The European Union has agreed to impose a new round of sanctions against Russia, following chaotic negotiations that threatened to put the entire package at risk.
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Greece, whose veto had until now prevented a deal, secured an exemption to continue shipping Russian LNG to non-EU clients for the foreseeable future.
It marks the 21st sanctions package since February 2022.
The agreement, reached on Thursday by ambassadors, is considerably watered down and raises serious questions about the influence of national economic interests in the yearslong campaign to cripple Moscow’s ability to finance the invasion of Ukraine.
Still, the bloc managed to avert a politically disastrous revision of the price cap on Russian oil, which, under a formula introduced before the conflict in the Middle East, was expected to jump from $44 to $58 per barrel.
Brussels considered this scenario unpalatable as it would have provided the Kremlin with relief at a time when Ukraine enjoys fresh momentum on the battlefield.
The deal by ambassadors freezes the cap at $44 per barrel for 12 months, removing a source of uncertainty as hostilities between the United States and Iran resume.
“Freezing the oil price cap adjustment for a year, so that the Russian war machine does not benefit from market shocks,” Ursula von der Leyen, the president of the European Commission, said on Thursday morning.
Additionally, the package blacklists more vessels from the shadow fleet, which Russia has deployed to bypass the cap and, at times, conduct hybrid warfare operations. Over 600 of these decrepit vessels have been denied access to EU ports and services.
It also targets Russian banks, crypto and oil-trading platforms, various metals found on the battlefield, as well as over 250 individuals and companies accused of supporting the invasion of Ukraine, spreading pro-war propaganda and enabling circumvention
Thursday’s agreement ends weeks of frantic negotiations in which member states moved with resolve to assail the elements they considered inconvenient.
An attempt to restrict imports of Russian fisheries, in particular cod and pollack, was abandoned after Portugal and Germany voiced reservations, while Bulgaria succeeded in removing two names from the final list: Patriarch Kirill, the head of Russia’s Orthodox Church, and Vagit Alekperov, the billionaire founder of Lukoil.
A bold proposal to ban the entry of Russian soldiers into the Schengen Area was downgraded to a commitment to continue working towards a successful implementation in practice. France and Italy had raised concerns about the administrative burden and legal responsibility for consular services.
The Greek veto
However, the loudest objector was, by far, Greece.
The country, which hosts the world’s largest merchant fleet, shocked member states by demanding a revision of the Russian LNG ban that was unanimously agreed last year as part of a previous sanctions package.
Athens sought a broad exemption to continue shipping Russian LNG outside the EU market after January 2027, the intended cut-off date.
The request was backed by Dynagas, a transport company owned by Greek billionaire George Prokopiou. Dynagas and its subsidiary have chartered 11 vessels, including seven Arctic-resistant icebreakers, to Russia’s largest gas facility, Yamal LNG.
The Greek government and Dynagas argued the transport ban would damage Europe’s maritime services industry, destroy employment opportunities, empower foreign competitors and ultimately fail to weaken Moscow’s war chest.
Other member states were aghast at the sudden attempt to revisit a text that has become EU law and feared granting the request would set a dangerous precedent.
But Greece held its ground and kept its veto firmly in place until the majority of member states agreed to introduce a derogation allowing the transfer of Russian LNG to non-EU clients for contracts concluded before the start of the invasion in February 2022.
The provision will be reviewed annually, which means Athens could wield its veto power to ensure it is extended.
Meanwhile, Austria secured a political victory after member states agreed to consider its contentious request to lift sanctions on Rasperia, a blacklisted investment company, to offset a €2.1 billion loss incurred by Raiffeisen Bank International in Russia.
Unlike last year, when the petition was outright dismissed, ambassadors showed more sympathy and promised Vienna they would find a solution at a later stage.