EU Struggles to Finalize 14th Sanctions Package Against Russia

EU countries are deliberating a new set of sanctions against Russia that includes restricting Russian LNG exports. They aim to finalize this 14th package before July, despite concerns about impacts on both the EU and Russian economies. Unanimity is required for adoption, complicating discussions.

EU countries will take weeks to hammer out the next set of sanctions against Russia for its war in Ukraine, EU diplomats say, though they broadly support the measures including to restrict Russian LNG exports for the first time.

Countries including Belgium, Germany and France have asked for European Commission for assessments on whether a ban on LNG transshipments at European ports will hit the Russian economy more than the EU's, they said. The countries and the European Commission declined to comment.

"There's broad support but mainly questions. This package is just stitches - we've never done anything like this before," one diplomat said, referring to the LNG. Diplomats say they are racing to iron out the 14th package before Hungary takes over the EU presidency in July. Hungarian Prime Minister Viktor Orban, who maintains ties with Russia's President Vladimir Putin, has previously tried to block aid to Ukraine and restrictions on Moscow.

Sanctions require unanimity in order to be adopted. As the war drags on, the EU is running out of ways to cut Russian revenues. Circumvention has been the focus since last year.

"We were truly surprised at the resilience of the Russian economy but it has been hurt ... Russia is turning into a kind of war economy," the diplomat added. The Kremlin said last month Russia would look for ways to overcome what it regards as any illegal sanctions the EU imposes LNG operations, saying any measures would backfire on European industry.

Diplomats are debating whether EU companies should be held accountable for their distributors in third countries although they are worried the extra red tape will hurt companies after previous measures stipulated contracts must include a ban on re-exports to Russia. Countries are debating a separate package to align pre-invasion sanctions on Belarus with the subsequent Russian ones and close a major loophole that allowed many EU goods to reach Russia through Belarus.

However, diplomats disagree over the so-called "empty annex" that would allow Belarusian potash, a fertiliser, to be exported via Europe should prices spike as they did in 2022, hurting third countries. The annex would be used to allow temporary exports to a specific country, the sources said. Belarus, Canada and Russia are the world's biggest potash producers. ($1 = 0.9208 euros)

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