Title: Strengthening the Stranglehold: EU's Dependence on US Support for Tougher Sanctions on Russia
Trump Considering Strict Economic Penalties Towards Putin
By Lea Verstl
The European Union (EU) seeks to ratchet up the pressure on Moscow's economy with its latest round of sanctions. However, the effectiveness of these measures hinges on the US President's willingness to cooperate. If Trump gives a thumbs down, the entire package may unravel, with an ally in the Brussels Council potentially tipping the scales.
The proposed price cap for Russian oil is questionable, as Moscow has already sold its oil below the proposed limit. To make matters more challenging, the EU is planning to decrease the oil price cap from $60 to $45 per barrel, as part of its 18th sanctions package against Russia. This move requires coordination with the G7 nations, including Donald Trump.
There's reason to hope that Trump could be persuaded. Lower oil prices could hasten the end of Russia's war against Ukraine. Trump's trade policies have already weakened the global economy, leading to lower oil prices. However, it remains unclear whether the mercurial US President is willing to pressure Russian President Vladimir Putin.
When it comes to the overall influence of western sanctions, Trump holds the upper hand. The US can impose secondary sanctions on companies doing business with Russia, making it harder for Russia to conduct business globally. The EU, due to legal reasons, cannot do the same, citing violations of international law and the sovereignty of other states.
There's currently debate raging in the US about secondary sanctions, with over 80 out of 100 US Senators supporting a bill by Republican Senator Lindsey Graham. The US media reports suggest that Trump is not entirely opposed to the bill but is pushing internally to temper its impact. This is due to concerns that the bill could harm US businesses if enacted. The proposed tariffs could affect not only Russian energy purchasers but also European countries still buying Russian gas.
Despite these efforts, Graham's sanctions package risks cutting the US off from its two most significant trading partners - India and China, the biggest buyers of Russian oil. A 500 percent tariff could put a halt to US trade with these countries at an unfortunate time, as China and the US are in the process of strengthening their trade relations. US and Chinese negotiators recently agreed on a framework for mutual export restrictions, which Trump and Chinese President Xi Jinping will soon discuss.
Alexandra Prokopenko, an expert on Russian economic policy at the Carnegie Endowment for International Peace, doubts that highly harsh secondary sanctions against buyers of Russian oil can be implemented at the moment, given the ongoing trade negotiations between the US and China. Even the threat of secondary sanctions against Indian or Chinese companies could undermine progress, Prokopenko told ntv.de.
The EU is left with its traditional sanctions, but there's a fly in the ointment - Hungarian Prime Minister Viktor Orban. Orban has promised to block the sanctions package, citing Trump's return to power. Orban has a cordial relationship with both Trump and Putin, increasing the likelihood of Orban playing spoilsport in the negotiations.
Politics
Economy
The proposed 18th EU sanctions package includes a lowered oil price cap, a ban on transactions with Russia’s Nord Stream pipelines, further sanctions on Russian banks, and 77 additional ships of the "shadow fleet". The German government has ruled out resuming gas transit after the war, although rumors persist that renewed gas supplies through the pipelines could be part of an American-Russian agreement to stop the invasion. This possibility could prompt Trump to flex his muscles, especially if Hungarian Prime Minister Viktor Orban sides with him.
Commodity: Oil, Oil Price, Russia, Vladimir Putin, USA, Donald Trump, Sanctions, EU, Viktor Orban, Hungary
Enrichment Data:
- The EU's proposed 18th sanctions package targets multiple sectors of the Russian economy, including banking, shipping, and energy infrastructure.
- Cooperation between the US and EU on secondary sanctions could create a more robust international enforcement regime, potentially disrupting supply chains and isolating Russian entities from the global market.
- The US has shown mixed signals on enforcing sanctions against Russia; some leaders, like the new Trump administration, have even discussed potential lifting of sanctions or striking energy deals with Russia.
- Differences in political will and enforcement capacity between the US and EU continue to pose significant challenges to achieving full coordination on sanctions.
- The impact of US-EU coordination on Russia is shaped by both convergence and divergence in their current foreign policy strategies.
- The EU's proposed 18th sanctions package, which includes a lowered oil price cap, a ban on transactions with Russia’s Nord Stream pipelines, further sanctions on Russian banks, and 77 additional ships of the "shadow fleet", is heavily dependent on the cooperation of the US President, particularly in enforcing secondary sanctions.
- As the US President's willingness to cooperate is crucial for the effectiveness of the EU's sanctions, the ongoing debate in the US about secondary sanctions, with over 80 out of 100 US Senators supporting a bill by Republican Senator Lindsey Graham, could significantly influence the economic and monetary union of EC countries vis-à-vis Russia.
