Good morning. Allied foreign ministers are meeting both at the Nato headquarters and at the European Council today to assess the sanctions imposed against Russia and to discuss their implementation and potential further measures down the line. The gatherings come after another brutal day of attacks on Ukrainian cities and Vladimir Putin vowing to continue the assault until he wins the war.

With the number of Ukrainian refugees abroad now having passed the 1mn mark, we’ll also explore a request from several EU lawmakers for the European Central Bank to open a swap line for the Ukrainian currencyto help people fleeing to EU countries convert their savings into euros.

Digesting sanctions

The EU’s sanctions conveyor belt has slowed in the past 24 hours as member states begin to take stock of what they have implemented, writes Sam Fleming in Brussels.

Since Wednesday last week, the EU has pushed through sanctions on dozens of individuals, including Vladimir Putin and some of his closest oligarch allies, as well as on seven Russian banks, the country’s air transport sector, the high-tech industry and sovereign debt. In arguably the most dramatic move of all, it has frozen the assets of Russia’s central bank.

It has also hit Belarus’s key raw materials exports, closing loopholes on existing potash sanctions and blacklisting senior military personnel.

These actions have been closely co-ordinated with moves by G7 allies — although there are clear differences, including with the UK, which despite its rhetoric has been less aggressive in hitting top oligarchs so far.

The question, as foreign ministers gather today for talks with Antony Blinken, US secretary of state, among others, is how rapidly to drive towards fresh measures, and it is here that member states divide.

Some argue for a breather, as capitals assess the damage to Russia’s economy and to their own business sectors. They also want to turn more attention to enforcing the expansive new sanctions regime and, in particular, tracing oligarchs’ assets. Other challenges include implementing the EU ban on Kremlin-controlled media outlets Russia Today and Sputnik, which one diplomat said was particularly difficult.

“We have been moving at warp speed and partners may need some time to align with packages that are constantly moving,” said a senior EU official. “Let’s let the sanctions bite, and keep the unity.”

Other member states, among them Baltic countries and some former eastern bloc nations such as Poland, are eager to do more — and quickly.

Ideas put forward include increasing the number of Russian banks cut out of the Swift messaging network — a move that the countries heavily reliant on Russian gas exports are distinctly wary of.

Member states have also discussed a shipping ban similar to the one already imposed by the UK. Many want to impose sanctions on the family members of some individuals already on the EU blacklist, as the US has done, to better enforce asset freezes. Lithuania has suggested 25 more individuals to hit.

Siegfried Muresan, a Romanian MEP, has called on the European Commission to “restrict the access of Russian companies to all public procurement in the EU”, according to a letter seen by Europe Express.

According to the commission’s database, Russian companies have won more than 20 public contracts in Bulgaria, the Czech Republic, France, Germany, Hungary, the Netherlands and Poland in a single year to the tune of more than €150mn, including in strategic infrastructure projects such as railways.

Capitals are also discussing measures to prevent oligarchs from hiding their assets in trusts. And the commission is in dialogue with the European Central Bank over rules to make it harder to dodge sanctions via the use of cyber-currencies.

Alongside this, perhaps the highest-stakes debate is over whether to target the Russian oil and gas sectors with sanctions. Some member states in central and eastern Europe are in favour, while prominent legislators in the US, including Nancy Pelosi, House Speaker, have advocated a block on Russian oil. The White House ruled it out yesterday.

Germany has made it clear that it takes a dim view of the idea. While the EU’s second sanctions package hit the Russian oil refining sector, it left exports of crude and natural gas alone — something Italy also strongly advocated. And the Swift regime launched this week was carefully designed to avoid interrupting European payments for Russian fossil fuels by leaving Sberbank and Gazprombank connected to the network.

The bloc gets 40 per cent of its gas and 10 per cent of its oil from Russia.

Officials who advocate hitting Russia’s natural resources sector harder argue it is the best way to cripple its economy and Putin’s war machine. But for many EU capitals the damage this would do to their own economies makes it a step too far — at least for now.

