EU countries agree new round of sanctions on Russia

The 27 EU member states have agreed an 18th sanctions package targeting Russia for invading Ukraine after being blocked for weeks by Slovakia, the EU's top diplomat Kaja Kallas announced on Friday.

The sanctions are intended to further reduce Russian revenues from the export of oil to non-EU countries and impact the Russian financial sector.

"We are standing firm," Kallas posted on X, describing the new sanctions package as one of the strongest so far. "We will keep raising the costs, so stopping the aggression becomes the only path forward for Moscow.

Additionally, it is planned to use sanctions to exclude a possible reactivation of the Nord Stream 1 gas pipeline and the use of the Nord Stream 2 pipeline.

Three of the total four pipelines linking Russia to Germany were destroyed in an attack in September 2022. If they were to be repaired, the pipelines running through the Baltic Sea could enable Russia to earn billions from the sale of gas.

The agreement on the sanctions package was actually supposed to take place directly after the June summit of EU leaders. However, Slovakian Prime Minister Robert Fico prevented this with the threat of a veto.

The agreement has now been made possible through concessions to Slovakia. Bratislava was assured that it does not have to fear serious economic and financial consequences if, after the new sanctions package, a plan for a complete import stop of Russian gas is also implemented.

Fico cannot block this plan because, unlike the sanctions package, it can also be decided by majority vote.

Fico said that continuing to block the move would be "counterproductive" for Slovakia's interests as an EU member.

All of the EU's 27 members have to back new sanctions before they can be implemented.

Recently, Malta, Greece and Cyprus also had concerns about measures intended to reduce Russian revenues from the export of crude oil to countries outside the EU.

The countries feared unfairly large disadvantages for domestic shipping companies if the so-called oil price cap is lowered too much. As a compromise, it was agreed to regularly adjust the price cap so that it does not fall more than 15% below the average market price in the long term. In a first step, it is to be reduced from the current $60 to $47.60 per industry-standard barrel.

The original plan was for the price cap for Russian oil to be lowered $45 per barrel.

It applies to the sale of Russian oil to countries such as India, China or Turkey and was introduced in 2022 together with the United States, Japan, Canada and the United Kingdom.

To enforce it, companies involved in transporting Russian oil at a price below the cap are threatened with sanctions. This regulation targets shipping companies, but also companies that offer insurance, technical assistance, as well as financing and brokerage services.

In addition to the measures mentioned above, the following was also agreed upon, dpa has learnt:

- Introduction of an import ban on refined products from Russian crude oil. These include fuels for cars and aeroplanes and heating oil. This is intended to close a legal loophole that previously allowed Russia indirect exports via third countries.

- Introduction of a ban on financial transactions with companies from countries that circumvent oil-related sanctions.

- Listing of more than 100 ships that are part of the so-called Russian shadow fleet to circumvent energy sanctions. They will no longer be allowed to enter ports of EU states and can no longer be insured, financed, or equipped by European companies. In total, around 450 ships will be affected in the future.

- Listing of an additional 22 banks that will be disconnected from the SWIFT financial communication system; in addition, the punitive measure will be extended to a complete ban on transactions.

- For the first time, a ban on transactions with two Chinese financial institutions that hinder EU sanctions; additionally, sanctions on several Chinese companies that directly support Russia's war of aggression.

- Introduction of further export restrictions; machine tools that can be used in the military-industrial system are among those targeted.

- Expansion of the list of sanctioned individuals, companies and organizations by more than 50 entries. It will thus include more than 2,500 entries.

The effectiveness of the sanctions on Russia remains disputed. Critics doubt that they have a significant impact on the policies of Russian President Vladimir Putin.

Supporters, however, point out that the punitive measures hit the Russian economy hard and that the Kremlin has to cope with significant revenue losses. Russia might have already ended the war in Ukraine with a victory without the sanctions, they say.

A formal decision by the Council of the EU for the new sanctions package was expected to take place on Friday. The punitive measures would then come into force shortly thereafter.