Agreement Reached in Brussels: EU Imposes New Sanctions on Russia

In light of Russia’s ongoing war of aggression against Ukraine, EU member states have agreed on a new package of sanctions. The plans include, among other things, further measures targeting Russia’s financial and energy sectors, as well as a travel ban on Russian soldiers, according to EU diplomats in Brussels.

EU Council President António Costa and Commission President Ursula von der Leyen welcomed the decision on social media. “At a time when Ukraine has gained military momentum, our sanctions continue to weaken the economic foundations of Russia’s war effort,” von der Leyen wrote on X. Costa said it was a “decisive step to increase pressure on Russia.”

To limit Russia’s revenue from oil exports, there are plans to suspend the automatic adjustment of the so-called oil price cap for twelve months. Otherwise, this cap would have to be raised due to increased world market prices resulting from the war in Iran and the extensive blockade of the Strait of Hormuz, which would mean more revenue for Russia.

The oil price cap applies to the sale of Russian oil to third countries such as India, China, and Turkey, and was introduced in 2022 in collaboration with the United States, Japan, Canada, and the United Kingdom. To enforce it, companies involved in transporting Russian oil at a price above the cap face sanctions. The regulation also targets shipping companies, as well as firms that provide insurance, technical assistance, and financing and brokerage services.

Difficult Negotiations

The agreement was preceded by weeks of difficult negotiations among the member states. Several capitals succeeded in securing concessions or compromises that favored domestic companies. Among other things, they argued that the sanctions should not cause greater economic damage within the EU than in Russia.

This revealed a fundamental dilemma: Given the already very long list of punitive measures, it is becoming increasingly difficult to identify additional sanctions that would have a tangible impact on Russia while, at the same time, having a comparatively minor impact on businesses and people in the EU and in third countries.

Plans for fisheries sanctions have failed for now

One example in this round of sanctions was Greece’s demand—which it pushed through to protect the interests of domestic shipping companies—that a ban on the transport of Russian liquefied natural gas to third countries not be implemented quite as comprehensively as planned, since existing contracts would be exempt for the time being.

In addition, import restrictions on Alaska pollock from Russia proposed by the European Commission, as well as an import ban on cod, will not be implemented.

According to EU diplomats, countries such as Germany, Portugal, and France pushed during the negotiations to water down the proposed sanctions. Because even compromise proposals failed to gain consensus, the proposal was eventually withdrawn entirely. The diplomats said that Germany had been willing to agree to a compromise. However, other member states had made even more far-reaching demands.

In Germany, the Commission’s proposal to reduce imports of Alaska pollock from Russia into the EU by half within two years had raised particular concerns. Given the limited supply, this could have had significant consequences for producers and consumers of fish sticks, gourmet fillets, and other frozen fish dishes. The industry would have faced production cuts, and consumers would have faced higher prices. According to experts, Germany is home to the world’s largest fish stick factories.

The head of the Russian Orthodox Church, Patriarch Kirill, will not be sanctioned for the time being either—primarily due to pressure from Bulgaria.

Von der Leyen Sees Russia Under Pressure

The proposals for the sanctions package were presented by the European Commission in early June. It also provides for the expansion of export restrictions on goods and technologies used by Russia’s military-industrial complex. In addition, more ships, banks, cryptocurrency firms, and oil traders from Russia and supporting countries are to be added to the list of entities with which EU companies are prohibited from doing business.

“We are adding another 32 Russian banks to our list of entities subject to transaction bans,” von der Leyen wrote in her post on X. She also emphasized that an important step had been taken toward imposing an entry ban on Russian fighters. According to diplomats, the package includes a commitment to present the necessary measures to that end.

At the time, the Commission President had said, in response to the proposal for a visa ban, that Europe should remain closed to anyone involved in the invasion of Ukraine. Commenting on Russia’s current situation, she explained that four years after the start of the large-scale invasion, the country had clearly failed to subjugate Ukraine, and the price Russia was paying was rising day by day. People are mourning the loss of their sons, brothers, and husbands and are also facing a declining standard of living.

The legislative texts for the sanctions package must now be approved by the Council of Ministers. However, this is considered a mere formality.

The new package of sanctions is the 21st imposed in response to Russia’s war of aggression against Ukraine. The 20th package took effect in April and was also heavily focused on reducing Russia’s revenue from gas and oil sales. It also targeted companies with ties to the Russian defense industry, banks, and other financial service providers.