EU Draws Up Plans to Maintain Financial Pressure on Russia Despite Possible Veto

Strategic Insights -

The European Union is preparing to use trade tariffs and capital controls to keep financial pressure on Russia even if Hungary vetoes an extension of the EU's sanctions regime. The European Commission has informed ministers that a significant portion of the EU's sanctions could be adapted to a new legal framework to bypass the veto. This move comes as Moscow and Kyiv hold their first direct peace talks since Russia's full-scale invasion of Ukraine in February 2022. However, Vladimir Putin has announced he will not attend the talks in Istanbul, despite Ukraine agreeing to a 30-day ceasefire.

Key Takeaways:

  • The EU is considering trade tariffs and capital controls to maintain financial pressure on Russia, despite the possibility of Hungary vetoing an extension of the EU's sanctions regime.
  • The European Commission has informed ministers that a significant portion of the EU's sanctions could be adapted to a new legal framework to bypass the Hungarian veto.
  • Russia has been slapped with 21,692 sanctions since the start of the war, with the majority targeting individuals, according to Castellum.AI.
  • Despite high oil prices and elevated military spending, Russia's economy has outperformed expectations since the start of 2022, with some analysts calling for "devastating sanctions" to suffocate the economy.
  • EU ministers are considering additional measures, including a ban on new Russian gas spot market contracts, a total phase-out by 2027, and tariffs on enriched uranium.
  • The EU's main response to Russia's war on Ukraine has been sanctions, but they have failed to stop the war, with some analysts doubting whether more sanctions will bring Putin closer to signing a peace agreement.
  • Senator Lindsey Graham has committed to a bill that would enact "bone-crushing" sanctions on Russia, including a 500 percent tariff on imports from countries that buy Russian oil and fossil fuels.

Statistics:

  • Russia's economy has outperformed expectations since the start of 2022, with an estimated 60 percent chance that Russia and Ukraine will still be at war by the end of this year.
  • 200 billion euros ($224bn) of Russian assets have been frozen by the EU's sanctions.
  • Some 200 "shadow fleet" tankers have been sanctioned, allowing them to bypass financial sanctions.
  • 30 companies involved in the trade of dual-use goods will face new restrictions.
  • Russia's shadow fleet tankers have allowed them to avoid financial sanctions.

Sources:

  • Financial Times
  • Al Jazeera
  • BFM TV
  • Castellum.AI
  • The United Kingdom's Financial Times newspaper