The EU executive has vowed to cap the price of Russian oil and impose new restrictions on high-tech trade, in the latest round of sanctions aimed at ‘making the Kremlin pay’ for escalating war against Ukraine.
European Commission President Ursula von der Leyen said Russia had accelerated the invasion to “a new level”, listing the sham referendums in Russian-occupied territory, the partial mobilization order and the threat of Vladimir Putin to use nuclear weapons. “We are determined to make the Kremlin pay for this further escalation,” she said.
She promised that the EU would introduce a price cap on Russian oil to “help reduce Russian revenues and maintain global market stability”. The European Commission also wants to impose new restrictions on high-tech products the EU can sell to Russia, such as certain chemicals and aviation components, to further weaken the Kremlin’s ability to wage war.
Von der Leyen said anyone who helped Russia evade sanctions risked being added to the EU’s list of restrictive measures. “It will have a major deterrent effect,” she said.
Shortly before his speech, Oleg Ustenko, economic adviser to Ukrainian President Volodymyr Zelenskiy, urged the EU to introduce a cap on Russian oil prices “as soon as possible”. Ustenko said Russia was making hundreds of millions a day selling oil, which was channeled to fund the war against Ukraine.
“Of course, the main goal is to cut off Putin’s regime from all possible sources of funding. No doubt the main source of funding for them right now is anything related to fossil fuels,” he added.
EU countries have spent 98.5 billion euros (£88 billion) on Russian oil, gas and coal since the invasion began on February 24, including more than 50 billion euros for oil, according to the Beyond Coal tracker.
In Ukraine’s view, the EU sanctions package should “be done already”, Ustenko told reporters, urging the European Commission to present the proposals as soon as possible.
Ambassadors from the 27 EU member states were briefed by Commission officials on the plans on Wednesday afternoon. While the plans predate Russia’s fake referendums in occupied Ukraine, the EU has responded by adding more people to its sanctions list. Civil servants working for Russian proxy authorities in Donetsk, Luhansk, Kherson and Zaporizhzhia, as well as those who facilitated the sham polls, will face visa bans and an EU asset freeze.
The EU’s proposal for an oil price cap was widely expected after a G7 pledge earlier this month. Under plans agreed by the US, Canada, Japan, UK, France, Germany and Italy, companies transporting and insuring Russian oil will only be able to operate if they meet a price below a level yet to be determined.
The plan takes advantage of the fact that most Russian oil is shipped and insured by companies operating in the EU and the UK. The price cap, pushed by US Treasury Secretary Janet Yellen and outgoing Italian Prime Minister Mario Draghi, is seen as a necessary follow-up to the EU’s decision to ban 90% of Russian oil imports from the end of the year.
The EU embargo on most purchases of Russian crude oil comes into effect on December 5, followed by an embargo on refined products such as diesel on February 5. The United States feared that without measures to control oil prices, costs to consumers and businesses would subsequently soar.
Analysts said the oil price plan is technically complex and uncertain to work because China, India and Turkey, the three biggest importers of Russian oil outside the EU, do not support the idea.
Ustenko, however, insisted that “pragmatic” countries such as India and China would join us, saying, “Who in the market is willing to pay an extra premium for Putin’s oil? Even if they don’t sign the agreement, they will follow the rules.
The European Commission must also convince EU member states with important maritime industries, such as Greece, Cyprus and Malta. But a tougher hurdle to achieving unanimity is likely to be Hungary, a big Russian energy consumer that has blamed Western sanctions for causing a “global economic war”.
“This [sanctions] the weapon has backfired and Europeans are paying a surcharge for oil, gas and electricity,” Hungarian Prime Minister Viktor Orbán told his parliament on Monday. The Orbán government also plans to hold a referendum on public support for sanctions, a well-established tool it uses to raise the temperature in its disputes with the EU.
Ustenko said the European Commission should consider withholding EU funds from Hungary if the country does not support sanctions. The legal options for such a move are dubious, although Brussels has threatened to withhold €7.5 billion in EU funds for Budapest due to separate corruption concerns.
Another element of the sanctions plan includes banning EU nationals from serving on the boards of Russian companies, a move that would affect former German chancellor Gerhard Schränder, who has been reprimanded for refusing to step down. to his friendship with Putin. Schränder resigned from Russian oil major Rosneft in May, but retains a position with pipeline company Nord Stream.
“Providing well-paid positions on the boards of Russian state-owned companies…has long been an important part of the Russian government’s efforts to gain undue political influence over EU member states,” the proposal reads. original drafted by the German government. “We should put an end to these attempts at strategic corruption.”
Diplomats said the proposals did not explicitly target Schränder. After Putin launched the invasion off Ukraine, former French prime minister and presidential candidate Francois Fillon resigned from his positions on the boards of two Russian companies, while former Austrian Chancellor Christian Kern has left the board of Russian State Railways.