The European Union is weighing a new round of restrictions that would hit some €5 billion ($5.3 billion) in trade with Russia as part of a sanctions package targeting Moscow for its war against Ukraine.
The bloc’s 12th package since Russia launched its invasion last year will tighten restrictions on Moscow’s revenue sources and industry and curtail the Kremlin’s ability to feed its war machine. Vast swathes of Russia’s economy have already been targeted, leaving EU policymakers to plug gaps, use targeted measures and tighten existing sanctions.
The new set of proposed measures includes export restrictions on welding machines, chemicals and further technologies used for military purposes, according to people familiar with the matter. Software license bans and restrictions on imports of a small number of processed metals and aluminum products, construction items, transportation-related goods and diamonds are also being considered.
EU leaders have sought to reassure President Volodymyr Zelenskiy that the bloc will hold the line in supporting Kyiv against the Russian invasion, despite worries that the Israel-Hamas war will trigger a broader conflict in the Middle East and distract focus.
The newly proposed import and export measures on Russia would add up to about €2.5 billion each, according to the people, who spoke on condition of anonymity to discuss private deliberations. The diamond ban is contingent on a Group of Seven agreement to track and trace the precious stones across borders, which is expected to be finalized soon.
The European Commission, the bloc’s executive arm, began consulting with member states this month, Bloomberg reported earlier. Russia had found a channel to import several machines used to produce ammunition and weapons, Bloomberg has reported.
The proposals could still change before they’re formally presented to member states and will need the backing of all 27 nations to be approved.
Ammunition Bid Falling Short
The package aims to disrupt Russia’s ability to skirt existing bans through third countries, where it wins access to components, technologies and electronics used in weapons in Ukraine or to manufacture them. The EU is looking to add more goods to an existing transit ban and list additional companies in third countries should those nations fail to crack down on the firms, the people said.
That effort has taken on fresh urgency as the bloc risks falling short on a pledge to provide Kyiv with a million rounds of artillery ammunition by next March.
The EU is also considering convincing companies to add clauses to their contracts with firms in third countries to prohibit the export of certain so-called battleground goods on to Russia. Banning the repatriation of Russian assets in the EU and restricting the involvement of Russian nationals in sensitive sectors are also on the table.
With significant amounts of Russian oil now trading above the $60 price cap introduced by the G-7, the EU and its allies are also discussing ways to better enforce the measure and target a shadow fleet of hundreds of vessels Moscow is using to move the shipments.
Some of the ideas discussed include banning transactions with sanctioned vessels, introducing notification requirements when a ship is sold — and contractual clauses prohibiting shipments above the cap.
Increasing oil-pricing transparency is also being explored to prevent costs of purchased volumes from being shuffled as a way of potentially evading restrictions. The cap price excludes transportation costs, meaning that inflated shipment costs can be manipulated to get around sanctions.
The package is also expected to add more than 100 individuals and four dozen entities to sanctions lists.