Note the heading “Non paper”. It is leaked, not authorised. This is a menu of options. It requires unanimous backing of the 28 ambassadors. Any one country can veto it. Cyprus may find it too much to swallow, and will need a lot of sugar to help it go down.

The MICEX index of stocks in Moscow rallied in the mid-morning session and is level for the day. The state-owned banks VTB and Sberbank scarcely missed a beat. Investors are clearly calculating that nothing will come of this.

The measures come into force only if Russia continues to help the rebels and funnel militants across the border (which in reality no longer exists). Still, I hope these investors have good political intelligence in Brussels, London, Paris, Berlin, and Washington, because this looks a little cavalier to me – rather like those who continued to buy the dips even after the Austro-Hungarian Empire issued its ultimatum to Serbia in July 1914.

The document makes clear that the aim is to force Russian banks into the arms of the state, bleeding the Russian budget and reserves. This really is “tier III” level. It hammers the whole financial system.

Basically they say there is no way for Russia to get around this if the EU and the US work together. I broadly agree, though it depends on what China does. It takes three to tango, these days.

Those arguing that sanctions do not work or are a feeble instrument are mostly drawing on pre-globalisation 20th-century views. They seem unaware of the new arsenal of financial measures that have been fine-tuned over the last decade that can bring countries to their knees in an integrated world system.

Does that mean Putin will yield? Not necessarily, but that is an entirely different issue. He may indeed risk vast economic damage to his own country.

So:

The document prohibits any EU person investing in equity or debt beyond 90 days' maturity issued by any Russian financial institution that is more than 50pc owned by the Russian state.

It does not cover sovereign bonds (yet), stocks and bonds of private companies, or syndicated loans.

The paper acknowledges that the “direct negative impact” would fall most heavily on financial centres, ie London, Luxembourg, Cyprus. It does not target the energy sector. This shields East European states with 100pc dependence on Russian gas.

Italy and Germany get off lightly in one sense, but they will suffer secondary effects from the damage to the Russian economy. In the end, the pain is spread around.

The ban on technology will stop “projects in deep sea drilling, arctic exploration and shale oil”. This would stop BP going ahead with its Rosneft shale venture in the Volga Urals, and would largely kill off Russia’s shale ambitions since its extraction costs are far too high to make fracking worthwhile. They need Western know-how and technology.

Here are a few extracts.

Russian companies and financial institutions are heavily dependent on EU capital markets:

Between 2004 and 2012 a total of USD 48.4bn was raised through lPOs in the EU by companies incorporated in Russia. Out of those, USD 15.4bn was issued by state-owned financial institutions.

ln 2013, 47% of the bonds issued by Russian public financial institutions were issued in the EU's financial markets (€7.5bn out of a total of €15.8bn).

Restricting access to capital markets for Russian state-owned financial institutions would increase their cost of raising funds and constrain their ability to finance the Russian economy, unless the Russian public authorities provide them with substitute financing. lt would also foster a climate of market uncertainty that is likely to affect the business environment in Russia and accelerate capital outflows.

With regard to the scope of the restriction, the measure would consist in prohibiting any EU persons from investing in debt, equity and similar financial instruments with a maturity higher than 90 days, issued by state-owned Russian financial institutions after the entry into force of the restrictive measure anywhere in the world. lt would also be prohibited to provide investment services and any service in relation to the admission to trading on a regulated market or trading on a multilateral trading facility with regard to the same financial instruments.

With regard to the entities targeted, the measure would target Russian state-owned credit institutions (banks with over 50% public ownership), as well as development finance institutions.

The prohibition would extend both to primary markets (first issue) and secondary (subsequent trading) market of the newly issued Russian securities. Existing shares and bonds would not be covered. Transactions other than those mentioned before with the targeted entities would remain possible, Russian companies and financial institutions are heavily dependent on EU capital markets:

lmpact on Russian investors would consist in sharply increased costs of issuance, even if eventually alternative financing sources in third markets could be found.

Substitution would not be easy in the short term. Even if not caught by EU sanctions, third-country investors will likely be unwilling to participate in new issuances by targeted entities or demand significantly higher yields. This would push companies to seek State financing as a stopgap, further straining the government's budget.

The efficiency of the measure strongly depends on co-ordination with the US. EU and US investors constitute the major portion of market participants investing or assisting the investment in these financial instruments and their venues are the major hubs for issuance.

Other jurisdictions such as Switzerland, Singapore, Hong Kong or Tokyo would only provide significant substitution capacity over time, but they could not fully compensate for the loss of EU and US investors.

If the EU ambassadors agree to this, I will withdraw my rebuke that they are frightened sheep.