EU Plans New Russia Sanctions As Loopholes Persist

The European Union is slowly preparing a new round of sanctions on Russia, its 20th since the full-scale invasion of Ukraine, with the goal of having the measures approved by all EU member states at the end of February to coincide with the fourth anniversary of Moscow’s attack on its neighbor.

The idea is that the European Commission, which proposes new packages, will have its round of “confessionals” in which proposed new measures and potential “red lines” are discussed with member states as early as the upcoming weekend of January 24-25.

Few EU officials believe that the measures will be sweeping and hard-hitting given that unanimity is needed in the bloc and there is a reluctance in Brussels to go for measures that could also hurt the already spluttering European economy.

Some things, however, are clear: the EU will add more names to its visa ban and asset freeze blacklist, which already includes around 2,700 individuals and entities.

Shadow Fleet

There will also be more vessels belonging to the Kremlin’s shadow fleet that will be slapped with an EU service ban -- with that list already comprising some 600 ships that Brussels thinks are carrying Russian oil in violation of an oil price cap imposed by the Group of Seven that now stands at $47.60 per barrel.

The EU estimated late last year that around 35 percent of all vessels transporting Russian oil did so in compliance with the oil price cap, while 65 percent were part of the shadow fleet violating the cap.

Perhaps the biggest potential new sanction is a so-called full maritime service ban against any ship transporting Russian carbon-based resources that would target both the above-mentioned categories.

This “maritime ban” has been put forward in informal discussion papers on further Russia sanctions authored respectively by Latvia, Lithuania, the Netherlands, and Sweden -- all seen by RFE/RL.

Now, this quartet are all known as “sanctions hawks” in the bloc, so the measure might not fly in the end, but RFE/RL understands that the idea is gaining traction in Brussels.

The idea of the ban is that it prohibits all EU economic operators in the bloc from providing services to any vessel transporting oil, gas, or coal from Russian ports.

This goes beyond the current price cap in several ways.

First, it includes gas and coal. Second, it would target all vessels, not only those already sanctioned. And third, the oil’s sale price becomes irrelevant.

In reality, this would stop EU vessels from transporting Russian energy completely while non-EU boats could continue but wouldn’t be able to rely on EU port services and insurances.

Curiously, the Netherlands is also arguing for a way for shadow fleet vessels to be scrapped and recycled by creating an exit mechanism. Quite how this would work isn’t spelt out in the Dutch paper, but it would likely involve big financial incentives for vessel owners to cooperate with EU port authorities rather than working for the Kremlin.

Energy Sanctions?

The documents by the quartet also propose other energy sanctions on Russia that are unlikely to be accepted considering they have been vetoed so far by various other EU capitals. These include sanctions on energy giant Rosneft and Lukoil, something that Britain and the United States have already imposed.

Similarly, there is still hesitation to hit Rosatom, Russia’s state-owned nuclear energy company even though there could be scope to target the company’s leadership with sanctions, banning all new contracts with the firm and potentially even stopping uranium imports into the bloc from Russia, worth more than $116 billion a year, given that the EU could get it from other sources.

Lithuania is also arguing for sanctions on PipeChina, a company owned by Beijing that is involved in buying liquefied natural gas from Russia.

With Brussels increasingly open to showing that it can also target China for its financial and political support of Moscow’s war, this could potentially happen, even though many EU member states are wary about being too tough on Beijing due to the economic stakes involved and the fear of retaliation.

Expect instead that the new measures will focus on plugging gaps in sanctions already imposed by shortening phase-out dates for import bans on Russian iron, steel, and nickel from later this decade to potentially the end of this year.

Sanctions Circumvention

Many also want to phase out Russian fertilizer imports, which the bloc imported to the tune of $1.6 billion last year.

In 2025, the bloc agreed to gradually impose tariffs on Russian fertilizers, but these measures won’t become prohibitively steep until 2028 when they hit 430 euros ($500) per ton. Therefore, there could be a move to raise the tariffs substantially much earlier than originally envisaged.

Then there is the issue of sanctions circumvention, which is also likely to be addressed.

As an example of such activities, Latvia in its sanctions paper pointed out that it has seen “uncharacteristically high export volumes of birch plywood from third countries with limited or no significant local production capacity such as Georgia, Egypt, Uzbekistan, Armenia, Lebanon and Kyrgyzstan into the EU market.” The belief is that the product in fact comes from Russia and Belarus -- which both have regions with commercial birch forests.

Birch plywood from Belarus and Russia already faces an EU import ban, with the measures recently extended to Kazakhstan and Turkey after Brussels said it had identified sanctions circumvention.

Expect these sorts of measures to expand further in the near future.