Compelled Sanctions? Why Not!

The EU is slowly preparing its 14th package of sanctions against Russia, following its invasion of Ukraine. This package currently includes a ban on the import of liquefied natural gas (LNG) from Russia and an export ban on luxury cars to Russia. Is that all? Not quite, as more measures are expected to follow.

Almost simultaneously with the EU Council's decision to use funds from the frozen Russian assets' revenues, it became known that EU countries are nearing the final stage of agreeing on the contents of the 14th sanctions package against Russia.

It seems a few more weeks are needed to finalise this next set of sanctions, which will, for the first time, include restrictions on Russian LNG exports. The governments of Belgium, Germany, and France have expressed significant concern about the potential impact of such restrictions. They have approached the European Commission, demanding an assessment of the consequences of this ban.

However, there isn't much time left, as negotiators have repeatedly signalled their desire to agree on the 14th package by 1 July. This is the date when Hungary takes over the EU's rotating presidency from Belgium for the next 6 months. Understandably, Hungarian Prime Minister Viktor Orbán is notably friendly towards Russian President Vladimir Putin. Orbán has a vested interest in Russian gas and other benefits from the Kremlin, which is why he has previously blocked EU assistance to Kyiv and engaged in other questionable actions.

Primarily, the EU's previous sanctions packages have aimed to address the methods by which Russia circumvents existing sanctions. As evidenced by the number of packages already implemented—13 in total—none have been formulated particularly quickly:

• The 14th package is still being prepared; it has taken at least 4 months so far.
• The 13th package was implemented on 23 February 2024, prepared in 2 months.
• The 12th package, from 18 December 2023, took 6 months, the longest so far.
• The 11th package, from 23 June 2023, took 4 months.
• The 10th package, on 25 February 2023, took 2 months.
• The 9th package, on 16 December 2022, took 2 months.
• The 8th package, on 5 October 2022, took 3 months.
• In 2022, packages were adopted swiftly, with just two days between the first and second packages.

The most recent 13th sanctions package targeted 106 individuals and 88 entities. It included new export restrictions on various goods necessary for the production of drones. Specifically, it banned the export of electronic transformers, static converters, and inductors, as well as the supply of aluminium capacitors, which can be used in the defence industry.

Next EU Sanctions Package Will Target Russia's Defence Industry

It is now confirmed that the upcoming 14th package of EU sanctions against Russia will prohibit the export of manganese ore and aluminium oxide to Russia, both of which are used by the defence industry. This measure, initiated by Latvia, was announced by Latvian Finance Minister Arvils Aseradens on social media.

Another significant issue under discussion is the expansion and intensification of so-called secondary sanctions. This is a contentious topic, second only to the debate on the import of LNG from Russia. These sanctions target third countries and companies that help Russia circumvent the primary sanctions—direct bans affecting EU companies and banks in their trade and cooperation with Russia.

Specifically, there is a debate on whether EU companies can be held accountable for their distributors operating in third countries. Many export contracts already require commitments not to re-export to Russia, but this appears to be insufficient.

According to the European Commission, surveys indicate that 72% of Europeans support sanctions against Russia.

Additionally, there is ongoing discussion about new coordinated sanctions against Belarus, aimed at completely halting the transit of goods from the EU to Russia. A particular point under discussion is the apparently agreed-upon total ban on the transit of luxury cars to Russia. Conversely, the sanctions will also target the transit of Russian diamonds to the EU.

The biggest issue with EU sanctions against Russia seems to be their lack of radicalism and comprehensiveness. The situation appears almost comical: initially, overly lenient sanctions are imposed, followed by intense debates on whether such sanctions were necessary, given their insufficient impact.

However, these hypocritical disputes may soon come to an end. On 21 May, US Treasury Secretary Janet Yellen urged German bank executives to step up their efforts to comply with sanctions against Russia and stop attempting to circumvent them. She clearly stated that otherwise, German banks risk facing secondary sanctions, which would cut them off from dollar transactions.

Yellen made this announcement during a meeting with bankers, citing new US Treasury powers that allow for secondary sanctions on banks aiding Russia in procuring goods needed for the war in Ukraine. This could be seen as an invitation for EU authorities to implement similar sanctions before it is too late.