The European Union has agreed to implement a new round of sanctions against Russia, concluding contentious negotiations that had jeopardized the entire package. This marks the 21st set of sanctions imposed by the bloc since February 2022.
The agreement, finalized by ambassadors on Thursday, is notably diluted, raising questions about the impact of national economic interests on the long-term strategy to hinder Moscow's financing of the war in Ukraine. Despite the compromises, the EU managed to prevent a politically damaging revision of the oil price cap. Under a formula linked to market fluctuations, the cap was projected to increase from $44 to $58 per barrel, a scenario Brussels deemed unfavorable as it could have provided financial relief to the Kremlin.
European Commission President Ursula von der Leyen stated on Thursday morning, "Freezing the oil price cap adjustment for a year, so that the Russian war machine does not benefit from market shocks." The new sanctions package also targets approximately 30 vessels belonging to Russia's "shadow fleet," which has been used to circumvent the price cap and engage in hybrid warfare. Over 600 such vessels have already been denied access to EU ports and services.
Further measures include blacklisting Russian banks, crypto and oil-trading platforms, various metals sourced from the battlefield, and over 250 individuals and companies accused of supporting the invasion, disseminating pro-war propaganda, or facilitating sanctions circumvention. The negotiations involved member states advocating for their specific interests, leading to the abandonment of a proposal to restrict imports of Russian cod and pollack after Portugal and Germany raised objections. Bulgaria also succeeded in having Patriarch Kirill, head of Russia's Orthodox Church, and billionaire Lukoil founder Vagit Alekperov removed from the final list.
A proposal to ban Russian soldiers from entering the Schengen Area was significantly weakened, becoming a commitment to continue working towards practical implementation, following concerns from France and Italy regarding administrative burdens and legal responsibilities for consular services.
Greece emerged as the most vocal objector, demanding a revision of the Russian LNG ban that was unanimously agreed upon in a previous sanctions package. Athens sought a broad exemption to continue shipping Russian LNG to non-EU markets beyond the planned cut-off date of January 2027. This request was supported by Dynagas, a transport company owned by Greek billionaire George Prokopiou, which has chartered 11 vessels, including seven Arctic-resistant icebreakers, to Russia's Yamal LNG facility.
The Greek government and Dynagas argued that the transport ban would harm Europe's maritime services industry, lead to job losses, benefit foreign competitors, and ultimately fail to significantly impact Moscow's war funding. Other member states expressed concern that granting the exemption would set a dangerous precedent by revisiting established EU law. However, Greece maintained its position, leveraging its veto power until a majority of member states agreed to introduce a derogation. This provision allows the transfer of Russian LNG to non-EU clients for contracts finalized before Russia's invasion in February 2022. The arrangement will be subject to an annual review, potentially allowing Athens to continue using its veto to ensure its extension.
In a separate development, Austria secured a political concession regarding its request to lift sanctions on Rasperia, a blacklisted investment company. This move aims to offset a €2.1 billion loss incurred by Raiffeisen Bank International in Russia. Unlike a previous rejection, ambassadors showed more willingness to address Vienna's concerns, promising to find a solution at a later stage.
Still, the bloc managed to avert a politically disastrous revision of the price cap on Russian oil, which, under a formula introduced before the conflict in the Middle East, was expected to jump from $44 to $58 per barrel.
Thursday's agreement ends weeks of frantic negotiations in which member states moved with resolve to assail the elements they considered inconvenient.
