EU seeks tougher sanctions on Russia without touching energy
The European Union is considering tightening or extending existing sanctions against Russia in coordination with the United States, while refraining from major new measures to cut oil and gas purchases amid division growing within the bloc on how to limit Moscow’s biggest source of revenue.
EU leaders, who begin a two-day summit in Brussels on Thursday with US President Joe Biden in attendance, will not forge new sanctions against Russia, officials from French President Emmanuel’s office told reporters on Wednesday. Macron. According to an EU diplomat, any new measures the countries could agree on this week would be limited in scope and could focus on closing loopholes.
The United States and the EU could announce new asset freezes and travel bans against individuals and entities, according to another EU official. Biden’s national security adviser, Jake Sullivan, said on Tuesday that the United States and the EU on Biden’s trip would agree new sanctions against Russia and tighten existing restrictions to crack down on escape.
But several countries, particularly Germany, have argued that the bloc should focus on enforcing current sanctions before targeting Russian energy, on which Berlin remains heavily dependent.
“As far as the sanctions regime is concerned, we are constantly working to make it more precise,” German government spokesman Steffen Hebestreit told reporters on Wednesday. “But there won’t be a big new package that I know about.”
Europe continues to buy coal, oil and gas from Russia at high prices, while energy-related transactions are exempt from financial sanctions, shielding some of Russia’s biggest banks from the bulk of penalties. Many contracts in place before the invasion have been allowed to continue as Europe pressures the United States and others to help boost their energy exports to Europe. The net result is that the impact of the sanctions imposed so far on Russia has been severely undermined.
There is growing pressure within the bloc to start hitting Russia’s most vital sources of revenue, with countries like Ireland adding their support to measures that Poland and the Baltics have been advocating for weeks.
Several member states want the EU to consider an oil embargo, higher tariffs on energy-related trade and cut more banks from SWIFT, the international payments messaging system, EU diplomats say . EU leaders are expected to hold an intense debate on these proposals on Thursday and Friday, but any decision would require the approval of all 27 member states.
“That’s an obvious area that, if we want these sanctions to hit, we should focus on,” Irish Foreign Minister Simon Coveney told reporters on the sidelines of a meeting of EU foreign chiefs. EU this week. Czech Foreign Minister Jan Lipavsky also called for tougher sanctions targeting areas where Russia makes money.
These moves continue to face strong opposition from Germany and Hungary. The dispute risks opening cracks in the bloc as it seeks to project a show of unity given that all 27 members are expected to approve any new sanctions.
German Chancellor Olaf Scholz reiterated his country’s view on Wednesday that coal, oil and gas should not be included in the next round of EU sanctions. He said other member states share this view as Germany is not the only country that remains heavily dependent on Russian energy imports. Hungary earlier this week said the energy sanction was a “red line”.
Germany has argued for keeping a ban on Russian energy imports as an option on the table in a scenario in which Russian President Vladimir Putin further escalates the war in Ukraine, for example by using chemical or biological weapons. EU leaders are expected to discuss Russian measures that could lead to tougher sanctions, according to a diplomat from the bloc.
Beyond the potential economic damage to European countries, there are also fears that the energy sanction could lead to even higher prices that could affect some of the poorest and most unstable regions of the world, possibly leading some countries on the verge of collapse, according to an EU diplomat from a country opposed to the move.
Germany and others have instead pressed for the EU to fill the loopholes in existing sanctions. Some targeted oligarchs, for example, tried to evade the measures, forcing authorities to prosecute them, an EU diplomat said.
The EU, in coordination with its allies, has already banned most transactions with the Russian central bank, cut a number of banks from SWIFT, imposed trade restrictions on key technology sectors and closed the airspace of the EU to all Russian aircraft, among other measures. That leaves a relatively short menu of options the bloc can choose from to hit Putin for its ongoing assault on Ukraine.
In addition to energy, some countries have asked the EU to consider sanctioning metals like titanium, Russian maritime trade and trust funds used to set up front companies, as well as cutting other banks from SWIFT and target others with travel bans and asset freezes, say diplomats familiar with the matter.
But many of these areas are also indirectly related to the Russian energy sector. Ports, for example, are important for coal shipments from Russia, while some of the Russian banks that can still access SWIFT are essential for member states making payments for these energy transactions. An EU diplomat said they were against banning certain metals because it would hurt the EU more than Russia. An outright port ban would de facto target goods that have not been sanctioned, the diplomat said.
Ahead of Biden’s visit to Europe, senior U.S. officials tried to find ways to help Europe cope without Russian oil. Sullivan, U.S. Treasury Secretary Janet Yellen and National Economic Council Director Brian Deese met with Exxon Mobil Chief Executive Darren Woods and senior officials from energy companies such as Marathon Petroleum Corp, according to a person familiar with the matter. .
Among the topics discussed during the discussion was preparing U.S. oil and gas producers for the ramp-up of production, the person said. A second person said they discussed the possibility of offsetting production shortfalls if the EU ultimately decides to join the United States in banning imports of Russian crude.
Bloomberg’s Jorge Valero, Michael Nienaber, Samy Adghirni, Ania Nussbaum, Arne Delfs and Ari Natter contributed to this report.