Brussels has announced its 18th sanctions package against Russia, primarily targeting Russian energy and banking sectors.
President of the European Commission Ursula von der Leyen says the goal is to pressure Russian President Vladimir Putin to accept an unconditional 30-day ceasefire, and force is the only language Russia understands. She also detailed, writes HVG, how sanctions have succeeded in eroding the foundations of Russia’s economy and war chest.
“The Russian Central Bank’s €210 billion in reserves are frozen. Russia’s oil and gas revenues have fallen by nearly 80 percent compared to pre-war levels,” von der Leyen said. “The deficit is skyrocketing. Interest rates are prohibitively high. Inflation is well above 10 percent. The cost of importing technology and critical goods is six times higher than pre-war levels and global average prices.”
The Commission is proposing – for the first time – a transaction ban on Nord Stream 1 and Nord Stream 2. This means that no EU actor can directly or indirectly participate in transactions related to the Nord Stream pipelines. The pipeline is not currently operational and will not be operational in the future.
The European Commission is also proposing to lower the oil price ceiling from $60 to $45 per barrel. This would allow the EU to adapt to the changed market conditions, as it has been successful in keeping oil prices down so far, but oil exports still account for a third of Russian state revenues.
Timing is important, as the oil price ceiling will also be a topic at the G7 summit in a few days, and the EU will come with this offer.
Previous sanctions included measures against members of the Russian shadow fleet, ships that often sail under third-country flags to sell Russian oil, circumventing sanctions, but were also accused of sabotage against European undersea pipelines. So far, 342 ships have been listed, and a further 77 have now been identified, which are not allowed to call at European ports and are not allowed to be provided with services by European companies, such as insurance.
Additionally, the European Commission is proposing a ban on imports of refined products based on Russian crude oil, to prevent “part of Russian crude oil from entering the EU market through the back door.”
Regarding the banking sector, the proposal includes converting the existing ban on the use of the SWIFT system into a complete transaction ban and extending this provision to 22 additional financial institutions in addition to the existing banks.
A further export ban worth more than €2.5 billion is also being suggested for industry, including weapons production, which would cover machinery, metals, plastics, and chemicals used to manufacture drones, missiles, and other weapons systems.
The restrictive measures affect 22 Russian and foreign companies that provide direct or indirect support to Russia’s military and industrial sectors. The European accounts of these companies, if any, will also be frozen.
Kaja Kallas, the EU high representative for foreign affairs, also spoke about the fact that the sanctions are working.
“After our latest 17th package of sanctions, Russian oil exports via the Black Sea and Baltic Sea routes fell by 30 percent in a week. In May alone, Russia’s state wealth fund fell by $6 billion, from $42 billion to $36 billion. And it could run out of money next year,” she said.
The approval of the sanctions package requires the agreement of all member states. The discussion will now begin at the level of permanent representatives (ambassadors) accredited to the EU, with the aim most likely to adopt the package at the meeting of foreign ministers on June 23, before the EU summit due at the end of the month.
Hungary has continuously stated that it does not agree with the sanctions policy, but so far, Foreign Minister Péter Szijjártó has voted for all packages. Slovakia has recently emphasized its independence, with Robert Fico saying that he does not support any punitive measures if they harm Slovakia’s interests.
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