsing new European Union sanctions against Russia, Reuters reported.

The manoeuvre highlights Austria’s economic connections with Russia, the bank’s determination to sustain its lucrative business in the country, and a diminishing Western effort to isolate Moscow.

Austria and Raiffeisen are pushing for the bank’s removal from a Ukrainian list termed “international sponsors of war,” which aims to publicly shame companies engaged in business with Russia, implicating support for the war effort through activities like tax payments. Despite Austria’s public support for Ukraine, several officials express reluctance to sever decades-old ties with Russia, believing in the possibility of restoring relations.

In October, Austria’s Foreign Minister, Alexander Schallenberg, openly criticised the blacklist as arbitrary during a European ministers’ meeting in Kyiv, as reported by a person briefed on the discussions. Raiffeisen remains the sole Austrian company on the contentious list. Austrian officials have conveyed their concerns about the list in Brussels, raising the issue at meetings with EU officials and diplomats in recent weeks.

Bank representatives have engaged with Ukraine’s National Agency of Corruption Prevention, responsible for the list, to explore avenues for Raiffeisen’s removal. While some companies, like Hungary’s OTP Bank, have been successfully delisted due to government intervention, this move has displeased Austrian officials and Raiffeisen.

A Raiffeisen spokesperson expressed dissatisfaction, stating, “We find it unfair that we are on the list.” The Austrian chancellery acknowledged the presentation of legal documents related to EU sanctions but refrained from providing further comments.

Raiffeisen’s presence in Russia underscores the deep economic ties between Austria and Russia, facilitated by Russian gas pipelines and financial connections. Austria’s lobbying efforts, echoing Hungary’s actions, risk undermining Europe’s unity on the Ukrainian issue.

While the Ukrainian blacklist lacks legal standing, its symbolic importance adds pressure on Raiffeisen to withdraw from Russia. The bank has expressed willingness to exit Russia, but concrete actions are yet to materialise. Raiffeisen had planned to spin off its Russian business, facing international regulatory pressure. Despite internal divisions within Raiffeisen’s management and among the controlling Landesbanks, key Austrian officials are staunchly supporting the bank, integral to the country’s economy.

Raiffeisen, with approximately 2,600 corporate customers, 4 million local account holders, and 10,000 staff in Russia, has become a litmus test for Western resolve to sever ties with Russia. Russian authorities have signalled a desire for Raiffeisen to stay, citing its role in facilitating international payments.

(With inputs from Reuters)

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