EU states agree on new sanctions package against Russia

In light of the ongoing Russian war of aggression against Ukraine, EU member states have agreed on a new sanctions package. According to EU diplomats in Brussels, the plans include further measures targeting the Russian financial and energy sectors, as well as an entry ban for Russian soldiers.

Oil Price Cap Adjustment Suspended

To limit Russia's revenues from oil exports, the EU plans to suspend the automatic adjustment of the so-called oil price cap for twelve months. Without this suspension, the cap would have to be raised due to increased world market prices resulting from the Iran war 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, or Turkey. It was introduced in 2022 together with the USA, Japan, Canada, and Great Britain. To enforce the cap, sanctions are threatened against companies involved in transporting Russian oil at a price above the cap. The regulation also targets shipping companies, as well as firms offering insurance, technical assistance, financing, and brokerage services.

Difficult Negotiations

The agreement was preceded by weeks of difficult negotiations between member states. Several capitals pushed through weakening measures or concessions in favor of domestic companies, arguing that the sanctions should not cause greater economic damage in the EU than in Russia.

This revealed a fundamental dilemma: Given the already extensive list of punitive measures, it is becoming increasingly difficult to find further sanctions that significantly impact Russia while having comparatively minor effects on companies and people in the EU and third countries.

Plans for Fish Sanctions Fail

In this round of sanctions, demands from Greece — driven by the interests of domestic shipping companies — ensured that a transport ban on Russian liquefied natural gas to third countries was not implemented as comprehensively as planned, as existing contracts are initially excluded.

Furthermore, an import restriction on Russian Alaska pollock proposed by the EU Commission, as well as an import ban on cod, are not being implemented.

According to EU diplomats, countries such as Germany, Portugal, and France pushed for a weakening of the planned sanctions during negotiations. Because compromise proposals also failed to find consensus, the proposal was eventually dropped entirely. Diplomats said Germany would have been willing to agree to a compromise, but other member states had even more far-reaching demands.

In Germany, the Commission's proposal to reduce the import of Alaska pollock from Russia into the EU by half within two years had caused particular concern. Given the limited supply, this could have had significant consequences for producers and consumers of fish sticks, gourmet fillets, and other frozen fish products. The industry faced production restrictions and consumers faced higher prices. According to experts, the world's largest fish stick factories are located in Germany.

Patriarch Kirill Not Sanctioned

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

Von der Leyen: Russia Under Pressure

The proposals for the sanctions package were presented by the EU Commission at the beginning of June. The package also includes expansions of export restrictions on goods and technologies used by Russia's military industry. Additionally, more ships, banks, crypto firms, and oil traders from Russia and supporting states are to be added to the list of actors with which EU companies are not allowed to do business.

Commission President Ursula von der Leyen said at the time about the push for the visa ban that Europe should remain closed to anyone involved in the invasion of Ukraine. Regarding the current situation in Russia, she stated that four years after the start of the large-scale invasion, the country has clearly failed to subjugate Ukraine, and the price Russia is paying is getting higher day by day. People have to mourn sons, brothers, and husbands and are also faced with a declining standard of living.