Chart du jour: Refugee protection

The number of refugees pouring out of Ukraine to flee the fighting doubled this week, with 1mn arriving in other countries since Russia invaded. EU interior ministers who gathered in Brussels yesterday agreed to grant Ukrainian refugees a special status allowing them to stay and work in the bloc for up to three years. The exception was Hungary, which said it would apply existing asylum rules instead. (More here)

Looking for a swap line

The European Central Bank has been asked by politicians to open an emergency liquidity line with Ukraine that allows its central bank and the war-torn country’s citizens to exchange their hryvnia currency into euros, writes Martin Arnold in Frankfurt.

The request puts the ECB in a difficult position, as Christine Lagarde, its president, has expressed her “horror” at Russia’s invasion of Ukraine and expressed her desire to “show solidarity” with its citizens, but officials are dubious it can justify opening a swap line with Kyiv.

A group of 22 members of the European parliament said in a letter to Lagarde: “We are deeply concerned by the numerous reports on the difficulty of Ukrainian refugees to convert the Ukrainian hryvnia into other currencies once they arrive on the territory of the EU.”

The Polish central bank has offered a swap line to its Ukrainian counterpart, but the MEPs said “this is not the case for all countries that host refugees”.

“As Ukrainians are fleeing the war, it is common for them to travel with cash resources, as we know from the media reports on long ATM lines, and they are now unable to convert and use those vital resources,” they said.

The Ukraine central bank last month suspended foreign exchange trades and banned banks from issuing cash in foreign currencies. Some commercial banks in other European countries accept Ukrainian bank cards in their cash machines, but many do not.

The ECB has not received a formal request for a liquidity line from the Ukraine central bank, according to a person briefed on the matter. Officials think it may be difficult for the ECB to justify such a move, even if a request was made, because of the riskiness of hryvnia-based assets and fears that it would set a precedent for helping war-torn countries.

“The ECB can take measures whether or not it is formally in their mandate,” Alin Mituta, a Romanian MEP who signed the letter, told the Financial Times. If the ECB did take such a step, it would prompt other central banks to follow suit, including those in Romania, Poland, Hungary, Slovakia and the Czech Republic, he said.

The ECB has swap lines with 16 countries outside the eurozone, including the US, Japan, China, Canada, Switzerland, the UK and Sweden, which provides them with euros in exchange for assets in their currencies to boost liquidity in financial markets.

Other central banks can request a repurchase facility with the ECB, under the EUREP facility it launched in 2020 to provide liquidity in euros to a wider group of undisclosed central banks. The ECB declined to comment beyond saying that it would reply to the MEPs’ letter .

Should the ECB open an emergency liquidity line with Ukraine? Click here to take the poll.

What to watch today

1. EU foreign affairs council meets in Brussels, including counterparts from the US, UK, Canada and Ukraine

2. Nato foreign ministers hold an emergency meeting, including with non-Nato partners Finland and Sweden

Smart reads

• No good (gas) options: Natural gas is Russia’s most potent economic leverage despite the EU’s efforts to reduce its dependency. Moscow’s ability to exploit that reliance could be exacerbated by wide disparities among member states’ needs, writes Bruegel in this policy paper. Hard decisions lie ahead, including for Germany to reopen lignite mines or the Netherlands to expand gas exploitation at the earthquake-prone Groningen field.

• EU half-awakening: The EU’s recent leaps on common defence and sanctions against Russia are significant and have upended the bloc’s relationship with Moscow, with a phase of protracted “cold” confrontation coming up. However, the Centre for European Reform lays out why there are several reasons to be wary about claims of a “geopolitical awakening”.

• War on liberal order: Francis Fukuyama writes on how liberalism was in trouble even before Vladimir Putin’s attack on Ukraine and why it will still have an uphill battle globally even if he loses the war. “But the world will have learnt what the value of a liberal world order is, and that it will not survive unless people struggle for it and show each other mutual support. The Ukrainians, more than any other people, have shown what true bravery is, and that the spirit of 1989 remains alive in their corner of the world. For the rest of us, it has been slumbering and is being reawakened,” Fukuyama writes in this piece for FT Weekend.