Fresh Take: EU Cranks Up the Heat on Russia with New Sanctions Package; Aiming to Squeeze Putin's Oil Revenues
EU nations aim to inflict financial pain on Putin by driving down oil prices through increased production and exports.
Following German Chancellor Merz's visit to Kyiv, the EU Commission unveiled the long-awaited 18th sanctions package against Russia. EU Commission President Ursula von der Leyen highlighted the measures aimed at tightening the oil price cap, targeting Russia's "shadow fleet," and the banking sector.
In Brussels, von der Leyen stated, "We are escalating the pressure on Russia because strength is the only language they understand." The sanctions package includes stricter measures against Russia's so-called "shadow fleet" used to circumvent sanctions, as well as a reduction of the oil price cap from $60 per barrel to $45 (around €40).
The EU, G7 countries, and Australia had agreed on a price cap for Russian oil in December 2022 to decrease Moscow's revenues from energy exports. In response to shifting market conditions, the Commission has decreased the price cap, with von der Leyen explaining, "We are taking action based on the current global market trends." The reduction will be discussed at the G7 summit next week in Alberta, Canada, the Commission President added, expressing her confidence that they will achieve this goal.
In addition to oil-related sanctions, the EU also proposed further actions against 77 ships of the "shadow fleet," the listing of 22 more Russian banks, and additional export bans on machinery, metals, plastics, chemicals, and dual-use goods and technologies that can be used for the production of drones, missiles, and other weapons systems.
Politics and Diplomacy
Since Lithuanian President Gitanas Nauseda criticized the lack of consequences due to sanctions threats during German Chancellor Friedrich Merz's visit to Kyiv one month ago, the EU, G7 countries, and Australia had agreed on a price cap for Russian oil in December 2022 to decrease Moscow's revenues from energy exports. The reduction in the oil price cap reflects the Commission's response to shifting market conditions.
Critics, however, argue that sanctions are too lenient, with essential components still making their way into Russia. Moscow remains capable of continuing to shell Ukrainian cities and advancing in eastern Ukraine, though at a slow pace. The effectiveness of the oil embargo and the oil price cap appears limited, as India and China have refused to comply with the embargo and have become Russia's largest oil buyers.
The Future of Sanctions: Adapting and Expanding
While the EU has already imposed a wide range of sanctions, including asset freezes, travel bans, oil price caps, financial transaction prohibitions, and export controls, there are various additional measures the EU could consider in its ongoing strategy. Some of these options include:
- Expanding sectoral bans:
- Ban on Nord Stream pipelines
- Prohibitions on additional energy infrastructure (e.g., LNG exports and related infrastructure)
- Enhanced financial measures:
- Full SWIFT exclusion
- Crypto-asset restrictions
- Trade and technology embargoes:
- Wider export controls (e.g., additional dual-use items and high-precision machinery components)
- Targeting the "shadow fleet"
- Media, information, and hybrid threats:
- Broadcasting bans on more Russian media outlets and internet-based content distributors
- Countering hybrid activities (e.g., cyber-attacks, disinformation)
- Asset and transaction controls:
- Broadened asset freeze criteria
- Transaction bans
- Individual and entity designations:
- Continually adding individuals and entities involved in undermining Ukraine’s sovereignty or human rights abuses to the sanctions lists
With these potential measures, if adopted at scale and in coordination with G7 partners, the EU could exert substantial pressure on Russia, further isolating its economy and limiting its ability to sustain military operations.
Sources: ntv.de, mau/AFP
- EU
- EU Commission
- EU Commission President
- Sanctions
- Ghost Fleet
- Sectoral bans
- Financial measures
- Trade & tech embargoes
- Media & hybrid threats
- Asset & transaction controls
- Individual/entity designations
In response to the criticism from Lithuanian President Gitanas Nauseda on the effectiveness of sanctions, the EU, G7 countries, and Australia had agreed on a price cap for Russian oil in December 2022 as a part of their general-news politics to decrease Moscow's revenues from energy exports. Apart from oil-related sanctions, the EU is also considering further actions, including expanding sectoral bans, enhancing financial measures, implementing trade and technology embargoes, targeting the "shadow fleet," countering hybrid activities, and asset and transaction controls, among others, to exert substantial pressure on Russia and isolate its economy.
