The European Union’s new round of sanctions against Russia is still up in the air after ambassadors failed to reach a deal during a meeting on Friday.
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The clock is ticking fast: the bloc has set 24 February, coinciding with the fourth anniversary of the full-scale invasion of Ukraine, as the deadline for approval.
According to diplomats familiar with the process, the main point of contention is a full ban on maritime services for Russian oil tankers, which, if enacted, would terminate the price cap that the Group of Seven (G7) established in late 2022.
Brussels has concluded that the cap, currently set at $44.10 per barrel, is no longer living up to expectations, and additional pressure is urgently required to cripple the Kremlin’s energy revenues, crucial to finance the war machine.
Under the proposed ban, EU companies would be forbidden from providing any type of service, such as insurance, banking, shipping or catering, to vessels carrying Russian crude. The goal is to increase transportation costs and weaken profits.
Greece and Malta, two countries with powerful maritime industries, worry that introducing an all-out prohibition would harm their domestic economies, favour competition from India and China, and empower Russia’s “shadow fleet”, the dilapidated vessels that Moscow employs to circumvent Western restrictions.
Their opposition is not considered uncompromising and could soften if other G7 allies join in and apply an equivalent ban within their jurisdictions.
So far, though, G7 allies have been mute about the prospect of following suit. The last time Brussels amended the price cap, Washington opted out.
The European Commission has already indicated that an agreement at the G7 level would be ideal but not indispensable for the bloc to move forward.
“It’s not an absolute precondition. But the higher alignment we can achieve, including at the G7 level, the better,” Economy Commissioner Valdis Dombrovskis said this week.
“We will not shy away (from taking) steps at the EU level should the broader agreement not be forthcoming,” he added.
Diplomats have echoed the determination to forge ahead, arguing that the EU, due to its geographic position, has an edge in influencing the seaborne trade of Russian oil.
“We’re prepared to start doing this already without the US,” said a senior diplomat.
“The overwhelming majority (of member states) is in favour of the ban because we all see the need for it. We’re not there completely yet, but I hope we will get there in the end in some shape or form.”
Pressing deadline
Negotiations on the 20th package are also zooming in on the possible activation of the Anti-Circumvention Tool, a tool that has been been put to use since its introduction in the summer of 2023.
The Commission has proposed to trigger the tool to curtail sales of EU-made computer numerical machines and radios to countries “where there is a high risk that these products are re-exported to Russia”.
This has put the spotlight on Kyrgyzstan. The mountainous country of 7 million people has long been suspected of serving as a back channel to help Moscow obtain blacklisted items that it is otherwise unable to procure.
EU-Kyrgyzstan trade has skyrocketed to eyebrow-raising levels since the start of the full-scale invasion of Ukraine. In 2021, the EU exported €263 million in goods to Kyrgyzstan. In 2024, exports of goods were worth €2.5 billion.
Meanwhile, Hungary and Slovakia have expressed general reservations about the full package of sanctions, a position they have taken in past negotiations.
It is unclear when ambassadors will meet again to attempt to bridge the outstanding differences. Foreign affairs ministers are set to gather in Brussels on Monday, with Russia’s war of aggression as the first item on the agenda.
For many capitals, the lack of progress made in the US-brokered trilateral talks makes the case for ramping up pressure to force concessions out of the Kremlin.
“Next Monday, we aim to adopt the 20th sanctions package against Russia,” High Representative Kaja Kallas said on Friday.
“Sanctions are working. They are severely hurting Russia’s economy, and each new measure further limits its ability to wage the war. Moscow is not invincible. Its army is suffering record casualties, and its economy is under heavy strain. But Putin won’t end this war until the costs are higher than the benefits. And that is the point we must reach.”
