EU, 18th sanctions package against Russia. Energy exports and banking targeted

Brussels – There is no 17 without 18. Not even two weeks after the adoption of the latest sanctions package against Russia, the EU Commission puts new measures on the table to coerce the Kremlin into accepting a truce in Ukraine. In Brussels’ crosshairs this time are the energy and banking sectors, but Washington’s backing on the oil price cut is not to be taken for granted. And, to put it bluntly, neither is the internal unity of the Twenty-Seven.

On 20 May, the foreign ministers of the EU-27 approved the 17th package of sanctions against Moscow, primarily targeting the “shadow fleet” with which the Federation continues to export its crude oil worldwide. Today (10 June), the two top brass of the Berlaymont presented a new round of restrictive measures. “Russia’s goal is not peace, but to impose the rule of force,” Ursula von der Leyen said as she and Kaja Kallas unveiled the 18th sanctions package since the beginning of the large-scale invasion of Ukraine.

According to the chairwoman of the EU executive, “force is the only language Russia can understand,” and therefore, pressure must be maintained on Vladimir Putin to persuade him to agree to sit at the negotiating table, so far deserted by the tsar. For the High Representative, “nothing suggests that Russia is ready for peace,” quite the contrary. Moscow, says the twelve-star diplomacy chief, is “cruel, aggressive, a threat to us all“.

The two tracks along which the upcoming sanctions will move are energy and financial transactions. As for the first branch, the target is the export of Russian oil, which still accounts for approximately one-third of the Kremlin’s revenue. To achieve this, the Commission proposes three different measures. First of all, all transactions related to Nord Stream 1 and 2 will be banned: “No EU operator will be able to carry out, directly or indirectly, any transaction” related to the double gas pipeline linking the Federation to Germany, von der Leyen explains. Currently, neither of the two arteries on the Baltic Sea bed is in operation.

An additional measure will be the lowering of the oil price ceiling to $45 per barrel from the current $60, as agreed by the G7 partners in December 2022. According to the German popular, “by lowering the ceiling we adapt it to the changed market conditions and restore its effectiveness.” At the same time, the list of the Kremlin’s shadow vessels grows even longer to include another 77 vessels, bringing the total to 419.

Finally, the EU would like to introduce “an import ban on refined products based on Russian crude oil” in order to prevent the latter from reaching the single market “by the back door.” Since the adoption of the 17th sanctions package, Kallas confirms that “Russia’s oil exports via the Black Sea and Baltic Sea routes have declined by 30 per cent in just one week.” Even the figures put forward by von der Leyen indicate a vertical collapse in the revenue Moscow obtains from its hydrocarbons, from 12 to 1.8 billion per month.

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As far as the banking sector is concerned, the idea is to “transform the current ban on using the Swift system into a total ban on transactions” with Russian entities and financial institutions. Such a ban, von der Leyen assures, will be extended not only to another 22 Russian banks but also, above all, to “financial operators from third countries that finance trade with Russia, circumventing sanctions.”

The Russian Direct Investment Fund, which subsidises projects and interventions of various kinds around the world, is also affected, while further restrictions are introduced on exports of “key technologies and industrial goods” to the Federation, with a total value of over €2.5 billion. These include machinery, metals, plastics, and chemicals, as well as dual-use goods and technologies (both civilian and military) crucial to the Russian military-industrial complex.

There are, however, just a couple of political knots that could slow down (or even derail) the adoption of EU sanctions. On the one hand, the price cap on Russian crude, as von der Leyen herself recalled, was set at the G7 level, and therefore, the agreement of the coalition members is needed to change it. “We will discuss how to act together” at the summit scheduled for 15–17 June in Kananskis (Canada), promised von der Leyen, who says she is “very confident”.

But US President Donald Trump has not shown so far a great appetite for a new crackdown on Moscow, despite his European allies pulling his strings in that direction since his return to the White House in January. “In conjunction with the United States, we can really force Putin to negotiate seriously,” Kallas repeated for the umpteenth time. For now, however, it appears that Brussels and Washington are failing to coordinate effectively.

There is much discussion in Congress about the proposal put forward by Republican Senator Lindsey Graham to impose a 500 per cent tariff on imports from any country that continues to trade with Russia, exempting those who support Kyiv’s resistance (such as the EU states). But such a drastic secondary sanctions regime could prove to be a dangerous boomerang for the United States itself, which is currently engaged in complex negotiations with China to defuse the trade war unleashed by Trump a couple of months ago.

On the other hand, even among the EU-27 there seems to be no total agreement on the issue of sanctions. Besides Viktor Orbán’s Hungary, Robert Fico’s Slovakia is now also raising its voice. Last week, the Parliament in Bratislava passed a resolution committing the government to not support new EU sanctions against Russia. “If there is a sanction that will harm us, I will never vote for it,” the Slovak prime minister said the day before yesterday.