International leaders in Berlin and Paris propose intensified economic penalties against Russia
In a joint effort to curb Russia's war efforts, Germany and France have put forth a position paper advocating for stronger EU sanctions against Moscow's energy sector. The proposed measures, if adopted, would target key economic actors providing resources to Russian economic sectors related to the war.
The proposed sanctions aim to exclude all economic actors from the European market who are involved in supporting Russia's war efforts. According to the position paper, around 250 small and regional banks are currently involved in international transactions to support Russia's war efforts. These banks are under scrutiny for potential involvement in circumventing existing sanctions.
Germany and France are also pushing for the closure of financial and logistical loopholes in the current sanctions. This includes adding more Russian banks, foreign financial institutions connected to the Russian Central Bank's transaction system SPFS, and cryptocurrency service providers in Central Asia to sanctions lists.
The expanded price cap mechanism for Russian oil would include European companies transporting refined products made from Russian crude between third countries. The proposed sanctions would target the main source of funding for Russia's war efforts, which is its energy sector. Companies like Lukoil and service providers in the oil industry are specifically mentioned as potential targets.
The proposed sanctions would also extend to the export of Russian oil to the EU and trading in Russian oil. Currently, only companies involved in transporting Russian oil above the price cap are threatened with sanctions, including shipping companies, insurers, technical assistance providers, and financial intermediaries.
However, the negotiation process is expected to be challenging, especially since some countries like Hungary are critical of any new sanctions. Hungary and Slovakia have previously expressed hesitancy towards new EU sanctions against Russia due to their economic dependencies on Russian energy and other factors. A unanimous decision is required for the adoption of the new sanctions, making the process more complex.
The 19th package of EU-Russia sanctions is expected to result in a concrete proposal for legal acts by the EU Commission in the coming days. The German-French position is a significant contribution to the current planning process for this package, also suggesting sanctions in the automotive industry, civil aviation, gold, machinery, and electrical engineering sectors linked to Russia's military-industrial complex.
The proposed sanctions are intended to be a more determined approach against Russia's funding for President Vladimir Putin's war efforts. The goal is to put pressure on Russia to cease its aggression and restore peace in the region. The position paper has been sent to other EU countries, marking the beginning of a potentially lengthy and challenging negotiation process.
